The Times 100 Business Case Studies Edition 15

1
The Times 100 Business Case StudiesEdition 15

• Providing consumers with
• ethically sourced garments
• Primark

2
Introduction to Primark

• A fast-growing brand
• Part of Associated British Foods (ABF)
• 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
• Europe, Asia, Middle and Far East
• Primark has responsibility to source ethically

3
Business ethics

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

4
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

5
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

6
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

7
Ethics in practice

• Primark Code of Conduct
• 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
• Training for suppliers and buyers to ensure
  adherence to ethical practice
• Tough selection process for new suppliers
• Subject to independent audit before approval
• Primark pays for remedial work to bring supplier
  up to standard required

8
Benefits of an ethical approach

• Primarks 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

9
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