Unethical Issues in Seven-Eleven

This article discusses the unethical labor practices in Seven-Eleven, which led to the exploitation of workers and affected the company's operations. The stakeholders affected were the employees, future owners of franchisees, and customers. The decisions made by the involved parties were unethical and affected the company's goodwill. The article concludes that an ethical framework is necessary to motivate employees and management to behave responsibly.

Running head: The Role of Accounting in Society
The Role of Accounting in Society

The Role of Accounting in Society
1
Unethical Issues in Seven – Eleven
As per 7 Eleven (2018) it is an American chain of
convenience stores which is known worldwide. It is
a Japanese owned chain and is headquartered in
Irving, Texas. Seven –Eleven Japan Co. Ltd is
headquartered in Chiyoda, Tokyo and it is owned
by Seven & I Holdings Co. It has employed around
45000 employees in its stores. The company
supplies proprietary food and continues to innovate
new edible products for its time –constrained
consumers.
However, in 2015, the company was accused to use
unlawful and unfair labor practices to decrease its
labor costs in its stores located in Australia. The
young and foreign laborers who were working at the
company’s stores had been paid less than 50 % of
the minimum wage rate. This problem continued for
some time in the company and it was confronted by
every person who was employed in the company.
As a result, the chairperson of Seven –Eleven , Mr.
Russ Withers and the CEO Mr. Warren Wilmot
resigned from their designations. It was stated that
the wage rate of the laborers were intentionally
kept low to keep the costs down and the profits
increased for the benefit of the franchisers and the
parent company (Zińczuk, Cichorzewska and
Walczewski , 2013) .

The Role of Accounting in Society
2
The workers were paid for every alternate hour and
the foreign laborers were threatened to be reported
if the lodged any complaints to the higher
authorities. They were paid $ 12 per hour which
was below the minimum wage rate. Also, they were
paid wages for 20 hours a week while they worked
for around 40-60 hours a week. The payment of
low wages was also reported in 2016 in which it
was found by the Fair Work Ombudsman that the
franchisees paid full payment to the workers and
afterwards half of the payment was to be given back
to them by the workers. The reason behind this was
that the executives and the head offices were
receiving 57 % of the gross profits while the stores
received the rest 47 % of the revenue. It became
difficult for them to manage the huge staff cost
from this meager amount. It led to the exploitation
of the workers (Ogbari et al., 2016).
The stakeholders affected in this scandal are the
employees who were paid less than their working
hours. Also, the future owners of the franchisees
and the customers were affected as nobody would
like to commercially transact with the unethical
company. The parent company 7-Eleven Malaysia
Holdings Berhad which was listed on the Malaysian
Stock Exchange saw a sudden downfall in the value
of its shares .The return on the shares was also
affected due to the loss of goodwill of the company.
After the scandal was settled, the workers left the
company and the new ones were reluctant to join it.

The Role of Accounting in Society
3
So, it had a negative impact on its operations (Bieler
and Lee, 2016).
The decisions made by the involved parties in this
issue was unethical and it affected badly on the
operational activities of the business. In this case,
the workers specially the international students who
worked in the stores were blackmailed to be
reported to the immigration department if they
spoke about the low wage rates. After the
allegations, the franchisees stated that it was
impossible for the company to earn profits without
exploiting the employees which was completely
unethical (Ollus, 2016).
The unethical activities of the company led to its
downfall in the market. According to Fair Work
Ombudsman (2016) as a result of various
investigations on the company for not complying
with the ‘Federal Workplace Laws ‘ .The
franchisees of the company were falsifying the
records regarding the payment of wages to the
workers (KPMG, 2015).
It had a great impact on the future owners of the
franchisees and the customers of the company. They
withdrew themselves from the operations of the
company. After the settlement of the scams, the
employees left the company and the new ones were
reluctant to join it. This further had an influence on
the downfall in the value of the shares and the

The Role of Accounting in Society
4
returns of the parent company which was listed on
the Malaysian Stock Exchange.
Before I joined the lecture, I related ethics to moral
principles which arise in the business environment.
After attending the lectures, I felt that the ethical
principles such as individualism, utilitarianism ,
Kantianism and the virtual theories are
manipulated by the organizations for their own
benefit and selfish interest. The ethical principles
are meant for the common good and not for the
benefit of the upper class of the society (Adeyeye et
al., 2015).
Hence, to conclude, it can be said that the
environment of the company sets the tone for its
employees and it should provide an ethical
framework so that the employees and the
management can be motivated for behaving
responsibly. The ethical framework of 7 -11 lacked
internal control systems regarding the payment of
wages.

The Role of Accounting in Society
5
References
7 Eleven (2018) About Us [online] Available from:
http://corp.7-eleven.com/corp/about#corp_about_int
ro [Accessed 9th April 2018].
Adeyeye, J.O., Adeniji, A. A., Osinbanjo, A.O.,
Oludayo, O.A. (2015) Effects of Workplace Ethics
on Employees and Organizational Productivity in
Nigeria. International Conference on African
Development Issues [online] Available from:
https://pdfs.semanticscholar.org/123e/bf2aa954d986
22997fe03c1da8f5e800d603.pdf[Accessed 9th April
2018].
Bieler, A. and Lee, C.Y. (2016) Exploitation and
resistance: a comparative analysis of the Chinese
cheap labor electronics and high-value added IT
sectors. Globalizations. DOI :
10.1080/14747731.2016.1204698.
Fair Work Ombudsman (2016) Statement on 7-
Eleven [online] Available from:
https://www.fairwork.gov.au/about-us/news-and-
media-releases/2016-media-releases/april-
2016/20160409-7-eleven-presser[Accessed 9th April
2018].
KPMG (2015) Fraud & Ethics at the Workplace in
Switzerland[online] Available from:
https://assets.kpmg.com/content/dam/kpmg/pdf/201
6/04/ch-fraud-and-ethics-at-the-workplace-in-

The Role of Accounting in Society
6
switzerland-brochure-en.pdf [Accessed 9th April
2018].
Ogbari, M.E., Oke, A.O., Ibukunoluwa, A.A. ,
Ajagbe, M.A. and Ologbo, A.C.
(2016)Entrepreneurship and Business Ethics:
Implications on Corporate Performance.
International Journal of Economics and Financial
Issues. 6(S3), pp. 50-58.
Ollus, N. (2016) Forced Flexibility and
Exploitation: Experiences of Migrant Workers in
the Cleaning Industry. Nordic Journal of Working
Life Studies. 6(1),pp. 25-45.
Zińczuk, B., Cichorzewska, M. and Walczewski ,
M.(2013) The Analysis of Unethical Behavior
Among Employees In Enterprises – A Pilot Study in
The Automotive Industry. Management Knowledge
and Learning International Conference 2013
[online] Available from:
http://www.toknowpress.net/ISBN/978-961-6914-
02-4/papers/ML13-249.pdf [Accessed 9th April
2018].