Business Ethics Primark Case Study Unit 3 .5.1 Business Ethics

Business Ethics Primark Case Study Unit 3 .5.1 Business Ethics Mrs Gutteridge

Introduction to Primark A fast-growing brand 200 stores across UK, Ireland and Europe Growth stems from meeting customer needs Offers high fashion at value-for-money prices Expanding stores Moving into new markets Products sourced from over 600 suppliers in 16 countries Part of Associated British Foods (ABF) Europe, Asia, Middle and Far East Primark has responsibility to source ethically

Business ethics Business ethics are: Rules of conduct Patterns of behaviour in business ‘Doing the right thing’ Involves responsibility to: Suppliers Employees Wider community

Primark and business principles Primark shares values with parent ABF Shape relationships with all stakeholders Affects dealings through supply chain Key principles Respect for human rights Setting appropriate conditions of employment in suppliers’ factories Over 700,000 workers in three continents Around 95% of Primark suppliers also supply other high street retailers

Ethical sourcing Key role of Ethical Trade Director Leads team of ethical managers in sourcing countries Ensures Primark goods sourced ethically Primark is member of Ethical Trading Initiative Alliance of companies, unions and NGOs Working to improve working conditions

Primark business model Business model based on High sales volume Lower retail margins Value for money stems from Economies of scale - buying volume Sourcing products efficiently Lean production Using simpler designs or local fabrics Focusing on most popular sizes Using off-peak factory time for production Not spending heavily on advertising

Ethics in practice Primark Code of Conduct Training for suppliers and buyers to ensure adherence to ethical practice Tough selection process for new suppliers Based on International Labour Organization Code Translated into 26 languages and published on Primark website Sets out full policies and is part of Terms and Conditions Subject to independent audit before approval Primark pays for remedial work to bring supplier up to standard required

Benefits of an ethical approach Primark’s key business objectives To be profitable To be sustainable Also aims to act as responsible corporate citizen Helps to build confidence in the brand Reduces risk of poor publicity on ethical issues

Costs of ethical behaviour Primark bears costs of Audits and training Remedial actions Employment of Ethical Trade teams However, these are all seen as contributing to sustainable business Improvements to a supplier mean Primark standards improve Transparency in business gives all stakeholders, including customers, confidence in the brand