Introduction

Zara is the Inditex group’s flagship shop and the world’s largest clothing retailer, according to reports. Zara is a Spanish apparel business. It has opened its first store in 1975. Firm does not believe in costly advertising efforts. It focuses on introducing new products and opening new outlets in the world market. Zara has established almost 2000 stores throughout the world to embrace the latest fashion trends in every year. On average, firm expects to release roughly 12,000 new designs every year (Martinroll, 2021). To compete in the market, Zara employs customer based product developing approach for developing new fashion. In this regard, this report discusses the business ethics followed by Zara in its business practices in the global market.

Issues Faced by Zara

Zara is accused of performing unethically with its employees. Below are some issued that have had/are faced by the company in its target market?
• Firm is criticized for the ways which used to dealt with subordinate workers;
•Non-healthy workplace conditions to employees in Argentina by seizing official documents of the workers. Due to this, they were not able to move freely (Equal Times, 2013).
• More working hours for employees at low wages from industry
• Unethical production in Bangladesh (REUTERS, 2018)
• Unethical behavior with the immigrant’s employees of Sao Paulo factory;
• Unauthorized outsourcing from companies that used workers as a slave;
• Racism issues (Hindustan Times, 2021)

Ethical Standards of Zara

According to Agency theory, employees must work in the favor of the master. It means that the managers need to make such a business strategy that gives respect to the employees and motivates them to work in the favor of the employer (Styhre, 2016). Otherwise, the failure to do so will affect the performance of the company and raise ethical issues. Another important theory is the “Justice theory of Rawls” which enables the organizations in developing effective business structures, corporate culture, and sustainable bureaucratic arrangements to ensure the use of ethics-based corporate practices always (Rawls, 2009). Through this, the company meets the social standards in the societies in an easy manner. In this regard, the reflection of a company’s ethical standards, such as Zara, has been proven to be hollow on several occasions. The firm mainly fell short of ethical norms and failed to deliver on its claims. The company’s finish line has proved ineffectual. The company’s supply chain management is excellent, but it lacks the transparency that means the managers are unable to work in interest of employer as like agency theory. Further, the company lacks the stakeholder’s engagement that means there was the lack of agency relationship between stakeholders. Zara’s obligation is not carried out conspicuously since the firm seeks to obstruct the auditing process (Winterstein, 2019). The firm has a global presence, and it is founded on the same concept that it must respond to the requirements of employees all over the world. The labor protection organizations, on the other hand, discovered workers in serious condition, indicating that the firm mainly failed in transparency audits. The company’s stakeholders are sometimes unaware of immoral practices that have an impact on the company’s long-line output. It means the organizational structure of the company was just against the sustainable bureaucracy defined by “Justice Theory of Rawls”. This is because that the firm was also failed in sufficient monitoring procedure, which reflects the lack of bureaucracy. On the other hand, it may be argued that the firm lacks the initiative to use surveillance knowingly. It means that company is not operating its businesses as per the above defined both ethical and corporate governance theories.

Social Responsibility Response of Company

Zara is fulfilling its social responsibility with the help of few actions against the social issues that include force labor, workplace discrimination, hygiene and security, abuse or inhuman treatment, payment of salary, commitment for environment protection, working hours and regular work, (QuickBooks Commerce, 2018).

Zara has been an integral element of several initiatives that have worked out well for the firm. On the other hand, the firm has failed based on human rights, owing to the discrimination it has shown against immigrants. CRS is responsible for developing the appropriate business model that considers both the company’s advantage and the environment’s long-term viability. Zara is a clothing brand that bases its designs on three concepts: simple, quick, and seasonal. The firm, on the other hand, takes a maximum of 15 days to create or duplicate new designs (QuickBooks Commerce, 2018). For the manufacturing process, the firm strives to combine high-end technologies. The use of technology, this aids in the channeling of the whole apparel line. However, the working conditions of factory workers are jeopardized as a result of the usage of technology.

When launching the quick line of clothes, the corporation uses the employees to extract and exploit them to the farthest extent possible. Zara’s other primary goal is to develop apparel lines that are not only high-priced but also suitable for everyday use (QuickBooks Commerce, 2018). These product lines make use of people and create goods at a cheaper cost. The workers, not the corporation, are the bargaining chip in such a situation. To keep the prices low, the firm pays the workers less and has them work more than 12hours in a day. In most situations, Zara does not take the initiative in fixing an ecological problem; instead, the firm attempts to direct the effort toward governments and the pricing established by governments (REUTERS, 2018).

Implications of Existing Ethical Practices of Zara
Zara is now a member of the “green label” program, which makes it clear that the raw materials used do not include pesticides. Aside from that, the firm encompasses the usage of design from the incorporation of raw materials through production and ultimate recycling (Brittlebank, 2016). The legal connotation of the firm has been incorrect, as it has been primarily trapped on the basis of human rights and element of slavery. Labor agencies have taken into account the company’s policy of using forced labor. This is the situation in which the firm has found itself due to the factory issues in Brazil and Argentina (Equal Times, 2013 and Antunes, 2011). It is evaluated form the discussion that the existing ethical practices in the term of environment is not effective for the company to improve its social position in the target market that can be a result of the failure of the corporate governance.

Recommendation

A firm like Zara must look after its employees and provide them with the resources that the corporation promised. This is a significant problem since workers are treated unfairly. They are compelled to labor long hours for meager pay. The firm must investigate this and put an end to the unethical treatment of employees. Aside from that, the firm must utilize the adequate treatment to employees such as good wages, good workplace environment and other kinds of facilities to labor required to perform organizational activities in the best supportive manner to the employer.

As one of the greatest merchants in the world, the company must keep its promises. The firm must also satisfy the fast fashion criteria without using hazardous ingredients in the manufacturing process (Winterstein, 2019). The firm must properly implement the code of conduct introduced by government for external manufacturers. Company’s oversight has improved, but not until the problem in 2014 was resolved. Zara must investigate the situation related to employment conditions in the own workplace or its suppliers and follow the regulations that have been established for external personnel.

Zara uses several materials that are hazardous to the environment and human skin. When the materials are manufactured in factories, some chemicals are discharged into the environment. This might be hazardous to residents in the region where the company’s plants are located (Deutsche Welle, 2021). The firm has a global reputation, and as a result, it should adhere to the code of behavior, as well as the notion that it must not create any cultural differences for the locals or consumers.

Conclusion

As per the above discussion, it is clear that Zara has implemented various step based changes in its business policies that allow the company to replace the issues related to the customers, societies, and environment but it also needs to follow above defined ethical theories that will not only improve the functions of the company towards employees but also make improvement in the societies.

References

Antunes, A. (2011). Zara Accused Of Alleged ‘Slave Labor’ In Brazil. Retrieved from https://www.forbes.com/sites/andersonantunes/2011/08/17/zara-accused-of-alleged-slave-labor-in-brazil/?sh=47cfef9a1a51
Brittlebank, W. (2016). Zara creates first ‘green clothing’ collection. Retrieved from https://www.climateaction.org/news/zara_creates_first_green_clothing_collection
Deutsche Welle (2021). Zara’s fast-fashion problem in focus. Retrieved from https://www.dw.com/en/zaras-fast-fashion-problem-in-focus/a-52161858
Equal Times (2013). Zara uses slave labour in Argentina. Zara Accused Of Alleged ‘Slave Labor’ In Brazil. Retrieved from https://www.equaltimes.org/zara-uses-slave-labour-in?lang=en#.YOabPRtLjIV
Hindustan Times. (2021). Zara under fire after head designer’s ‘racist’ message to Palestinian. Model. Retrieved from https://www.hindustantimes.com/lifestyle/fashion/zara-under-fire-after-head-designer-s-racist-message-to-palestinian-model-101623746908324.html
Martinroll. (2021). The Secret of Zara’s Success: A Culture of Customer Co-creation. Retrieved from https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-of-customer-co-creation/
QuickBooks Commerce (2018). Zara supply chain analysis – the secret behind Zara’s retail success. Retrieved from https://www.tradegecko.com/blog/supply-chain-management/zara-supply-chain-its-secret-to-retail-success
Rawls, J. (2009). A Theory of Justice. Harvard University Press.
REUTERS (2018). Bangladesh Clothing Factories Face Squeeze If Safety Push Blocked. Retrieved from https://www.businessoffashion.com/articles/news-analysis/bangladesh-clothing-factories-face-squeeze-if-safety-push-blocked
Styhre, A. (2016). Corporate Governance, The Firm and Investor Capitalism: Legal-Political and Economic Views. Edward Elgar Publishing.
Winterstein, I. (2019). Zara Promises Sustainability, But What About Its Garment Workers? Retrieved from https://medium.com/@ilanawinterstein/zara-promises-sustainability-but-what-about-its-garment-workers-cb62efdb36f9