7-Eleven Business Ethic

Ethical Analysis

In the case of 7-Eleven, an assessment was conducted by the Australian authority to identify the main reasons of non-compliance delivered by the business. The case reflected systematically underpaid wages and doctored payroll records in the biggest convenience retail business of Australia. The case clearly reflects the exploitation and intimidation of workers who mainly consist of foreign students. The head office appeared to scrutinize its compliance of payroll under the business model of franchising and wage fraud. The case provides that the key responsibility is to rebuild a compliance based culture under focused maintenance and strong leadership.

Under the ethical theory of psychological egoism, the leadership culture of 7-Eleven is established on the foundation of selfish behavior. It is not surely possible for delivering absolutely unselfish actions as the motivation for every action is affected by self- interest. Hence, it can be stated that 7-Eleven is ethical in franchising and behaving selfishly under the theory of psychological egoism. A number of employees reported having approached 7-Eleven head office with concerns before they approach the Fair Work Ombudsman, however, they felt that the head office was disinterested in their grievances and no effort has been made to rectify the issue. The business model of 7-Eleven gets a percentage of each store’s gross profit so there is direct financial benefit to the franchisor when franchisee underpay their staff to save cost. In businesses perspective, their main goal is always maximizing profit to ensure shareholder’s benefit. Many companies use a variety of strategies to maximize the wealth of their shareholders and in 7-Eleven case, paying low wages is one of their strategy to gain more profit. Although it is a selfish act from 7-Eleven and the franchisee, it does help them to meet their self-interest of gaining more profit for the organization and the franchisee. Report shows that more than 140 of the 620 stores would not make profit if they had to pay the legal wages. There is a conflict of interest if they act unselfishly and pay minimum wages in these stores as it results in less profit or even loss and it is unsustainable for these franchisees.

Under the ethical theory of utilitarianism, the purpose of mortality is claimed for ensuring a better place to live and strive. One must focus on delivering the greatest good by understanding the right and wrong actions based on specific circumstances. In the case of 7-Eleven, the behavior of franchisee has a specific scope of self- interest. This does not reflect the action of greater good so it is not ethical in the theory of utilitarianism. Further proving the unethical behavior, the business used to record the pay rates of employees at half hours for showing that they were provided with double rates in comparison with the actual flat rate. The company was significantly failing in adequately recording the employment for each and every worker with the deliberate discarding of every record (Briton, 2015). Evidences showed that there was involvement of both the directors in these contraventions under the scope of directing will and mind across the business. In utilitarianism theory, amount of pain that an action provide also needs to be consider when measuring happiness. Both the franchisor and franchisee in 7-Eleven clearly did not consider the negative impact it would bring to their employees. They need to face long hours of work, work overload, underpayment, threatened by boss working in 7-Eleven and that oppose to utilitarianism theory of maximisation happiness for everyone.