Describe about the Business Ethics for History of Zara?
History of Zara
Zara is a retail flagship store of the Inditex group, and is reported to be the largest apparel retailer globally. Zara is a Spanish clothing company which was established in the year 1975. This is a company, which do not believe in creating high end advertising campaigns but make it a point to introduce and open new stores round the world. There are more than 2000 stores opened by Zara internationally with the idea of incorporating the best fashion trends every year. The company is expected to launch nearly 12,000 fresh designs on an average. Zara follows the unique strategy of creating fresh fashion in order to compete in the market. The company has gained the competitive advantage over the years successfully. However, in this regard it is important to note the fact that the company has been part of few unethical behaviors towards the worker. This has hampered the business of the company to a certain limit. The supply chain management of the company has been quite pivotal to deal with the issues of unethical behavior towards the workers effectively. This is one of the companies, which is into clothing and trendy fashion but have changed the dressing line along with accessories round the world (Zikmund et al. 2012).
Unethical behavior of Zara
Zara has been accused of showing unethical behavior towards the workers. In most of the cases, the company has dealt with subordinate workers with loads of accusations against the fulfillment of the commitments towards the workers by the company. In Argentina, the company has been alleged of keeping the workers in terrible condition (Bunge, 2012). The company has seized the official documents of the workers and they were not allowed to move freely without the permission of the company. The workers were not registered and Zara failed to meet the commitments they have made to the workers. Not only adults but also children who have been used as the workers who were immigrants to the company. They were forced to work for more than 13 hours a day. In the Buenos Aires factory, the workers worked not only in terrible condition but also in degrading state of labour. Zara relates to unethical way of production in Bangladesh at the same time. They make the workers work for long hours in wretched condition where the condition of the women is precarious. This is a major issue raised by reporters round the world regarding the pain that few people faces behind the high street fashion brand of Spain (Carroll & Buchholtz, 2014).
Zara is also linked with unethical way of behaving with the workers of Sao Paulo factory. Most of the reports claimed of rescuing 15 employees from the company. 14 Bolivians and 1 Peruvian was found to work in the unethical condition being immigrants to the country. The unhygienic condition in which the worker had to work was wretched out of which 1 employee is of 14 years of age only. In Brazil, the minimum wage includes $344. On the contrary, the workers had to work for 12 hours a day with wage between the ranges of $156 to $290. Zara has been under the allegation of unauthorized outsourcing. The commitment to the workers was to have a better prospect in Brazil, which the company failed largely (Becker, 2012). The employees were forced to be slaves with further reduction in their wages for the aspect of travelling to Brazil and their cost of living. This turned the condition of the workers hellish as they starved and could not move without the consent of the authority. The company has taken few endeavors in accordance to the law along with the compensation to the affected. However, reports show the company to be part of unethical labour behavior repeatedly.
Reflection of ethical standards of Zara
Most of the companies have the idea of dealing with supply chain management effectively along with the implementation of five categories, which includes environment, animals, people, product and politics. The reflection of the ethical standards of a company like Zara has been proved hollow a number of times. The policies and the working standards of the company has been critical and against the expectation expected by different control organizations or workers round the world. Apart from this, the company has been a major failure in few of the products, which hurt the sensitivity of buyers round the world (Ferrell & Fraedrich, 2014). The products hurt the sentiment of the buyers due to the message, which is proposed by the products. In the year, 2014 Zara launched a tee shirt for the children, which has an imitation if the dresses of the holocaust camp uniform. There were number of issues and controversies related to the unethical practice of hurting the sentiments of the buyers. This is largely based on the ideas, which might not be accepted by many of the customers globally. Apart from this, the company has been involved in creation of a necklace, which represents racism (Shrader-Frechette, 2012). Products like these have creating issues in the minds of the customers regarding the differentiation created by Zara.
The company largely lacked the meeting the ethical standards and failed in the promises. The finish line of the company has been ineffective. The supply chain management of the company is effective but the company lacks the transparency expected from the audit (Audi, 2012). Apart from this, the company lacks the engagement of the stakeholders efficiently. The responsibility showered on the company like Zara is not carried out prominently as the company tries to hinder the auditing. The company has global presence and based on the same idea the company needs to cater to the needs of the workers internationally. However, the labor protection agencies found workers in critical condition, which states that the company failed largely in transparent auditing. The stakeholders of the company are at times not aware of the unethical means, which affects the long line production of the company. The reflection of the standard state the company does not have proper monitoring process. One the contrary it might said that the company do not have the initiation of proper surveillance knowingly (Hauk, 2012).
Influence of leadership
Many of the well-known companies have the workers who look up to their leaders in order to receive the best in the company. In other words, they try to emulate the leaders. Similar is the case of Zara as most of the employees feel the reputation of the company instead of finding and understanding the loopholes of the company. The leadership style of the company may be categorized under two aspects. The first one includes participative. In order to make the fashion and to set out e latest trends most of the employees of the organization work effectively. They participate in channeling the designs and the materials used for the garments and the accessories. However, in case of the workers who work in the factories to produce the product line face the major issue (De George, 2012). They do not get the support from the authorities at all. They cannot participate in the process and do not say in most of the issues which they face in their factory and workplace area. The workers are exploited to work for long hours and are more of less caged in the factories. The participation is much less and they have very little say in the entire process of production.
The next type of leadership followed by the company includes transformational. In this case, the mangers or the team monitor the workers and integrate them to form a particular team. This helps in the enhancement of the process motivating the employees to carry out the work successfully. However, in case of the immigrant workers in the factory the situation is completely different. Most of the workers face the issue of working in wretched, unhygienic condition, which is not suitable as per the ethical standards. In such case, the motivation from the high-end officials and the transformational leadership is largely missing. In this regard, it is important to mention that most of the company in the higher levels has the monitoring and the inspiration to produce better along with proper standards (Guffey & Loewy, 2012). On the contrary, in case of the immigrant workers the situation is opposite. They do not have the standard or the resource. They are forces to work under pressure with more or less the retention of slavery. The role of the leaders in this case is to extract the most from the workers and exploit their condition. The exploitation is based on the maximum extraction from the immigrants.
Social responsibility response
Zara has been one of the companies, which has to control and eradicate few aspects, which includes the following:-
Hygiene and security
Abuse or inhuman treatment
Freedom of association and collective bargaining
Payment of salary
Zara has been effective part of numerous strategies, which has been perfect for the benefit of the company. On the contrary, on the human rights ground the company has failed largely because of the discrimination, which the company showed towards the immigrants. It is the responsibility of CRS to build the right business model, which looks in to the benefit of the company along with the ecological sustainability (Rutherford et al. 2012). Zara is a company, which create their line of clothing based on three ideas basic, fast and seasonal. However, in case of making or copying new designs the company takes maximum of 15 days time. The company tries to incorporate high-end technology for the production process. This helps in the channeling of the entire line of clothing with the implementation of technology. However, beneath the use of technology the condition of the workers in the factories is at risk.
In case of introducing the fast line of clothing, the company makes use of the workers to extract, and exploit them to the maximum. The other major strategy of Zara remains to make the clothing line now only high priced but also the ones, which is for daily wear (Hopkins, 2012). These lines of product make use of the workers and produce the items in lower cost. The bargain in such condition is not the company but the workers. To make the products low priced the company pay less to the workers and force them to work nearly 13 hours. Zara mostly do not take the initiative in case of resolving the ecological problem in most of the cases the company try to point the endeavour towards the governments and the prices set by the governments. Zara inclines to show their responsible behavior towards supply chain, in the following:-
The DNA of Zara’s offices: includes the employees in the respect of (legality, respect and diversity)
The DNA of Zara’s factories: includes the business partners and the suppliers (transparency, legality and traceability)
The DNA of Zara’s stores: includes the clients (quality, security and health)
However, the above-mentioned points are just for discussion, as the company does not maintain their responsibility towards the workers of the factor. The transparency of the auditing is largely missing (Bardy, Drew & Kennedy, 2012).
Cultural, environmental and legal implication of Zara
The cultural implication of the company is not effective as there are certain products like a t-shirt and a necklace, which have hurt the sentiments of many of the customers globally. There have been controversies regarding the same (Robison, Pritchard & Ellin, 2012). They have used racism as a concept in the necklace. There were certain black faced with red lips in the necklace, which sowed the discrimination. On the same line, the company has made use of the concept of creating the t-shirt, which disrespects the feeling of the holocaust concentration camps. In the environmental aspect Zara has been part of the “green label” which make it evident to use the raw materials, which do not use any pesticides (Cialdini et al. 2012). Apart from this, the company entails the use of the design long with the inclusion of raw materials, to the manufacturing and final recycling. The legal implication of the company has been not right as based on the human rights and the aspect of slavery the company has been trapped largely. The policy of the company to use forced labour has been taken into account by the labour agencies. This is the case, which has been faced by the company owing to the issue of the Brazil and the Argentinean factories.
Impact on stakeholders
The impact on the stakeholders entails the fact that most of the suppliers or organization like AHA, which is part of the manufacturing process in the factories, is facing the problem. In most of the cases, it is important to note the fact that being part of a company like Zara the external stakeholders and the suppliers feel privileged. In most of the cases, the company needs to channel the process (Acevedo, 2012). However, the external stakeholders feel the problem of being part of the company, which has many of the ethical problems. In case of the company, the perspective has been to extract the mot from the stakeholders that is the immigrant workers. These internal stakeholders have faced the issue of exploitation. The treatment of the company towards the internal stakeholders as slave has been one of the major issue reading the controversy of the company. In such cases, most of the immigrant workers globally are not interested in working with the largest retailers inclusive of Zara. Hence, the impact on the stakeholders like the designers might be good for the company but for the external stakeholders like the suppliers the company is rigid in certain aspect of supply chain. Apart from this for the immigrant worker, the condition has been wretched (Ardichvili et al. 2012).
Event outcome with consequences
The outcome of the event is to deal with the effectiveness of the company and not to extract from the workers. The last controversy of Zara has been reported in the year 2014. Since then the company is trying to incorporate the ideas of sustainability with apt supply chain management. The outcome of the event however, could affect much of the productivity or craze of Zara. The company still has loyal customers round the world and followers who are religious part of Zara fashion and retail stores. The company is believed to have most of the aspects apart from the issue of the human rights (Voegtlin, Patzer & Scherer, 2012). Moreover studies have shown that fast fashion make use of materials which area part of toxic materials causing harm to the human skin and can even cause cancer. In such case, the outcome of the company lies in the mentality of the customers. This has changed the buying decision of the customers. Zara has been claimed to use the toxic raw materials, which goes to an extent of 70%. Hence, in this regard the outcome of the company is changing with the awareness of the customers (Emery, 2012).
Fairness in punishment
There has been very little which has been done to the company with all the above-mentioned unethical means. The company has been given the warning of not using labour as slave but not much has been done in the present cases (Melé, 2012). The company still has a growing range of the customers but there have been 52 charges that have been brought by the Brazilian government against Inditex of which Zara remains an integral part. The government of Brazil took the step against AHA, as it is the company responsible for 90% of Zara’s productivity in Brazil. The case against the company has been brought on the ground of physical violence and coercion on the workers. Apart from this Zara have been part of another criticism which have been brought against the unethical means of sourcing the angora wool. The animal welfare group against the Chinese suppliers of Zara has forwarded this case. PETA (People for the Ethical Treatment of Animals) is part of the initiative to stop the production process, which includes the need of angora wool (Bazerman, & Gino, 2012). However, there has been no evidence of the farms detected by PETA but there have been 255,000 people, who have signed the petition against unethical treatment of animals.
Taking in consideration the human rights of workers-
it is the responsibility of a company like Zara to take care of the employees and to give them the resources, which the company committed to the workers. This is a major issue as the labours are treated with utmost discrimination. They are forces to work for long hours for petty earnings. This must be looked by the company and they must stop the unethical treatment towards the workers. apart from this the company needs to make use of proper hygienic condition for work (Sacconi, 2012). Being one of the best retailers in the world, it is the responsibility of the company to stick to their commitments. This would reduce the controversies that Zara faced in the recent years along with the spread of positive word of mouth. The company also must meet the standard of fast fashion without the inclusion of the toxic materials for the production process. The company must fulfill the code of conduct for the external manufacturers effectively. The supervision of the company have been made better but not until the issue faced in the year 2014. Zara must look into the matter and abide by the rules, which are set for the external workers (Hilson, 2012).
Understanding the cultural sentiments-
In most of the cases the company needs to follow the sentiment of the customers globally. There are certain products, which have been against the perception and the cultural identification of the particular people globally. Zara faced the issue of creating and manufacturing products, which administers the idea of racism. On similar ground, it is essential that the company must not produce something to harm the sentiment of the customers. This would ensure the productivity of the company and would retain the customers of the international ground. The company has its global reputation based on which it should manufacture products which would be for international customers. This would enhance the brand image of the company along with returning customers (Schaltegger et al. 2012). Zara make use of certain materials, which are harmful for the ecology and the human skin. The materials contain certain chemicals, which are released in the environment when they are made in the factories. This can be harmful for the people of a particular area where the factories of the company are situated. Zara must follow the code of conduct along with the understanding of not creating any cultural difference for the inhabitants of an area or the customers.
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