Ethical Challenges in the Retail Industry-Free-Samples for Students

Question: Discuss about the ethical challenges existing in the retail Industry. Answer: Introduction Making ethical decisions helps the society to ensure that a sense of order and justice prevails in the society. The retailers also have the responsibility to adopt a policy of CSR in order to ensure that business carried on by such retailers do not adversely affect the stakeholders of the retail industry. Corporate Social Responsibility (CSR) can be defined as the responsibility of the business to adopt a sustainable approach which aims to create economic, environmental and social benefits for all its stakeholders (Schwartz, 2017). Such concept of Corporate social responsibility is often closely associated with corporate ethics, thus as opined by CSR can be defined as a businesss ethical expression. Thus in context of the retail industry it can be said that the retailers also have the corporate social responsibility to comply with such ethical standards that aims to create wellbeing of the workers and their families, sustainable economic development and positively impact the environment. In the video Blood, sweat and Tshirt it is clearly evident that the workers who are employed in the Indian factories are living in adverse health conditions. They are getting low wages. No steps are being taken by the retailers to improve the condition of the workers. The actions of retailers can be analyzed from the perspective of good options. As opined by Ferrell Ferrell (2016), retailing plays a very important role in the economy as it serves the link between the manufacturer and the final consumer. Therefore it can be said that it is of utmost necessity and importance that retailers comply with social standards while conducting business and aim to positively affect the lives of the stakeho lders. Discussion Retailing To understand the ethical obligations of the retailers it is important to have a proper understanding of the term retail and the functions of retailers in the industry. The term retail can be defined as a process of selling which is meant for final consumption and a sale to the ultimate user (Ferrell Ferrell, 2016). Therefore, retailing can be defined to be the interface between the maker and the individual buyer purchasing for individual utilization. This prohibits a direct coordination between the producer and institutional purchasers, for instance, the government and other mass clients. Retailing is the last connection that interfaces the individual client with the assembling and appropriation chain. A retailer is engaged with the demonstration of pitching products to the individual buyer at an edge of benefit (Abreu Rocha, 2015). Concept of Ethics in Retail Industry Ethics can be described to be a stream of philosophy which aims to uphold the values of the actions of individuals and assess such actions as right or wrong, moral or immoral (Bhattacharya et al., 2017). As discussed before the retail industry acts as a direct link between the manufacturer and the final consumers it is the duty of the retailers to act in an ethical manner as their actions affect the lives of all the stakeholders involved. Some of the unethical practices that exist in the industry of retailing affect the stakeholders, which include both the final customers and the employees. Retailers often mislead the consumers by lying to them or concealing the complete truth about the characteristics of the product from them. However, the retailers should charge fair price and disclose all the characteristics of the products sold by them as it would be unethical to mislead customers and charging more from them. It can be said that ethics is very important in the long run of business as businesses must comply with ethical standards if they are to succeed in the future (Pedersen, 2015). The retailers also have ethical responsibilities towards employees. However in the video Blood, Sweat and Tshirt it has been illustrated that the retailers are not fulfilling their ethical responsibilities that they owe to the worker. The retail industry employs a large volume of people therefore proper policies and procedures must be formulated in order to ensure the well-being and welfare. Such policies and procedures must aim to promote fair recruitment, selection, training of employees (Littell Doh, 2015). Negative issues existing in employment relations can adversely affect the reputation of a business to its customers, lead to low staff morale and low productivity (Ferrell Ferrell, 2016). It is evident in the video Blood ,Sweat and T-shirts that the workers and the employees who primarily manufacture the clothing are adversely affected by the harsh and unfavorable working conditions. The workers are highly underpaid and are made to live in acute poverty and adverse living conditions. The retailers of the fashion industry exploit the workers of the developing countries by paying them much lesser wage rate than the minimum wage rates. Thus, retailers fail to ensure the wellbeing and welfare of the employees. Retailers have a duty to comply with Corporate social responsibility. Corporate social responsibility of Retailing Corporate Social Responsibility (CSR) can be defined as the responsibility of a business association for the effects of its choices and exercises on society, the planet and its own success. Corporate Social Responsibility can be defined to have the "triple main concern" of individuals, planet, and benefit (Steenkamp, 2017).As opined by Schwartz, (2017), not only do responsible, sustainable and transparent CSR methodologies strengthen the reputation of a brand, they aim to positively affect the community and hence the marketplace of the community. A strong marketable strategy, installed into the business culture, reflecting the values and objectives of the organization through key CSR application, will create a gainful and sustainable future for all. It can be said that there is strong relationship between Corporate Social Responsibility and the retail industry. This relationship has to be perceived to be something more than a mere channel of distribution of goods which are socially responsible. Retail sectors of businesses must perceive CSR as the opportunity to reach out to the mass and form a connection with the interests of the people. With expanding globalization, the clothing business is presently regularly scattered geologically, with assembling, dissemination and retail tasks split over a few distinct areas and nations (Abreu Rocha, 2015). Worldwide retailers endeavor to guarantee their worldwide corporate measures for wellbeing of employees, work, manageability, quality of items are adhered toand kept up all through their store network. Nevertheless, this is yet a day-by-day challenge.Because of globalization that empowered progressive decrease of trade obstructions and made the flow of labor, services and goods more in temperate, the clothing industry is centered mostly in the hands of vast partnerships with boundless supply chains, based on outsourcing According to Ferrell Ferrell (2016), that the textile and the clothing industry are intricately related. The textile industry gives the most input to the clothing industry and forms the vertical linkages. For a garment to be sold, it has to go through a long process from making to designing to reaching the shelf of the retailer (Franco, 2017). Thus, it can be said the clothing and the textile industry are to be treated as a single unit. However, the competition faced in the clothing industry is cut throat and different fashion companies strain themselves in order to acquire a slight higher profit margin. It can be said that in modern times people find a wide variety of choices of apparel at low costs. This cut throat competition has driven the companies to lower the cost. Thus, cutting down costs so drastically has made it even more difficult for the companies of the fashion industry to adopt a CSR policy and follow CSR rules (Salib et al.,2015). The fashion industry and the textile industry are governed by many bilateral contracts between the countries which are involved in the manufacturing process of the garments as well as many international trade agreements. The fashion and textile industry has introduced a wide array of technological advancements. Moreover the technology introduced in the textile industry is comparatively inexpensive than human labor and thus poorer countries of the world who manufacture the garments become more competitive in the apparel world. The modern trend is that clothes which used to be identified by their endurance have been put out fashion. The recent trend is desire for fast fashion. This constant innovation and need to keep up with the modern trends of the market have made the clothing industry over produce clothes, which are wasted once the trend goes out of fashion. It can be mentioned that the textile industry is a driving factor of economic growth in developing countries. The textile industry provides basic jobs which do not require any special skill and knowledge to a large number of people (Abreu Rocha, 2015). This industry especially employs women who have little chance of seeking employment elsewhere. Since language is not much of a barrier in the textile industry many immigrant are also employed in the textile industry. This has been illustrated in the video blood sweat and t-shirt. A large number of unskilled and labor were employed in factories for the purpose of manufacturing clothes for retailing. Due to the aforementioned factors of cut throat competition, low pricing and short life span of the clothes manufactured companies that are engaged in the sector are required to effectively manage their chain of supply. The supply chain management in the clothing industry is an instrumental for the success of the companies that are engaged in the clothing sector. It can be said that the managers of the companies engaged in the clothing and textile industry must therefore choose their suppliers very wisely. They should ensure that their suppliers not only fulfill the task they are assigned but also exhibit responsible behavior and address the social and environmental issues (Takkar, 2015). As opined by Ferrell Ferrell (2016), company cannot claim that adheres to the policies of CSR if its supply chain violates the provisions of CSR. It can be said that to ensure the existence of closer trade relations with the manufacturers, the companies engaged in the clothing industry must lower the number of their suppliers. Having a lower number of suppliers would help companies ensure that transparent bonds exist between the parties involved in the process of manufacturing textiles and ensure improved information sharing between the parties involved in the process of production of garments. It can be said that there are a lot of opportunities for implementation of the CSR principles in the structure of the clothing and textile industry. The environment and the society at large are at stake throughout the entire process of manufacturing and supplying garments. As opined by Abreu (2015), the large multinational companies engaged in the clothing industry have more pressure on them to act in a socially responsible manner than medium and small enterprises. The fashion industry faces the demand for garments which were not made in exploitative conditions by workers who were abused. Consumers of garments do not want to take the guilt for harming people by the process of manufacturing clothes thus they want to be assured that the clothes purchased by them had been manufactured in decent conditions. The main issues of CSR that exist in the clothing industry are working conditions of the laborers, hours of work and the wages paid to the workers. These three factors can be considered to be the social responsibility of the employers to the employers (Cao, 2017). As companies engaged in the clothing industry opt to outsource and the process of manufacturing to other countries, companies need to ensure that they comply with ethical practices not only at the headquarters. Businesses and organizations are required to ensure that that the subcontractors of such businesses are following the CSR standards. Many large corporations have been held responsible for the wrongdoings of their subcontractors. Some of the businesses have been disconnected with the operations of their subcontractors. Some big organizations like Gap Inc. have faced adverse media publicity and customer boycott. As opined by Abreu (2015), companies involved in the clothing industry can chose to develop responsible methods for the day to day operations. Some of the means to ensure that the operations of the companies are conducted in a socially responsible manner would mean providing safe and hygienic working conditions to the employees, reducing environmental damages, maintaining good relations with the stake holders and helping locl communities. The different Views of CSR Narrow View It can be stated that the rules related to the corporate social responsibility of companies is dependent on various factors. How the profits that are earned by the company are to be utilized has to be determined. It can be said according to the narrow view of CSR that the benefits of the that are directly associated with the company or particular aspects for the company are of utmost importance to the company (Vertigans Idowu, 2017). In accordance with the narrow view, the management of the company only considers and analyzes the factors that can be beneficial for the company. Milton Friedman, the American commentator and writer, had introduced the narrow view of CSR. He opined that a business organization has no responsibility other than maximization of profit (Cheng, Ioannou Serafeim, 2014). He further stated that a business has only one responsibility, and that is to fullyutilize its resources while engaging in its activities for the purpose of profit maximization. However such acts of the business organization have be with the binding of the law. All business must engage in free competition and not indulge in fraudulent or deceptive activities. From this perspective of CSR the society is not an important stakeholder. Tai Chuang (2014), argued that only governmental and non-governmental organizations, non-profit organizations have the responsibility of contributing significantly to improve the society argued it. Friedman further stated that the CSR can be threat to the Capitalist system. However, it should not affect the operations of the organizations Broad View According to the Broad view of CSR, it can be said that the power and influence of corporations have increased significantly over the years in the capitalist market. However, it is debatable what ethical obligations do corporations owe to the society and its relevant stakeholders. In accordance with the broad view of CSR it can be stated that Corporations are to be treated as human creations (Steenkamp, 2017). Therefore, in addition to making profits, organizations and corporations also have the responsibility to uphold other CSR principles. The Keith Davis had introduced the Broad view of CSR and according to the broad view it can be stated that decisions of businesses have social consequences and it was held that businessmen cannot make sole economic decision. The Stakeholder model of the Broad view of CSR it can be stated that corporations have responsibilities and obligations to the stakeholders who share both primary and secondary relationships with he concerned business organizations (Schwartz, 2017). One of the other arguments in favor of the broad view of CSR is that business is allowed to exist and operate in a society as they provide necessary services and goods to the society. Thus Businesses are to be judged by a triple bottom line which includes financial, social and environmental services to the society as opposed to the previously judged concept of single bottom line which used to take in to consideration the financial services to the society (Pedersen, 2015).. Thus after discussing both the views it can be stated that the retailers who buy from the Indian markets only comply with the narrow view of CSR. They only focus on profit maximization of the company and neglect the other social and environmental factors. Such retailers are not concerned about the welfare and the wellbeing of workers who are employed in the manufacturing industry. The poor lifestyles, unhealthy and unsafe work environment and very low wages of the workers demonstrate that the retailers do not comply with the broad view of CSR principles. However all organizations have the ethical responsibilities to all the stakeholders involved ad therefore the broad view of CSR is to be adhered to while conducting business. Thus after discussing both the views of CSR it can be said that the retailers have reduced the meaning of CSR to its narrow view. As shown in the video, Blood Sweat and Tshirt, the retailers only focus on profit maximization instead of improving the working conditions of the workers employed in the Indian Factories. Analysis of the operations of companies by the application of ethical theories It can be said that the operations and actions of organizations can be assessed from the perspective of different ethical theories. Utilitarianism According to the theory of Utilitarianism, it can be said that only those actions of individuals are considered to be ethical which produce the maximum benefit for the most number of people (Mill, 2016). The consequences of actions to individuals must create utility for the most number of people. Utility can be defined as the summation of the benefit created for the stakeholders minus the effort required to perform such action. As opined by Barrow (2015), Utilitarianism is one of the main branches of consequentialism theories. Thus in this context it can be said that actions of the retailers are not ethical as they do create benefit for the workers who are involved in the manufacturing process. They are the primary stake holders in the given scenario. The low wages, poor style and poor work environment point out that the retailers to ensure the wellbeing of the workers are doing nothing. The retailers only focus on the profit maximization. Conclusion Thus to conclude it can be said that all business organizations that exist and operate have the responsibility to adopt and uphold CSR policies. CSR or Corporate Social Responsibility of the business organizations is defined as the responsibility of the business organizations to conduct business in an ethical sustainable manner . It is the responsibility of the business organizations to ensure that their operations have positive impacts on the society, environment and the economy. The retail industry acts as a direct link between the manufacturer and the final consumers it is the duty of the retailers to act in an ethical manner as their actions affect the lives of all the stakeholders involved. The Clothing industry is very competitive in nature and it outsources the process of manufacturing the clothes to the developing nations. Therefore it is the responsibility of the industry to implement CSR policies to not only in their headquarters but also in the countries to which the task of manufacturing clothes is outsourced. As evident in the video the retailers who buy goods from the Indian factories are considering the narrow view of CSR as they are only focusing on profit maximization and neglecting the welfare of the workers. However all business organizations must consider the broad view of CSR as it in compliance with the ethical standards. 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