MGT301A Report: 7 Eleven Unethical Practices and Stakeholder Theory

This report delves into the unethical practices of the Australian retail company 7 Eleven, specifically focusing on allegations of payment fraud and exploitation of overseas students. The report analyzes the situation, highlighting the company's failure to pay employees adequately, falsifying p...Read More

Running head: UNETHICAL PRACTICE
UNETHICAL PRACTICE
Name of the Student:
Name of the University:
Author Note:

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Executive summary:
This report has discussed the situation of the unethical practice by the reputed
retailing company of Australia named 7 Eleven which has been accused for performing a
payment fraud with the students coming in the country for educational purpose. This paper
has analysed the stakeholder theory in detail so that the points of view of the stakeholders
mainly the students as the employees in the company can be understood. This report as aimed
to find the best possible solution to help the company to understand the root causes of this
type of behaviours of the managers in different branches and how the company can revive its
reputation.

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Table of Contents
Executive summary:...................................................................................................................1
Introduction:...............................................................................................................................3
Summary of scenario:................................................................................................................3
Description of stakeholder theory:.............................................................................................4
Analysis:.....................................................................................................................................5
Identification of 3 alternative solutions:....................................................................................7
Recommendations:.....................................................................................................................8
Conclusion:................................................................................................................................9
Reference list:...........................................................................................................................10

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Introduction:
The objective of this particular report is to discuss the factors relating to the payment
fraud done by one of the most reputed Retail Company in the Australian market. The
company has been accused by The Fair Work Ombudsman Australia for this illegal operation
for along six years (Ferguson, 2015). Without paying the overseas students and keeping their
legal documents for exploiting them is the issue identified in this report. The stakeholder
theory will be detailing the perspectives of the stakeholders associated with this particular
case and how this can help in finding three most effective recommendation to solve this issue
is detailed in this paper.
Summary of scenario:
The ethical issue here detailed is the illegal behaviour of payment fraud of the reputed
Australia company 7 Eleven. This company employs the overseas students visiting Australia
under low payment slab and does not keep payment record. In addition to this, the company
not only cheating the employees by exploiting them but also cheating the government of
Australia by skipping taxes. The payroll records are not kept in the workplace in order to
fraud the tax department continuously (Ferguson, 2015). The company has referred to the
agency through which the employees are recruited and ask to investigate the agencies as they
are responsible to pay the employees. It is not only the process of cheating the students
working as the employees in this company but also the falsification of their payroll sheets to
cheat the tax department of the country. The stakeholders here will be detailing the
perspectives of the stakeholders associated with this particular case. Through this process, the
company in one hand doing unethical works with the employees and on the other hand is
indulging in the unethical operation with the government. All the statements that were given

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to the media and The Fair Work Ombudsman Australia from the management of 7 Eleven are
also false as the company itself is responsible to pay its employees.
Description of stakeholder theory:
In this highly competitive world of business, the companies are not only responsible
to compete with the other companies in the same industry but also responsible to operate in
the ethical manner. The values and theories of the companies guide them to perform
according to the preferences and support of the stakeholders (De Gooyert et al., 2017).
Stakeholder theory is a view of capitalism which focuses on the relationship between the
company and its customers, employees, suppliers, investors, local communities, media,
environmental groups and many other entities which are associated with the performance of
the company. This particular theory keeps the companies to stay in the right path and help the
companies to create value for all the stakeholders and not just the investors.
This stakeholder theory was first presented by Edward Freeman for detailing the
importance of the Stakeholders to address morals and values needed for the successful
operating of the companies. The more the companies operate transparently, the more the gain
profit. Stakeholder theory relates to the different perceptions of the Stakeholders that
manipulate the policies and regulations of the companies to work ethically (Harrison,
Freeman & Abreu, 2015). This theory details how the managers can set their principles to
satisfy the Stakeholders economically as well as ethically. Initially, the companies used to
focus on the financial growth of the business but now they are bound to make decisions
according to the favour of the employees, customers, shareholders, suppliers, government and
most importantly the trade unions that take care of the interests as well as rights of the
employees.

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This particular ideology by Freeman as opined the fact that the companies need to
convince their stakeholders in such a way so that all the stakeholders support the pat chosen
or goal set by the management of the companies (Fassin, De Colle & Freeman, 2017). This is
the process of empowering the stakeholders which ultimately empower the companies to
sustain. In the question of sustainability or survival of all the inevitable challenges, the
support of the stakeholders only can help the organizations to cope up with any situation. By
acting ethically and maintaining principles to achieve long term goals, the company can gain
competitive leverage than the other rival companies if its stakeholders contribute fully.
Analysis:
In the case of 7 eleven the main stakeholder are the employees whose payment were
not done by the company. In addition to this, the secondary stakeholders are the government
of the country who is responsible to have a clear and true record of payment of the
employees. Both of these two groups are interested in the career development, perfect
payment process, equal opportunities and transparency in the organizational setting. These
stakeholders expect that the company will be solving any type of issues regarding their
payment and will not extend their exploitation of skills and capabilities. The Fair Work
Ombudsman Australia aims to eliminate any type of unethical incidents taking place with the
overseas students. This has therefore came under the incident of the illegal process of
recruitment and payment in one hand by exploiting their skills and efforts. On the other hand
the company if continues this type of actions will dissuade the overseas students to come in
the university of Australia and work in the local companies.
Meeting needs
 Engaging in the interest area
Key players
 Key stakeholders focus on
the effectors on the group
ower

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 Increasing the level of interest  Engaging regularity
 Bringing changes in the
recruitment and management
process of human workforce
Least important
 Informing the stakeholders
through media, open
communication and the
company websites
Showing consideration
 Arranging potential supports
 Using interest through proper
involvement of the low risk
area
Interest
The primary interest of the employees as victims of the exploitation of the situation as
well as the exploitation of the higher authority, is related with the salary, job security, job
satisfaction and transparency of the higher authority of the company. On the other hand the
The Fair Work Ombudsman Australia has the main interest to maintain ethical decision
making process and actions of the Australia based companies. All of these stakeholders have
the capability to manipulate the decision making and operation of the company which can be
attained if there is an intention to unite and build protest against this type of exploitation
(Miles 2017). The employees as the stakeholders can only be satisfied if the company makes
changes in the management operation and include the recruitment process in the HR
department of the company.
By eliminating any type of illegal process affecting the employee morale, the
company can effectively solve the issues in one hand and build a successful relationship with
the stakeholders. The media which is now working against the company, can be brought into
support if the company changes its policy to promote stakeholder relationship. By offering
different types of benefits to the victim employees, the company can this issue to be
happened in the near future. This needs to have a perfect amalgamation of hard work and
vision to develop such liaisons with the stakeholders. By paying the employees fairly, the

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company will be able to gain mutual success. Here the students for the overseas countries
have been recruited as cheap labour and they are exploited at their worst. This can also affect
the customer bases of the company because the awareness among the customers relating to
the ethical decision making and actions of the companies manipulate them to have trust on
the company and the customers buy their products (Jones, Harrison & Felps, 2018). The
media has negatively promoted the company due to this payment issue which has already
reached the customers and the sales of the company will be affected.
Similarly the company’s operation in cheating the tax department has affected the
government as an important stakeholder. Due to this issue the government will be acting
negatively for the growth of the company. The government of Australia can sue the
organization or may not give permission to the company to open up new branches in the other
markets. This will be affecting the company negatively and create a barrier for the successful
business in the Australian market. These are the reason why the company needs to operate
ethically to the stakeholders because all of them are somehow related with one another. By
using interest through proper involvement of the low risk area can be helping the company to
operate in the Australian market more effectively. Therefore, stakeholders can to manipulate
the decision making and operation of the company.
Identification of 3 alternative solutions:
The reputed company like 7 eleven needs to take some every important initiative so
that this case get solved as soon as possible in one hand and this type of incident do not take
place in the future.
Firstly the company needs to change the recruitment policies for which 7 Eleven used
to depend upon the third party agencies. The company needs to bring the recruitment policies
under the internal human resource management process so that the HR can arrange the

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recruitment process by sorting the applicants mainly the students from the overseas countries
coming to Australian universities for higher studies.
Secondly, it must take initiate action against the accused managers who were
associated with this type of payment fraud. The managers who are associated with the payroll
documentation to cheat the tax department of the country must be immediately sacked from
the operation of the company and legal actions against them must be taken so that they do not
get placement in any other companies.
Thirdly, the company needs to promote feedback process among the workers whether
temporary as well as the permanent employees working in the company. This process will be
increasing transparency of the company and gain trust of the stakeholders. The employee
while will be able to give feedback to the managers can reveal many unethical issues in the
internal environment. This feedback process will end any type of unethical process regarding
employee starting from recruitment to retention and motivation.
Recommendations:
In order to cope up with this situation where the company has been constantly
questioned to answer why it has not taken proper initiative to end this process of payment
friend, the higher authority must not hide any information from the Fair Work Ombudsman
Australia as well as the media. This will help the company to face defamation at first but can
incur a feeling of repentance in the minds of the stakeholders. Hence the higher authority
must arrange for a press conference and detail all the unethical behaviours found out by the
media and the Fair Work Ombudsman Australia. Then the company needs to change its
policies regarding the promotion of transparency in the workplace.

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Conclusion:
Therefore, it can be concluded that the Australian retail company has been indulging
in an unethical operation by hiding the payroll records of the existing companies to cheat the
tax department of the country in one hand and they also stoped payment to the employees for
long on the other. The stakeholders are important for the successful business of the
companies and they have the capability to manipulate the decision making and operation of
the company like 7 Eleven. These can be attained if there is an intention to unite and build
protest against this type of exploitation.

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Reference list:
Jones, T. M., Harrison, J. S., & Felps, W. (2018). How applying instrumental stakeholder
theory can provide sustainable competitive advantage. Academy of Management
Review, 43(3), 371-391. Retrieved from https://doi.org/10.1002/9781405164771.ch1
Miles, S. (2017). Stakeholder theory classification: A theoretical and empirical evaluation of
definitions. Journal of Business Ethics, 142(3), 437-459.
Fassin, Y., De Colle, S., & Freeman, R. E. (2017). Intra‐stakeholder alliances in plant‐closing
decisions: A stakeholder theory approach. Business Ethics: A European Review, 26(2), 97-
111. Retrieved from https://doi.org/10.1111/beer.12136
Harrison, J. S., Freeman, R. E., & Abreu, M. C. S. D. (2015). Stakeholder theory as an ethical
approach to effective management: Applying the theory to multiple contexts. Revista
brasileira de gestão de negócios, 17(55), 858-869. Retrieved from
http://dx.doi.org/10.7819/rbgn.v17i55.2647
De Gooyert, V., Rouwette, E., Van Kranenburg, H., & Freeman, E. (2017). Reviewing the
role of stakeholders in operational research: a stakeholder theory perspective. European
Journal of Operational Research, 262(2), 402-410. Retrieved from
https://doi.org/10.1016/j.ejor.2017.03.079
Ferguson, A. (2015). 7-Eleven: Wage abuse claims puts scrutiny on Fair Work response.
Retrieved 17 August 2019, from http://www.afr.com/business/retail/fmcg/7eleven-wage-
abuse-claims-puts-scrutiny-on-fair-work-response-20150830-gjavxh