Ethical Analysis of 7-Eleven's Management Practices: A Case Study

This essay delves into the ethical challenges encountered by 7-Eleven, a major international convenience store chain, particularly concerning the exploitation of its employees. The paper examines the company's business practices, highlighting issues such as wage fraud and poor working conditions within its franchisee stores. It explores the application of management theories, specifically Deontological and Utilitarian ethics, to understand the ethical implications of 7-Eleven's actions. The analysis reveals a lack of corporate responsibility and leadership, contributing to employee dissatisfaction and ultimately, the company's ethical failures. The essay discusses the importance of ethical decision-making in business and its impact on stakeholders, supported by the application of ethical theories and relevant case details. The essay concludes by emphasizing the need for ethical leadership and responsible business practices to ensure fair treatment of employees and maintain a positive corporate image. The paper also reflects on the consequences of ignoring ethical considerations and the importance of prioritizing employee well-being and ethical conduct.

Running head: MANAGEMENT THEORY AND PRACTICE
Management Theory and Practice
Name of the Student:
Name of the University:
Author Note:

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Introduction
Managerial ethics is defined as the rules and principles that is handled by the
management and this helps in analyzing what is right and wrong in a business organization.
Ethics is referred to as the science of morality in different business organization. The managers
are faced with the important decisions and they need to take these decisions in an ethical way.
The managers must also take ethical decisions which have extended consequences. These also
imply that the decisions taken by the manager must be in accordance with the implications of
business environment. Sometimes, there are also some uncertain consequences and this ethical
decisions are risk free. In the past few years the managers and authority of 7 Eleven has been
facing various ethical issues in their business environment due to some of their wrong decision
regarding the employees (Karp, 2018). Managerial ethics is important for organization to set
their ethical behavior within their environment. Any hamper or bad impact of such ethics leads to
a lot of issue for the organization. Looking at the theoretical perspective, there are various ethical
theories showing the ethical options available to the organization such as Utilitarianism,
Deontological, egoism and other ethical theories. This paper will discuss Deontological and
Utilitarianism approach of business ethics to explain the ethical dilemma faced by 7 Eleven in
their business environment.
The thesis statement of the paper is to highlight lack of corporate responsibility and
leadership by the management committee of 7 Eleven that has led forced its employees to leave
the job.
Discussion

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7 eleven is the longest international chain of convenience stores selling variety of
products. The company operates various franchisee stores that are licensed. There are more than
56,000 stores in 18 countries and the company is still planning to expand in more regions. It
comes under subsidiary and retail industry. It is a well known brand and loved by its customers
in the global market due to its extra ordinary and unique products. The company has always
maintained its growth strategy by offering extended services to its customers. This has helped the
company to become the leader of the industry it operates. The company has also engaged itself in
continuous innovation over time with its technology. According to the company, supplying
convenience product is their choice; however, offering the best service is their main business
criteria (The Conversation, 2018). The company also indulges itself in servant leadership in
which it focuses on serving the best to its customers. The company has recently come up with
various ATM services in their store and the stores will remain open 24/7 for the customers. The
company has been known to follow strong corporate social responsibilities in its operations. It
focuses on the people, planet and product. This has helped the company to reduce the energy
used in the stores by 20 percent which will reduce further by 2025 and reducing the waste
generated from packaging of products (ABC News, 2018). The company holds a strong
franchisee chain by offering profitable options of franchisee stores to the dealers and suppliers.
The company experiences a good increase in revenue, gross profit and net profit over the years.
Increase in net profit in the year 2016 was experienced to be 19.39 percent.
Recently, 7 Eleven faced an issue in its employment for the workers by ripping off
capable workers. The workers were rip off from their job because of increase in the average pay.
The problem of wages among 7 Eleven workers were investigated by Four Corners and Fairfax
Media. The employees of 7 Eleven are not paid proper wages and they had decided to go on a

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strike, if their wages were not increased. 7 Eleven is one of the largest convenience store chain
and after a joint investigation; it has been found that this company has paid the lowest salary to
the employees in the past few years. Thus a huge rage was experienced by the politicians,
lawyers and regulators on taking strict actions for solving employee exploitation issues. The
scandal broke out and was found that the company is facing crisis of wages to pay to its workers.
This has led them to buy out franchisee. The wage problem was evident in the franchisee stores
across the countries. However, the scandal took a bad turn because 7 Eleven continuously
ignored the wage fraud going on in the franchisee stores (Ferguson, 2018). The business is very
happy to make huge profit by saving cost and ripping off workers. However, they failed to
realize that their working environment has become a mere place for slavery. After the scrutiny
carried out by the media team, forced 7 Eleven to keep a check on the wages and fraud going on
in the business franchisee. There were many incidence of wage fraud in the organization in
which workers were forced to work extra per day or carry out extra responsibilities without much
rewards. There were workers that lived two roles in the store for weeks without getting paid for
it. This was the strategy followed by the organization to save cost and earn higher profit.
According to the report given by Four Corners and Fairfax Media, a worker is liable for
approximately $30,000 unpaid wages. This was the situation of the workers getting exploited in
7 Eleven franchisee environment (Franchise.7-eleven, 2018). There were also cases in which the
franchises covered up the true records by falsifying the records.
The exploitation of workers due to low wages created a huge rage among the workers
stating that the company is a big fraud as they are earning money through them not the business.
The company also had to face high penalty for exploiting workers. A penalty of $1 million was
put on the company by the Fair Work Ombudsman and the court. The matter was put in front of

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the Federal Circuit Court in which they were ordered to pay huge penalties to the underpaid
workers. The court also ordered the business that they have to abide by the rule of minimum
wage rate that applies to every worker across Australia. Such blunt action taken by the court
served as a feeling of relief among the workers as they will get justice for the exploitation they
have faced. The FWO has been able to take strict actions against nine stores of 7-Eleven in 2009,
followed by many more stores in 2013-2014. Such strong actions against the 7 Eleven franchisee
forced them to return back the wage to the workers. The workers were taken to the ATMs to pay
back their due wages (Franchise.7-eleven, 2018). However, some of the workers also went to
violence to get back their underpaid wages. This creates a lot of chaos for among the workers
and in the company.
Deontological ethics is referred as morality based n the duty that an organization provides
or conducts in its business environment. It depends on the moral decision made by the people
and business depending on morality and good ethics. Deontological ethical theory describes that
the actions taken by an organization or people are not justified by the consequences. This ethics
saw its rise in the categorical imperative developed by German Philosopher Immanuel Kant. It is
mainly focused on the consequences of the action that is being made by a person. In other words
Deontological ethics is also referred to as virtue ethics. In order to justify the situation as right or
wrong, it is essential to judge the actions made by a person (Chakrabarty & Bass, 2015). Thus,
morality is the main aim and belief of this type of theory. Thus, the theory largely show the
relationship between morality and the actions that human beings conduct. Deontological theories
are concerned with the morality choices a person has while taking decision about a matter. All
kinds of Deontological theories seem to have the same meaning such as showing the wrong and
right effect of an action. Moreover, such an action is determined by the intrinsic feature of the

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action. However, the intrinsic feature that is shown gives an obligation to the behavior of a
person to act in a certain way (Hoover & Pepper, 2015). According to Deontologists it is
believed that moral is just a duty that has to be conducted in a given situation. However, to
perform good or bad duties depends on the action and not the consequences. This has been
largely stated by Kant’s deontological ethics. Moreover, Greek philosophers Aristotle and Plato
offered virtue model of ethical behavior. Virtue based ethics mainly focuses on qualities while
taking a decision. It actually put stress on the relationship between the individuals that are
planning to get into a relationship with each other. Another ethical theory was put forward by
Thomas Hobbes and John Locke on right based ethical theory. According to this theory as stated
by Kohen (2015), individuals should be deemed for various rights under them such as right to
speech, right to freedom, right to privacy and various other rights. This version of ethical theory
received further modification and better version by Immanuel Kant. Kant has put forward a
better version of right-based ethical theory which shows the duty of the individual in performing
moral actions.
Similar ethical and unethical behavior is evident in the actions taken by 7 Eleven in their
organization. The decision taken by them followed all possible behavior of being ethical,
unethical and illegal. The ethical behavior is said to be the one that reserve the right of the people
getting affecting by the behavior. 7 Eleven has taken certain step to support some employees that
got affected by their behavior. The employees were called to take the underpayment back from
their ATMs. However, the employees did had the right to know the job cut that the company
implemented from before so that they could have reduced the impact of such decision. This goes
with the deontological ethics that people have the right to be treated with respect. Kant talked
about the moral worth and motivation in its theory that is necessary in a decision (Chakrabarty &

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Bass, 2015). However, the scandal that took place in 7 Eleven did not follow any moral law and
the company only focused at reducing cost of the company by ripping off workers. It did not give
any attention to the morality and feeling of the workers in doing so. Moreover the decision taken
by the management will have poor impact on the workers was known to the management and the
company. Thus this decision is ethically incorrect as the workers were ripped off knowing that
the decision is ethically incorrect and have bad impact on the life pf the workers. It has been
stated by Broad (2014) that the hypothetical statement that has not been created or must have
taken place is called the imperative. Such a decision taken by the manager easily proves that the
company did not have any good motive for the workers. The decision on behalf of 7 Eleven is
morally incorrect as it in no way created any positive impact on the workers. Moreover, the
workers were impacted negatively and demotivated to work in any other place. 7 Eleven has
taken a detrimental step just to get its own cost reduced and to increase profit margin, without
realizing it’s after affect that was created.
Another important theory that is suggested in the ethical theories is the Utilitarian
Theory. This theory was formulated in the back eighteenth century. It is called a rule based
ethical theory which focuses on certain types of rules to get the maximum benefits to others. The
concept was introduced by Jeremy Bentham and was modified by John Stuart Mil. The theory is
more based on group interest rather than just focusing on individual interest. It is a collective
form of ethical theory in which it states that every individual in the society is entitled to get the
best benefit. It consider the situation or action that offers benefits and look at the interest given to
all individuals (Arrow, 2017). The action should be such that leads to benefits to maximum
number of individual. Thus the theory is mainly focused on the consequences an action might
lead to that is taken by the business or an individual. Moreover there is a situation of trade off

7MANAGEMENT THEORY AND PRACTICE
attached to this theory. This is because utilitarian theory always try to judge two decision, the
impacts each of them have on the society and finalize the decision that is having positive impact
on maximum number of individual. Thus it focuses to reduce the harmful effect by increasing the
net benefit, which means a decision should be such that has benefits more than its negative
impact. Thus the decision making process attached to Utilitarian theory is a cost benefit analysis
which the stakeholders of the business has to make. However, the decision that are made only
visualizing own benefit and not realizing others benefit falls under the egoism part of the
Utilitarian approach (Nantel & Weeks, 2016). “Greatest good for the greatest number” is the
actual motive of this theory. Thus it places the wrong action and right action separately by
analyzing the outcome of every action taken.
Bentham’s principle of utility is another Utilitarian approach in ethical theory which
states the role of pain and pleasure in the life of a human and approves or disapproves of the pain
that is caused by the action. The pain and pleasure stated in Bentham’s theory is measured by
four criteria such as intensity, duration, certainty and uncertainty. On the other hand John Stuart
Mill intends the Bentham’s theory by stating that more than the quantity of pleasure, it is the
quality of pleasure that matters in human life. Thus Utilitarian is known as a normative approach
theory that judges right or wrong only based on the result. In their view Sinclair and Walker
(2016) states that happiness can never be quantifies, it can only be measured by its quality.
The Utilitarian ethical theory can be applied in 7 Eleven situation in which various
situation in the issue faced by the organization and the consumer is a choice. The situation offers
various option in which the most appropriate option needs to be chosen to get the best result.
There are two option that the company faces in this present situation. One option is offering
employment to the workers and design different action of cost cutting. The other option is to cut

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down the employees and save the cost of the company. Thus they had two choice, in which one
focuses on the profit of the organization and the other focuses on the benefit of the employees.
However, it is seen that Utilitarian does permits some wrong actions by providing two options to
the decision maker to decide the option that offers maximum utility (Nantel & Weeks, 2016).
Moreover, rule utilitarian also defines the validity of the moral action that is being taken by the
decision maker. Promise is the main factor of the decision as in both the condition the decision
maker will keep one promise by breaking another. Thus, whether the action is right or wrong can
be judged by analyzing the breaking of the promise. In this situation 7 Eleven made two
promises, one to the employees and another to the company stakeholders. One was to reduce the
cost of the company in any way and another is to provide employment security to its employees.
Thus, it is seen that the company has broken the promise made to the employees by ripping off
the workers to save the cost of the business. Thus, the promise breakage of the company caused
various hazardous impact on the employees. Moreover, Utilitarian also suggest that greatest
happiness helps in gaining greatest number to the company. Thus the decision taken by the
company to reduce cost will help them to earn increasing profit in future. However, the breach of
human rights that the company conducted will lead to loss of trust on behalf of the employees
affecting the company in a great way. Moreover, the action also affected the brand name of the
company that it has made in the mind of the people (Arrow, 2017). The customers of the
company will have the perception that the company does not value their employees and fails to
maintain an ethical environment. This further has a negative impact on the customers creating a
loss to the company.
Thus, ethical theory describes the ethical consideration and choice that company faces in
its business environment. The choices hamper the business in a great way as the business choose

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to decide to act morally or immorally. Companies are hot with various option which can either
benefit the company or the others related to it. The decision of the company to act depends on
the ethical theories such as Deontological and Utilitarian approach.
Conclusion
From the above analysis it can be deduced that ethical theory highly effect the ongoing
market scenario. The ethical theories has positive and negative impact on the organization. Every
organization faces two or more choice while taking an ethical decision in the company. the
choice that the company choose from these option may be for its own benefit or the benefit of
others. However, the choice is largely affected by the two theories of ethics such as
Deontological theory and Utilitarian theory. Both the theory have different perspectives as one
defines the action by the consequences and the other does not. This, creates the different in the
decision taken by the companies. Similarly, 7 Eleven faced two options while deciding to
decrease their cost. One was to cut off its employees and the other to find better cost effective
method of operations. However, the decision it took has negative impact on the company.
Instead of thinking about the benefits of all, the company chose to benefit itself. Thus, they
followed egoism concept of Utilitarian theory. However, it had negative impact on the trust of
the employees of the company and also the customers. Thus, ethics play a crucial role in defining
the decision of the company.

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