Competition Management Theory And Practice: A Case Study Of 7-eleven

Discussion

Discuss about the Competition Management Theory and Practice.

Presently high amount of competition can be found in any type of business. However, in order to become successful in long term competition, a company has to work ethically. All companies have to develop an appropriate guideline to control the behavior of employees and employers. These guidelines can also help to maintain ethical footsteps in business operations. This assignment has been developed in order to find out the challenges that a business entity has to face, when an ethical issue related with work or workplace occurs. It has been analyzed that, most of the organizations struggled to maintain organizational image and its reputation while these types of ethical issues occur.

7-eleven is the selected organization in this assignment. It has been found that the company 7-eleven is one of the most renowned and recognized business chains that has occupied majority of its market place. It has been analyzed that the company had started its journey in the market of Australia during the year of 1977 with only a single store (7eleven 2017). After that, the company had expended its business immensely. Presently the company has more than 630 stores in Australian market (7eleven 2017). The company has utilized majority of states and renowned cities of Australia. It includes Western Australia, New South Wales, Queensland, Australian Capital Territory and Victoria. The company has approximately 190 million transactions annually. Presently the company is facing some major ethical issues that have hampered company’s business operation significantly. In addition, it had been found that these ethical issues have also drawn the attention of customers of the company. For this reason, the company was not able to maintain is organizational image. For this reason, the revenue growth of the company was significantly damaged. Hence, in this assignment, ethical issues faced by the company had been identified. It had also been discussed how these ethical issues have affected reputation of the company and performance of employees.

In recent times, 7-eleen was accused for not paying proper wages to its employees which is an ethical problem for the organization. According to Sivaraman and Turner 2016, a joint investigation was held by The ABC Four Cornets and Fairfax that found that 7-eleven was forcing their employees to work long hours and was not even paying their wages properly. However, the management of the organization tried to distance itself from the problem by saying that the problem was caused by a handful number of franchisees. According to Fraser, (2016), the stores of the organization stay open seven days per week. It is evident that wage costs of operating such a store must be significant. However, the report suggests that in a financial report that was supplied to the 7-eleven head office located in Australia, it was mentioned that total wages of sex employees was a little over $64,000. It was also found that the employees of the organization were paid half the $24 an hour or less (Terry-Armstrong, 2016).  Besides it was also found that organization was doing the same with its employees who were immigrated to Australia. Some of them were even international students. As a result of this investigation, the franchising model of the organization came under the public spotlight, mainly the professed unfair financial pressures placed on franchises and, in turn, their staff to make sure profitable and viable businesses.

According to May et al., (2014), Australia is the one of the most regulated franchising sectors in the world where The Mandatory Franchising Code of Conduct aims to deliver a level playing field ad franchisees and franchisors. At the time of any dispute, the office of the Franchising Mediation Advisor can support with dispute resolution. However, in the case of 7-eleven the franchises violated all the rules and regulations. In order to argue this ethical problem of the organization, two concepts of managerial ethics will be discusses in this part of the essay.

Business ethics is known as the application of some ethical principles and standards to business. However, ethical principles in a business must not be different from those moral principles that business people must apply to their own personal conduct. However, a debate is always there about whether ethical principles must be applied if the consequence is a decline in profit. From the case of 7-elven it is clear that the organization did not follow any ethical principle in order to improve their profitability. According to Michaelson et al., (2014), ethical behavior means not harming others. In the case of 7-eleven, the organization harmed the employees therefore there is no doubt that their behavior was unethical. To describe their ethical problem, two concepts of managerial ethics will be adopted which are immoral managers and amoral managers.

Immoral managers, according to Patino, (2012), are the best examples of self-serving greed that can be termed as “simple business.” These types of managers have very few principles and they view reliability ax religious term which is not applicable in the real world. These types of managers can do anything and everything to accomplish their personal goals and the objectives of the organization. On the other hand, managers who are amoral believe that it is not important to consider ethical principles while making business decisions. They think that it is absolutely legitimate for business organization to do anything they will so long as they stay within in legal and regulatory bounds (Smith et al., 2013). These types of managers are either deliberately or not deliberately amoral. Managers who are intentionally amoral normally observe ethical considerations as an act of charity. However, they also believe that ethical standards which require doing more than what is required by the law are not realistic in this competitive business world. One common behavior of the intentionally amoral managers is most their decisions are lawyer driven. They always try to find out loopholes in legal systems in order to gain advantage for the organization.

Then there is an unintentionally amoral manager who does not want to pay any type of attention to the concept of business ethics (Stanwick & Stanwick 2013). These types of managers do not give any type of serious attention to the unethical consequences of business decisions that can look as amoral. With the amoral managers the biggest problem is that when they are confronted by the unethical results of their amoral acts, they find it easy to justify the “need” for immorality in pursuit of profit rather than find a way to change their business strategies based on ethical principles.

From the case of 7-eleven it can be said that organization and is managers were following the unintentionally amoral attitudes towards its employees. According to the investigation, the organization is to pay workers a total of $4.36m (Wotruba et al., 2015). However, the workers were underpaid $24,000 each. However, this situation was denied by the Allan Fels chief of the panel who said that the complaints of underpayment came from 60% stores only. However, the question is why the organization did this with its workers. According to Ford and Richardson (2013), an agreement was signed between the management of the organization and franchisees. According to that agreement the franchises are expected to pay nearly 55% of revenue to the head office (Weaver, 2014). However, it was not possible for the franchisees to provide that and gain profits at the same time. That is why, they started to gain profits by underpaying the employees.

From this scenario, it is clear that the managers of the organization were unintentionally amoral. Managers who are intentionally amoral take unethical decisions using the law and order. For example, the intentionally amoral managers think “if there is a legal loophole that can be found to open an overseas bank account in a bank that will protect the identity of the depositors or not.” That means if the managers of the franchisee companies wanted to keep their profits while paying 55% revenue, they would find a way that is legal (Uche et al., 2016). However, the story that was revealed by the investigation clearly showed that what the managers did was absolutely unethical. Like unintentionally amoral managers, the leaders of the organization did not pay any type of attention to the concept of business ethics. Their aim was to increase the amount of profitability of the organization and they wanted to accomplish it somehow. That is why; they started to underpay the employees.

The investigation also revealed that the organization was also responsible for implementing cash-back scheme in the workplace. According to this plan, the employees were paid right amount of reward that they deserve. However, later they were forced into paying back part of their reward to their employers. From this decision it can said that the organization by any means tried to improve their profitability. They did not care whether the step taken by then is ethical or not. However, Sivaraman and Turner (2016) argued that most of the franchisee carry other’s brand but are independent businesses. Therefore, it is not right to blame the franchises. Franchisors can easily demand that were acting according to the rules and regulations of Franchising Code of Conduct and they are in line with their franchise agreements and disclosures. When a problem occurs, it is easy for the franchisors to say that legally it is not their problem. However, it is true that the franchisors will face the main problems. They will face problems in terms of public perception of their business and brand and also on franchisee and staff recruitment and retention.

One good thing about 7-eleven is after finding out about the problem, the organization did not hesitate to come forward. After revealing that all the problems were caused by the franchises, the organization could easily step away and could ask the franchisee companies to pay for their mistakes (Fraser, 2016). However, the organization took the matter into their hands and announced that they would repay all underpaid employees once those are verified. So far, 7-elven has successfully paid nearly 120 workers and has also entered into a compliance partnership with the fair work ombudsman to enhance its practices related to business ethics. As the franchisees were manipulating time sheers, the organization introduced new electronic timekeeping (7eleven.com.au, 2017). The management of 7-eleven also announced that they will terminate those franchisees that violated the legal rules and regulations and forced the workers to work under low payments.

From this situation it can be said that the managers of the organization are Moral Managers. Moral Managers is another concept of managerial ethics that states that these types of managers are dedicated to high standards of ethical behavior both in his own personal actions and in his decision of how to handle and organization’s activities. The management of the organization through a spokesman of their own told Guardian Australia that the company was unaware of the incident (Michaelson et al., 2014). The organization in any situation did not support the decisions o the franchisee companies. Therefore, it can be said that the organization is following business ethics properly.

In this research work, the main topic is work ethics. In this section, it had been critically evaluated how business ethics is related with leadership style and decision making skills. According to Albert and Merunka (2013), ethics is the belief or value of a company based on which all the business operation are conducted. For instance, 7-eleven always try to maintain customer relation. It is one of the major ethical concerns for the company. Barry (2016) mentioned that employee performance of an organization has significant impact on customer relation. If employees of an organization can offer best quality of service to their customers, then customers become satisfied (Barry, 2016).  However, offering high standard of service is not the only ethical concerns that management of the organization is facing. The management of the company has to provide all the necessary benefits and facilities to workers in order to maintain ethics at workplace. All the business managers of a company like 7-eleven has to follow some specific acts while developing business operations. It includes acts such as Health and safety Acts, Data Protection Acts, Anti-discrimination Acts, gender equality acts and Right to information Act. Managers of a company have to treat every employee with dignity and respect (Alberts et al., 2015).

Albert and Merunka (2013) stated that leadership is another important aspect that can support and promote ethics at workplace. It is the responsibility of an ethical leader to guide every employee towards organizational goal.  It had been analyzed that employee performance is highly dependent on leadership quality and style. It has been found that a leader can follow different types of leadership styles depending on the individual characteristics. They are such as democratic leadership style and autocratic style. Ardichvili et al. (2012) mentioned that in democratic leadership style, leaders provide opportunities to workers so that they can express their point of view. The leaders take decisions after taking advice from subordinates. On the other hand, in autocratic leadership style, leaders take their own decisions without consulting with subordinates. Barry (2016) mentioned that, this type of leadership is effective in emergency situation or when a company is able to gain profit. However, this type of leadership style can lead to discrimination and partiality and give rise to ethical issues (Alberts et al., 2015). It also forced employees to follow the order given by their higher authority blindly. They are not provided enough space so that can express their own point of view in the decision making process. For this reason, employees lose interest in work and they are not able to provide effective service to customers.

On contrary, it can be mentioned that business decision is the process that depends both on employees and employers. Ardichvili et al. (2012) stated that, in most of the successful organizations, before taking any important decisions managers involve  employees in the decision making process. Audi (2012) mentioned that, it also makes sure that managers can take ethical decisions. For example, in order to motivate employees to take less leaves, at first the management team has to discuss employees about their issues.  It will help managers to understand the aspects that can motivate employees to take less leaves. For example, providing work from home facility and extra incentives for not taking leaves can motivate employees to take less leaves. In order to lead workers to organizational goals, business leaders have to develop effective communication with every worker in order to know their issues and challenges (Barry, 2016). Hence it can be mentioned that values and beliefs of managers and the leadership style has significant impact on the decision making approach.

In case of 7-eleven, it had been analyzed that leaders of the organization do not follow organizational ethics while taking decisions. It had been found that human resource management team has selected less talented, less skilled and undergraduate employees, who are not even qualified to work in the company. It gave rise to issues related with discrimination at workplace. In addition inequality can also be found in the payment system. It had been found that most of the employees of the company were underpaid. For this reason, most of the employees failed to maintain their livelihood in appropriate manner. The managers did not follow organizational ethics while taking these kinds of decisions. It had increased dissatisfaction among employees, which hampered individual performance of employees and as well as overall organizational performance.

Audi (2012) mentioned that, in order to become an effective leader, a person has to follow the ethics of business and principles. They have to develop strong relationship with employees depending on which they can take collective decisions so that they reach the target market in more efficient manner. Hence, it can be stated that all these terms business ethics, leadership and decision making are interrelated. Hence, in order to take appropriate business decisions, business leaders cannot deny the significance of business ethics.

Conclusion

In this assignment an in-depth analysis has been provided to find out how the management of company can maintain ethics at workplace. It had been found that contribution of employees in a company cannot be denied. However, some of the mangers and leaders of company 7-eleven has denied this aspect. It led the company to a serious ethical issue, which hampered the business operation of a company in significant manner. It had been found that huge amount of employees within the organization were humiliated and exploited. The managers and leaders of the company did not provide much importance to work ethics and values. Discrimination and inequality in the payment system are the major ethical concerns that the company was facing. In order solve these issues; the management of the organization has to follow certain rules and regulations.

They have to promote equality and respect within the workplace. They have to treat every employee equally and with respect and dignity. They also have to involve employees in the decision making process and follow democratic leadership style. It will involve employees much with the organization and make them feel valued.  They have to understand that providing work from home facility and extra incentives for not taking leaves can motivate employees to take less leaves. In order to lead workers to organizational goals, business leaders have to develop effective communication with every worker in order to know their issues and challenges. Hence it can be mentioned that values and beliefs of managers and the leadership style has significant impact on the decision making approach. Managers have to listen to employees to know their issues and challenges and try to solve them as fast as possible.  It will motivate employees to fulfill organizational objectives. In the scenario of 7-eleven, it can be seen that the organization had no idea about the ill-treatment of the employees by its franchisees. Therefore, it is also important for the franchisors to keep a frequent communication with the franchisee companies so that it can have information about the steps of the franchisee companies.

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