Business Analysis of 7-Eleven and Volkswagen †Free Samples

Question: Discuss about the Business Analysis of 7-Eleven and Volkswagen. Answer: Introduction The issue of ethics is topical in that it affects the operations of almost all facets of business while at the same time the topic can be controversial. Ethics refers to the rules or principles that define right and wrong conduct (Robbins, 2000). Businesses in particular are expected to do the right things in their operations hence, it can be observed that enlightened firms encourage their managers to look beyond the written laws by doing the right thing in doing business (Kotler and Armstrong, 2010). However, ethical issues usually involve conflicting interests and people can disagree about the right course of action to take in a given scenario. As such, this report seeks to analyse the ethical conduct of two organizations namely 7-Eleven and Volkswagen (VW) that have hit the headlines for their unethical business practices that have been widely criticised by different stakeholders. The report starts by outlining the two case scenarios involving 7-Eleven and VW as well as the simila rities between the two companies that are presented. The report also addresses the assertion that good leaders by definition are ethical leaders and it also discusses the measures that can be taken in order to improve the organizational climate so that the members can act in an ethical manner. Case analysis of 7-Eleven 7-Eleven is one of the biggest convenience chain stores in Australia and it has come under the spotlight for its unfair labor practices where the employees mostly international students are paid half of the $24.50 an hour award rate they are entitled to and they are often threatened with deportation if they complain to the boss. Though the company has laid the blame on the franchises operating using its trademark, there is abundant evidence to show that the company itself is at fault (Ferguson and Danckert, 2016). The rot at the companys head office pertaining to underpayment of the workers has been downplayed for a long time and it was only exposed by a whistle blower. However, the company has been operating profitably for a long period using unorthodox business practices that have been equated to slavery by different concerned stakeholders. Apart from being underpaid, the affected students are also forced to work for long hours. For example, one student was threatened with deportat ion after confronting the employer following a dispute of unpaid wages amounting to more than $30 000 (Ferguson and Danckert, 2016). The lawyer of the franchise store threatened that he will report him to immigration for breaching his student visa conditions by working more than 20 hours a week. The practice has been viewed as highly illegal and prominent groups including lawyers, politicians and other regulators have categorically stated that something should be done in order to rectify the problem. Ironically, the exploited and intimidated workers by the chain store are mostly international students who are often threatened with deportation once they try to raise their concerns about the unfair treatment they will be getting from their employers (Ferguson and Danckert, 2016). This shows that the wage scam is a planned initiative and the head office has full knowledge of its existence. The affected students have stated that the company is making money out of them instead of engaging in fair business practice. This practice is viewed as fraud and therefore unethical since all human beings are born free and with equal rights. On top of that, Article 4 of the Universal Declaration of Human Rights (1948), states that No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in any form. This goes along with the proclamation that no one should be subjected to unfair treatment in foreign countries since their rights should be upheld under whatever circumstance. Case analysis of VW Volkswagen, a German car manufacturer has been implicated in a scandal for installing software in its cars that ensured it falsely passed emission tests and for seven years, about eleven million cars have passed the test (Rhodes, 2015). The cheating by VW was specifically meant to increase its sales and in 2009, the company became the worlds biggest car manufacturer (Rhodes, 2015). Following the discovery of the scandal at VW, the CEO Martin Winterkorn resigned and later faced criminal charges. The nature of this scandal shows that it was not a mistake or a result of poor judgment but was intentionally designed as well as executed in violation of the law with the sole aim of increasing the companys revenue generation capabilities (Queen, 2015). During the contemporary period, it can be noted that the issue of global warming is topical since it causes damage to the environment and various organizations particularly automobile manufacturers are compelled to ensure that they manufacture vehicles that are environmental friendly. As such, all newly manufactured vehicles are supposed to undergo tests to ensure that they are in compliance with the expected standards. However, the case of VW shows that it deceived those people it owed a duty of honesty intentionally by fraudulently misrepresenting its vehicles to be what they were not actually like. The most significant aspect about this particular case is that the company continued to commit the wrong business practice for years fully aware that its action was not good all for the sake of making profits from its operations. Similarities between both cases In both cases that involve 7-Eleven and Volkswagen, it can be observed that their clandestine practices which were also unethical were carefully planned by the company owners with the sole purpose of earning profits at the expense of the other stakeholders. As noted in the case of 7-Eleven, the company resorted to underpaying the workers mostly international students with full knowledge since they had their intended goals of reaping profits as a result of reduced labour costs. In most cases, labour costs significantly contribute to the overall costs of the organizations operations. Therefore, in this case, the company sought to cut these costs through unorthodox means. The justice view of ethics states that individuals should impose and enforce rules fairly and impartially so there is an equitable distribution of the costs and benefits (Robbins, 1993). This view is usually favoured by unions which advocate that all employees are paid similar wages for the same job since they contribu te to the company in the same way. In the same vein, it can also be observed that the case of VW has quite a number of similarities with that of 7-Eleven. VW deliberately evaded the regulations that stipulate that the vehicles manufactured by the company should pass emission tests so that they do not contribute towards the green-house gas emissions that negatively affect the environment. However, in all their knowledge, the responsible authorities at VW tempered with the software to detect the level of gas emissions so that the company can reap profits from selling vehicles that do not meet the expected standards with regard to greenhouse gas emission standards. The stance taken by VW is unethical and it is similar to that taken by 7-Eleven and this shows that both companies are primarily concerned about their profit oriented goals at the expense of the interests of the other stakeholders that are affected by their operations. This type of attitude displayed by both companies is unethical and it should be treated with the contempt it deserves since it is intentional. Good leaders by definition are ethical leaders To a larger extent, I agree with the statement that good leaders are by definition are ethical leaders. In as far as business ethics are concerned, the underlying principle is that they should not be compromised for financial gain (Strydon, 2006). For instance, this calls for leaders to be truthful in whatever they do and they avoid situations that are likely to result in them engaging in unorthodox practices which can be viewed as unethical. As shown in both cases, it is evident that the leaders are not ethical since they engage in bad practices that are designed to help them to generate huge profits at the expense of the employees and other stakeholders. An ethical leader does not engage in bad practices fully knowing like what has been shown in the cases of VW and 7-Eleven. Whilst the issue of ethics can be controversial in some cases, ethical leaders do not deliberately do bad things in their operations as illustrated above. The other issue is that good leaders lead by example and they are expected to display positive behaviour that can be emulated by their followers within the organization. A leader who is ethical knows that the followers should be treated as important to the organization not mere workers who must just work for the sake of productivity. This is very important since it helps the creation of mutual trust between the leaders and their followers as well as the other external stakeholders. When the followers are happy about the way they are treated, job satisfaction also increases and this positively contributes increased productivity. This is advantageous to the company since it can generate more revenue from its operations through fair means. Thus, Enlightened leaders look beyond the written rules and regulations and they do the right thing in their operations (Kotler and Armstrong, 2010). The other issue is that ethical issues are not only limited to internal affairs within the organization but extend beyond the boundaries of the company to impact on the other stakeholders. For instance, customers are the major stakeholders of the organization hence the leaders are expected to put measures in place that are meant to ensure that the targeted consumers are satisfied with the products and services offered by the organization. This is also very important since it helps the company to gain competitive advantage in its operations. When the clients are happy about the products and services they get from the company, loyalty among them is likely to be created. This helps the firm to operate viably as well as to sustain its operations in the long run. However, as noted, members of the organization can encounter ethical dilemmas in their operations where there are grey areas that can be viewed as ethical in other instances while other people view it as unethical. For instance, the utilitarian view of ethics is solely made on the basis of their outcomes or consequences where the goal is to provide the greatest good for the greatest number (Robbins, 1993). This view tends to dominate business decision making and it is consistent with goals like productivity, efficiency as well as effectiveness which all contribute to improved profitability of the organization. By maximising profits, business executives can argue that they are securing the greatest good for the greatest number of people within the organization. This view has been supported by Rhodes (2016) who states that good ethics often make good business. Essentially, the main goal of every business is to generate profits from its operations therefore there is nothing wrong about the course of action that it takes as long as it is in a position to fulfil its desired goals according to the utilitarian view of ethics. Though controversial, this argument can be sustained from a business perspective as long as the welfare of the employees who constitute the majority stakeholders in this case is satisfactory. However, in the case of 7-Eleven outlined above, it can be seen that the organization has been engaging in unethical business practices for the main purpose of maximising profits from its operations while at the same time underpaying the employees. This practice is unethical since it does not benefit the employees but is a source of misery to them since they are threatened with deportation once they try to raise the issue with their employers. From an ethical perspective, the utilitarian principle has its own advantages as well as liabilities. For instance, it promotes productivity and efficiency but at the same time it can result in the leadership ignoring the rights of the rights of the other individuals particularly those with minority representation (Robbins, 2000). This has been illustrated in the case of 7-Eleven above. Measures that can be taken to improve organizational climate Organizational climate is described as the perceptions shared as well as the meaning that is attached to the practices, policies as well as procedures that are experienced by the employees as well as the behaviour they observe and that is also expected in order to get reward (Schneider, Ehrhart and Macey, 2013). To a larger extent, the climate of the organization has a bearing on how the employees perceive their jobs. This also affects the attitude of the members within the organization which also affects the way they behave. Organizational climate influences the performance of the firm through employee motivation (Noordin, 2010). In most cases, employees are motivated by the way they are treated within the organization. For example, the workers who are treated as important are motivated by their work and they put optimum performance in their operations. The leaders need to be motivated such that they can also have a sense of respect for their followers. This in turn significantly mo tivates all the people such that they can be in a position to pull their efforts towards the same direction. As illustrated in the case of 7-Eleven, it is crucial for the organization to create an organizational climate that is favorable to the employees so that they can develop a sense of belonging to the company. On the other hand, the climate should also shape the behaviour of the leaders such that they understand that when dealing with employees, they also understand that they are human too and they deserve to be treated equally and in a fair manner unlike the treatment they are currently exposed to. When the leaders within the organization are motivated to be exemplary in their operations, then they are likely to behave in an ethical way. As such, effort should be made to ensure that the climate of the organization is designed in such a way that it appeals to the interests of all people so that they share the same vision of the company. When all the people share the same vision, then they are likely to understand what is expected of them such that they put effort to do the right thing. The other important aspect about the organizations climate is that it can be used as a tool by the company to measure the extent to which the company uses its employees towards the attainment of the desired goals (Hay Group, 2009). The companys success is mainly determined by the effort put by the people who work within it and this means that they should be properly treated in order for them to be loyal. The leaders need to conduct periodic surveys so that they can get feedback from the employees as well as the other stakeholders at large about the measures that need to be taken so as to understand the desired climate by these very important stakeholders to the company. The leaders who understand the desired climate by the employees can be able to suggest intervention strategies that can help to develop the skills of the employees (Noordin, 2010). This also helps the company to operate in an ethical way since all the people would be aware of what would be expected of them. The employ ees who have the required skills and competences are likely to work towards the attainment of the desired goals. On the other hand, companies also need to gain understanding of the needs of the external stakeholders so that it can design its climate to suit them. This will significantly help the company to create mutual understanding with all the stakeholders and ultimately trust among them. In case of both 7-Eleven and VW, it can be seen that the companies need to redefine their organizational cultures so that they suit the needs of the concerned stakeholders. This can also help the leaders to uphold the ethical principles expected of them in their operations. Once these companies have managed to create good climates for their working environments, they can be able to gain competitive advantage in their operations. The consumers in particular are attracted by the quality of service they get from the company instead of reaped of their hard earned money. The employees are also motiva ted by good working environment which is also good for the company. Conclusion In conclusion, it can be noted that the concept of ethics is mainly concerned about the rules or principles that define right and wrong conduct especially by businesses (Robbins, 2000). However, businesses often encounter certain situations that are characterised by grey areas where individuals can debate about the correct course of action to take in the event that the scenario can be viewed as right while others can view it as wrong. As illustrated in the two cases of 7-Eleven and VW, it has been observed that their operations are unethical since they are mainly designed to help the organizations to reap huge profits from their operations through unorthodox means. As noted in the discussion above, good leaders in most cases are ethical leaders since they are aware of what is expected of them and they strive to do the right thing. It has also been observed that it is imperative for leaders to create favourable organizational climate in order to enhance ethical conduct in their operat ions. A good organizational climate promotes fair working conditions where all the employees are treated as equal. This helps all the members to do the right thing which is good for all the stakeholders. References Cant, J 2000. Introduction to marketing, CT: JUTA Ferguson, A Danckert S, 2016. How 7-Eleven is ripping off its workers. The Sunday Morning Herald. https://www.smh.com.au/interactive/2015/7-eleven-revealed/ HayGroup. (2009). Australia: HayGroup. www.haygroup.com.au Kotler, P. Armstrong, G. (2010). Principles of marketing. Cape Town, CT: Pearson. Kotler, P. Keller, K.L. (2006). Marketing Management, 12th Edition. Upper Saddle River, NJ: Prentice Hall. Noordin, F. 2010. Organizational Climate And Its Influence On Organizational Commitment. International Business Economics Research Journal, Volume 9, Number 2. 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