Slide1 name

Slide 2 Presentation By

Slide 3 Introduction

Slide 4 about 7-Eleven

7-Eleven is an international chain of convenience stores that operates,
franchises and licenses some 58,300 stores (as of January 2016) in 18
countries. 7-Eleven Inc. is headquartered in Dallas, Texas, United States.
Slide 5 7-Eleven around the World
7-Eleven is the worlds largest convenience store chain operating,
franchising and licensing stores in 18 countries. 10,500 of the 58,300
7-Eleven stores worldwide are in North America. The company operates,
franchises and licenses approximately 8,600 convenience stores in the
U.S. and Canada. More than 47,800 stores outside US. 7-Eleven has been
the leader in franchising and licensing in the convenience store industry
for 51 years.
Slide 6 7-Eleven Australia
The first 7-Eleven in Australia opened on August 24, 1977 in Melbourne. 7
Eleven Stores Pty Ltd (7Eleven) is an Australian company owned by the
Withers family i.e. Mr. Russell Withers his Sister Beverley Barlow and their
spouses. Mr. Withers also serves as the company's chairman. More than
620 stores are in Australia.
Slide 7 Mission/Vision Statement
The mission of 7-Eleven is to be the convenient store in order to make the
life easy.
The vision statement of 7-Eleven is to be the best retailer of convenience.

Slide 9 CA
The term Corporate Accountability is commonly used instead to refer to
more confrontational or enforceable strategies of influencing corporate
behavior. The term corporate responsibility is used to indicate voluntary
approaches, although those supported by market based incentives.
Corporate accountability typically implies that corporate behavior is
influenced by pressure exerted by social and governmental actors beyond
the company itself.
Slide 10 CSR
Corporate Social Responsibility refers to varied practices that reflect the
belief that corporations have responsibilities beyond generating profit for
their shareholders.
Such responsibilities include the negative duty to refrain from harm
caused to the environment, individuals or communities, and sometimes
also positive duties to protect society and the environment, for example
protecting human rights of workers and communities affected by business
activities.
Slide 11 SOT
Legitimacy

Theory

and

Stakeholder

Theory

are

two

theoretical

perspectives that have been adopted by a number of researchers in

recent years. The theories are sometimes referred to as systems-oriented
theories.
A systems-based perspective, the entity is assumed to be influenced by,
and in turn to have influence upon, the society in which it operates.
Slide 12 Legitimacy
Legitimacy Theory relies upon the notion that there is a social contract
between the organization in question and the society in which it operates.
Legitimacy Theory asserts that organizations continually seek to ensure
that they operate within the bounds and norms of their respective
societies, that is, they attempt to ensure that their activities are perceived
by outside parties as being legitimate.

The legitimacy theory suggests that organizations need to continuously

maintain a balance between social values established by the organization
and the societys expectation of the business.

Slide 13 Legitimacy Theory

7-Eleven company is in the news for not compensating the employees for
their work according to the mentioned wage rate by Australian
government. 4 corners and Fairfax Media investigate the wage scandal of
7-Eleven and found that the company is paying less than $13 to the
employees mainly students and foreigners. 7-Eleven prefer to hire
foreigners and students as an employee and they gave less wage as
compare to the standard wage rate. They also force them to work for
more than 40 hours per week and threaten them that if they go to the
authorities they will tell the authorities about working on student visa so
the employees have to work on the said rate.
Slide 14 and 15
There are some news clippings that shows 7-Eleven is not working legally
and paying less to the employees. Lets look at this video clip
They are not working according to Legitimacy theory.

Slide 17 CG
Corporate governance refers to the system by which corporations are
directed and controlled. It specifies the distribution of rights and
responsibilities among different participants in the corporation (such as
the board of directors, managers, shareholders, creditors, auditors,
regulators, and other stakeholders).
Its fundamental objective is not the mere fulfillment of the requirements
of law but in ensuring commitment of the board in managing the company
in a transparent manner for maximizing long term shareholder value.
(Le et al., 2006) also point out that the impact of corporate governance
mechanisms differs across industries, i.e. Good corporate governance
requires that managers have the proper incentives to work on behalf of
owners.

Slide 18 Principles of CG
According to ASX Corporate Governance Council there are 8 principles of
corporate governance
1.
2.
3.
4.
5.
6.
7.
8.

Lay solid foundation for management and oversight

Structure the board to add value
Promote ethical and responsible decision-making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Respect the rights of shareholders
Recognize and manage risk
Remunerate fairly and responsibly

We will try to sort out which principles are being applied at 7-Eleven
company
Slide 19 1st Principle
The first principle states that Lay solid foundation for management and
oversight.

7-

Eleven

has

defined

the

governance

structure

and

Shareholders of 7-Eleven elect the Board of Directors and Board of

directors will elect the Chief Executive Officer (CEO) and management. 7Eleven have defined the first principle in their financial statement as
shown here.
7-Eleven have defined the roles and responsibilities of the board of the
directors, top management and the managers. They are following the first
principle but the top managers are not following the responsibilities that
lead towards the wage scandal.
Slide 20 2nd Principle
The 2nd principle is to Structure the board to add value. As shown in figure,
7-Eleven has structure the board and have developed the board
committees. Due to the scandal the 7-Eleven CEO Mr. Wilmot and
chairman Mr. Withers resigns from their posts and 7-Eleven instantly
upload on the media center about the recent changes in the management
and the board structure. It also becomes the headlines as shown in this
news clipping.

Slide 21 3rd Principle

The 3rd principle is to Promote ethical and responsible decision-making in
the organization. Investors and other stakeholders expect listed entities
to act ethically and responsibly. According to ASX Corporate Governance
Council the organization should respect the human rights of the
employees, creating safe workplace, dealing honestly with suppliers etc.
but the recent wage scandal of 7-Eleven demonstrates the opposite.
Many of the Franchise workers were paying less than the standard wage
rate by the 7-Eleven and also the management force them to work extra
hours. They dont care about the employees, they just care about their
pockets being filled whatever the way it is.
As shown in figure according to Brisbane times, on 25 th January 2016, 7Eleven face court for underpaying workers. 12 staff members, including
international students, were underpaid a total of $82,661 in the year to
September 2015, Also foreign workers were threatened with deportation if
they spoke up. 4 corners also published that the staff were paid as little as
$13 an hour by falsifying employment records and entries to the head
office payroll system.
According to the employees the management knows about the wage
scandal but they dont pay attention to the matter as they were getting
their cut by the franchisees.
Lets look at the video when Michael Fraser calls the franchise agent to
check the wage rate.
7-Eleven didnt comply with the 3rd principle
Slide 26 5th principle
The 5th principle is to Make Timely and Balanced Disclosure 7-Eleven is
following the 5th principle as they have the Media Center section on the
website where they upload all the news about the company as shown in
these pictures.
Slide 28 7th Principle

Principle 7 of corporate governance is to Recognize and manage risk. 7Eleven is not following this principle as there were many robbery cases in
Australia in the last couple of months. They have listed this principle on
their financial statement but they are not following it as shown in this
figures.
Instead of providing security to the staff the manager made the store
worker to work for the next 8 hours shift that results in the recent incident
at Keysborough. The manager fired the store worker (Mr. Farag) after the
incident. Lets look at this clip of 7 news

Slide 33 principle 8
Principle

of

corporate

governance

is

Remunerate

fairly

and

responsibly. 7-Eleven is not following this principle as most of the

franchisees are running from Australia.
Churning Franchises is common in 7-Eleven. Churning" is a common
term in the franchise industry which refers to a practice where head office
either terminates the franchise agreement or allows a franchisee to
terminate an agreement because they want to leave the network.
7-Eleven, has recently faced accusations of deliberately "churning"
franchisees in order to reap more fees. The store is then sold to a new
franchisee and 7-Eleven head office collects a further franchising fee.
Look at these news clippings
Slide 35 Implications
For not following the principles there are some implications that affect
different stakeholders of the company. Lets look at the implications on the
following stakeholders
Slide 36 Shareholders

Shareholders are the owners of the company and the negative impression
affect the shareholders of the company. The wage scandal largely affect
the share prices of the 7-eleven as shown in this figure.
Before the incident the stock was trading at more than 35$ but after the
incident the share price started declining at comes at less than 25$. It
started to increase as the company is compensating the employees with
the wages that are not payed to the employees.
Slide 37 Employees
Employees are the main resource for any organization as they are the
main face of the company towards the customers, The employees were
not satisfied with their jobs and they are also being threated of
deportation by the employers. Baharat Khanna in a recent interview revels
the story, lets look at his views.

Slide 38 Economy
Economy of the country also affected with the wage scandal of 7-Eleven.
As the employees working at night dont have the tax file number so It is
potentially robbing the Australian Taxation Office of hundreds of millions of
dollars a year in tax because of not paying the full amount to the
employees. Lets look at the news clipping
Slide 39 Recommendations
Read from the slides all the recommendations
According to Australian Competition and Consumer Commission chair
Allan Fels
Slide 41 Conclusion
7-eleven wage scandal poses the very bad image on the reputation of the
company and the senior management was responsible for the wage abuse
by 7-Eleven. . Many of those staff were international students whose visas
only allow them to work 20 hours per work. 7-Eleven was also not
complying with the corporate governance principles and the results were
devastated as the wage scandal destroys the reputation of the company,
company needs to change the policies and to make them stricter and
needs to manage the employees using automated software