Analysis of Business Ethics in Practice: Primark

Executive Summary:

Organizations need to be alert to the challenges of ethical practices in their operations. They require being responsible and developing ethical practices towards their partners, workers and society. In our study we want to mention ethical problems and practices which generally an organization faces in their business operation. We consider the case of Primark, a renowned fashion brand, who develop their ethical behavior towards their external and internal partners who are associated with them. We also evaluate the ethical issues like deontology, cognitivist, egoism, utilitarian and social responsibility which may arise in the business operation. We also conclude the case of study and recommended something that an organization may face at the time of business operation.

Contents

1. Introduction
1.1 Company Profile
1.2 Issues in Business
1.3 Ethics in practice
1.4 Difficulty to sustain this ethical considerations
1.5 Tactical move by Primark
1.6 Ethical practices by Primark
2. Applications of Ethical Issues in Primark
2.1 Deontology
2.2 Utilitarianism
2.3 Cognitivist
2.4 Egoism
2.5 Corporate social responsibility
3. Conclusion and recommendations

1. Introduction

Business ethics is a concept which examines ethical principles in an organization. Blowfield& Murray (2008) stated that ethics is a nature which conform us in moral practices, both in personal and business environment. But to apply business ethics, certain aspects must be considered: First, business is to earn profit. But if it earns in a misconduct or unethical way, the life of the business may be shortened. Many of the well-known organization had been misconducted due to their unethical practice in business. Second thing is that, balancing to gain profit against the responsibility in society. To maintain this trade-off sometimes organization requires to compromise, and society has developed rules to guide business to earn profit without making any harm to society as well as individual.

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The definition of business ethics deals with rules, standards and moral principles of business to state that what is right or wrong in a specific situation (Carroll &Buchholtz, 2009). De George (1999) explained that the business ethic guides the world of business according to principles, values and standards. Principle is the specific and absolute boundaries of behavior and it designs on the basis of rules. Values are norms that are socially enforced. Crane &Matten (2010) added that the community who are directly related with the organization, like, investor, employees, customer etc. decided whether the specific action is ethical or unethical.It is not obvious that the community is right but the influence of their decision makes a huge impact on society and business activity.

1.1 Company Profile

Primark is a part of Associated British Food (ABF) and has more than 200 outlets all over the world. It spreads their business across UK, Ireland, Spain, Netherlands, Germany and many other countries. Their annual turnover plays a significance role in ABF’s balance sheet.[QCM2]

1.2 Issues in Business

Rapid changes in textile industry and fashion world forced the economy more connected than the previous. They noticed that their consumers’want fashionable products at affordable prices. They have a fashion conscious customer base and always want to give them the value of their money. So their policy was to make clothes with simple designs, used local materials, bought in volume, less expensive on advertising etc (Tuana, 2007). They outsource their business from India, Bangladesh, China, and Turkey because of lower labor and material cost. They basically work with manufacturer all over the world. The main focus of this study is how Primark maintains the ethical values to produce their clothes from different company with added cost to itself.

1.3 Ethics in practice

Primark always consider that they have a responsibility to society and they maintain their pattern to do the right thing. So for that they tried to involve a wider community into their business process. They work with many third parties and strict about their policy that being an international brand we have to act ethically and committed to provide the best product to the customers in terms of money and products but not at the expense of suppliers (De Cremer and Trenbrunsel, 2011). In other words throughout their production process they maintain good quality and obviously they behave well with those laborers.

1.4 Difficulty to sustain this ethical considerations

Primark shares value with its parent company ABF and this maintains the stakeholder’s relation with them. Stakeholders are basically interested about profit and they are concerned about the business policy. They may be internal or external authority, and they are also affected by the policy.[QCM3]
Primark respected human rights and made a guide line for their supplier for appropriate work condition and maintain the rights. They have suppliers over 16 countries and 700,000 workers in three continents. The challenge for Primark was to make sure that it suppliers will act responsibly towards their workers. Textile industry has a habit of manufactured high skill product in a lower rate and this practice generally shown in the developing country.

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Another problem they faced from the supplier that they workfor different organization at a same time according to their work specification but at the same time wage rateis same irrespective of any wage specification (Garsten and Hernes, 2008). The most of the suppliers who were supplying Primark they also supplied other brands at the same time. It was a problem in to maintain their ethics in those companies who were not solely dependent on them.

[QCM4]

()[QCM5] The exploitation of labor according to wage rate is very high in these companies. Primark business policy is just opposite of this attitude. They do not entertain any kind of discrimination in the workplace and their motive of the ethics is social responsibility which does not support this kind of wage policy.

1.5 Tactical move by Primark

Primark offers low value to its customer because of its high sales volume and minimum advertising costs. They also cut their cost by purchase in bulk. The other tactical move was that using off season production timing at lower price. This practice helps to maintain their ethics and lower cost practices. In lean production period workers were not supposed to get job and wages, but Primark give them opportunity to earn and as well as they get their work in a lower price than the peak period. It helps to maintain their ethical values as well as efficient business practices.[QCM6]

1.6 Ethical practices by Primark

Operating ethically is a real challenge for an organization in real world. Primark maintains ethical practices and principles throughout the business and joints their hands with their associates to ensure rights of employees (Kline, 2010). Primark follows the code of conduct of ILO, an agency of UN. ILO promises a standard of rules which gives opportunity to work with freedom, dignity, security and equality for both men and women. They set a code of conduct for their suppliers and were committed to help in legal issues. They also provide training to their suppliers and own buyers to realize the ethical issues. They also selected their suppliers through a selection process and ensure to maintain necessary working conditions for their laborers. They also appoint an independent auditor to audit the factory conditions to implement properly the code of conduct, like, fire safety, child labor, salary paid on time etc. Primark also supports and trains their suppliers to implement business ethics permanently. [QCM7]

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2. Applications of Ethical Issues in Primark

2.1 Deontology: Deontology comes from Greek word ‘deon’, which means duty. This philosophical concept says that we should act in a certain principles and rules and obliged to act in that manner without any consequences of outcome (Lawton and Lasthuizen, 2011). For example deontologist seriously argued against injustice of a person, without consider the benefit of society, but only influence is that it will infringe the individual’s right. Actually deontological philosophies focus on individual behavior, and determine its rightness on individual act not on society. Sometimes we referred it as an ethics based on respect for persons.

Deontologists emphasizes on moral principles to decide whether a behavior is ethical. For example, if a worker dies for the condition of workplace, the theory suggests to change the whole condition of the unit without considering whatever loss may incur or how many worker’s loss their jobs and even in bankruptcy.[QCM8]

Primark practices the deontological approach to their supplier factory whose labor was indirectly associated with them. They were concerned about their safety, work condition and make sure of payment in time. In case of its buyers Primark approaches also support this approach. Sometimes it also bears costs to maintain the ethics.[QCM9]

2.2 Utilitarianism: This moral theory focused on maximizing overall goods for individual and other. The idea is actually associated with the pleasure of happiness. Utilitarian should focus on greatest total utility, which covers all the people who are affected by the decision. Langlois and Schlegelmilch (2009) stated that utilitarian decision making relies on cost-benefit analysis by which decision maker calculates the utility of all possible alternatives and then derive the best one. For example, researcher for cosmetic and pharmaceutical organization use animal for their testing purposes. But animal right activist protested against this. The utilitarian consider the effects and it halts the research process due to depriving animal rights rather than consider the consequences of greater benefit of research work.

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Primark works for collective good for both, individual and others. They are really careful about their workers and buyers. They trained them and secure them for their job even in the lean period which helps their worker to be employed in all the season and the factory can run throughout the year[QCM10]

2.3 Cognitivist: Cognitive moral development process is a stage by which people may advance their development on moral thoughts. Many models predict and control individual ethical behavior within organization through cognitive moral processing to achieve ethical decision making. Lawton and Lasthuizen (2011) opined that according to Kohlberg’s there are six different stages in cognitive moral development stages:

First, punishment and obedience, for example some company asked their buyer to not to accept any gift from salespeople. Buyer may refuse the gift or accept it when he realizes that there is no chance of punishment. [QCM11]

Second stage consists of individual instrumental purpose and exchange, for example a salesman doing his business first time in a new place with arranging some gifts. Actually this is a stage of reciprocity where ethical decision is based on agreement rather than principle.[QCM12]

Third stage concerns about mutual interpersonal relationship and conformity. That means one gives priority to other decision than his own. Suppose a manager speed up the production or service by the order of higher authority, not to only obey their orders and to do good for the company but also to prove himself as an obedient servant. Here ethical values derive from obedience.[QCM13]

An individual in stage 4 acts as responsible person for the society, not to just dutiful person of organization. The concerned people in this stage balancing between their duties, respectfulness to the company and the expectation of the society. For example someone respect the privacy of others and try to restrict them from observe or monitored other issues.[QCM14]

Beauchamp (1997) explained that the people in this stage concerned about commitment or obligation, social contract and in some cases legal view or moral view may conflict. To reduce conflict decision makers took calculation of total utilities. Some people call it a stage of right, utility or social contract.
Universal ethical stage emphasizes on universal principles that everyone is bound to follow. In this stage a person gives priority to the social values and not thrives by the organization direction. For example, a company may force to stop deadly production because of life threat and regardless of profit morality of life empoweredr[QCM15]

In last few years researcher accepted that empirical research and cognitive moral theory has been mixed up and both have a positive and negative effect in ethical decision making process. Garsten and Hernes (2008) concluded that the consequence tells us that it is difficult to measure cognitive theory and to take ethical decision.

Primark ethical practices support the cognitive moral theory. It involves all the parties, both internal and external, in ethical practice. They follow ILO code of conduct, and according to this approach they developed through moral thoughts. Otherwise they can act to their suppliers as many others do. They thrive by the moral and always try to grow with all the members who are associated with them.[QCM16]

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2.4 Egoism: Egoism support or accept the behavior which gives the maximum output to an individual or a particular organization. In ethical cases the egoist will always take a decision that gives him maximum profit. In the present study Primark went against the egoistic approach. It decisions in business not only for its own good but also for the society. It thinks about the suppliers, their workers and even for their buyers. Crane &Matten (2010) mentioned that they tactically maintain their interest without harming the society as well as the individuals which is really appreciable in the business ethics.

2.5 Corporate social responsibility: The main objective of Primark like other organization is to make profit and retain their business for long term. But, at the same time it also acted as a responsible organization in the society. It maintains their ethics through auditing and work collaborate with their suppliers.

3. Conclusion and recommendations: Analysis of Business Ethics in Practice: Primark

Primark is a trusted brand which gives the value to its customer as well as suppliers. They have a good manufacturing unit all over the world and retail outlets in Europe. It maintains the ethical standard of its manufacturing unit and gives the satisfaction to its customers. They maintain their ethical practices through individual audit into the suppliers for which they pay by own and joined their hands with ILO and ETI to set the standards. Primark try to demonstrate their customer that the clothes which they are buying are not only cost-effective but also produce in a manner which is highly ethical and the suppliers and their workers are really happy to work with them.

Recommendations:

Primark is practicing ethical issues in a very well manner. But the fact is that any kind of malpractices may harm their reputations. So they must be kept alert themselves against this. Some recommendations are as follows:

It should make guidelines to avoid abusive behavior in supplier’s workplace. It damages the productivity level as well as the good will of the organization.

Primark has to be concerned about the auditor’s report. They must ensure that there is no lie in their report, because they generally do this by an external auditor.

Bribery must not be done by the new supplier to get a positive report from the auditor.

There should not be a conflict of interest in supplier and auditor. Even their internal employees may engage in this practice. So, it is recommended that Primark should be aware of the fact.

They must be aware of corporate intelligence because there is a chance to leak out their secret trade policy from any of the suppliers.

Any discrimination in labor force or sexual harassment should not be entertained and they must set the strong code of conduct against this.

Environmental issue becomes an ethical concern, so Primark must maintain this in their total cycle of business both in manufacturing unit and sales unit.

There are several types of fraud in the business, Primark should confirm that there is no hiding truth in their total cycle of business.

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