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Primark – Case Study


Primark is an international clothing retailer.  In terms of location, the retailer which is considered to have or operate a series of stores, is located in the United Kingdom and Ireland (Primark – About Us 2017). In its operational history, the company has experienced a series of issues and scandals most of which have resulted in it facing a series of lawsuits and immense loss in the market. In addition, the company has experienced myriad challenges most of which have attracted analysts to use it as reference when discussing imperative issues such as corporate social responsibility amongst others.

Purpose of the Study

As stipulated in the introduction, the Primark Company has had a series of challenges most of which are associate with how it deals with the stakeholders. As a result, the case study is intended to conduct an in-depth review of the issues that are facing the company. From a professional perspective, reliability of the case study’s content can mainly be influenced by citing particular cases that prove that the issues cited are actual. In the operational period, Primark faced a series of scandals and issues that have amply hurt its reputation. In a bid to ascertain the assertion that the issues have been severe, it is imperative to stipulate that they involve people getting injuries and even dying.

The first issue is that of the collapse of Rana Plaza collapsing building. On the 24th April of 2013, the building collapsing while a myriad people were operating from within (Gayle 2013). From an analytical perspective, the company’s control system from the inside was very weak resulting in the company being involved in a very huge scandal that involved the loss of people. Actually, from a statistical perspective, thousands of people lost their lives while others experienced injuries. As was required by the law, the company had to compensate the victims an amount of 14 million dollars (Trading updates 2017). The issue raised with regards to PRIMARK’s operations was the working environment that the company provides was unhealthy and unsafe. Another issue that the company was involved in was that of child labor. The company took advantage of some children who worked in the Indian refugee camps. These children was oppressed in such a manner that they were paid cheaply and were forced to work in unconducive conditions. In addition, there is the issue of the company not treating the workers well. For instance, in the year 2008, the company was stipulated to have operated in an environment that was characterized by unhealthy labor practices, as well as sexual harassment. The purpose of this study is to benchmark the approach that the company is expected to do as compared to what the company ought to be doing.

Importance of the Case

The idea of deriving the most appropriate means through which a company can and ought to address its business environment internally and externally is of immense essence. In this case, this argument forms the basis of the research. Accordingly, the importance of the case is to first establish a set of issues and scandals that Primark Company has involved itself in during the past and then provide an avenue for solution finding. Most essentially, the case study provides an in-depth and procedural review of the cases that have resulted in the fall of Primark and the feasible solutions towards such a case as may occur in the UK amongst other markets.

Structure of the Case Study

In the context of developing a comprehensive case study regarding the issues and scandals affiliated with Primark, the case study feature a series of elementary sections through which the process of making recommendations can be come easy and feasible. First, the case study will commence with the briefed background of the company and the case altogether. In addition, it will comprise a description of the main events that transpired in the case. From the description of the events, a case analysis section will be developed focusing on the major corporate governance issues and the literature aspect of analyzing these issues. On a similar account, the case analysis will facilitate the feasibility of developing another section that is based on providing potential responses to the issues by Primark and the general lessons acquired from the case.

Background of the Company and Case

The Primark Company is an international company that is considered a subsidiary of the Associated British Foods. The company’s first store was established by one Arthur Ryan in representation of the Weston Family in the year 1969 (Primark – About Us 2017). Its success in the country resulted in it expanding to the United Kingdom in the year 1971. In consideration of the fact that the company could not use the initial name “Penneys” in the European continent, a decision was reached that the company could equally register under the name Primark. In terms of the products that the company deals with, the company mainly focuses on newborn and children’s clothing, men’s wear, women’s wear, home wear (Primark – About Us 2017). Accessories, beauty products, footwear and even confectionery. The company manages to sell its products at a competitively low prices but makes sure that it maintains a price level that is slightly below the average prices in the market. From a professional perspective, it can be argued that the company embraces a penetration pricing strategy. From a numerical aspect, the company owns approximately 315 stores. The greatest one is situated in Market Street in Manchester, England.

Structure of the Board

The fact that Primark is owned by the Associated British Foods implies that the company is also retained by the board of Associated British Foods. The board constitutes approximately 128 executives. From an individualized analysis, it is rational to argue that company is operated by highly qualified members of the board of directors. For instance, as up to the year 2015, the chairperson was named Charles Sinclair who was aged 67 years (Primark – About Us 2017). His experience surpasses most expectations in affirmative terms making him a reliable leader in the board. Notably, the board contained approximately ten members including the top leadership of the very board. The board comprises of seven non-executive directors, one chief executive, the chairman and the finance director.

Organizational Structure of Primark

The company also possess a realistically outstanding organizational structure. In addition there is absolute representation in most crucial sectors in the company. Below is a chart as of three years ago. Some positions are subject to changes in the last three years.

Primark Case study Diagram

Ideally, the structure is well organized with each sector being effectively structured with regards to the top most management. For instance, there is a simple disintegration between the management and finance section and the marketing section. The well-defined disintegration between these two avenues imply that the organization entertains a healthy level of independence in as far as its administrative or organizational structure is concerned.  

Description of the Key Events within the Case

In light with the identified issues regarding Primark’s there are several key events that resulted in the cases being considered essential to focus. The three case scenarios subject to analysis in this case study include the Rana Plaza collapsing building, Child Labor, Sweatshop working conditions. For instance in the context of the Rana Plaza Collapsing building, Primark is associated with the scandal of failing to offer health and safety measures in the workplaces. Particularly, on the 24th April, 2013, the Rana Plaza building in Bangladesh collapses (Rana Plaza 2017). The building housed a chain of factories that manufactured garments for a wide series of brands. The fact that the building did not have a well-structured control system implies that the company failed to play its roles in employee protection. The second case scenario in this case is that of engaging underage children in labor and paying them less than they deserve. According to The Observer, young children were forced to offer cheap labor but had to work for many hours (Henn 2014). Ultimately, there is the case where the BBC investigated Primark suppliers that are situated in Bangladesh and raised the issue of dirt. It was identified that the women who were employed by the company in the Primark factories were expected to work under a series of unhealthy environment and even experienced sexual harassment (Henn 2014). That, from a professional perspective indicated that the company failed to exercise ethics of work.

Case analysis

Main Corporate Governance Issues

Upon reviewing the stipulated case issues and scandals, the case analysis section focuses on addressing each issue or scandal. This time, the case study intends to incorporate a professional approach of addressing these issues. Below is a distinct analysis of these issues.

 Risk Management

Definition wise, the concept or risk management specifically refers to the process where uncertainties are identified, analyzed, accepted or mitigated. Usually, the process is embraced when kicking off in investments. Hence, it is an essential element in the context of investment of decision making. Despite that this concept is mainly applied in avenues where the investor feels that there is a need to analyze and quantify the feasible and potential adversities and losses in the investments from a financial perspective, other aspects such as the welfare of the human capital is also essential to consider. Arguably, risks are likely to emerge at any given time and avenue. It could emerge from the threats of project failure in the process of establishment or even immediately after it has been formed. Hence, it becomes essential to put into place the feasible approaches that could be used towards minimizing or handling risks as they emerge.

In that case, understanding the risk management model is also significant especially because different projects demand different measures of risk management. In as much as there is a series of models that could be used in such a scenario, the use of the PRINCE2 model could suffice. Ideally, the model in this case will comprise four stages that will be elementary towards reaching or acquiring a reliable risk management approach in the end. It starts with first acquiring the authority to establish the project. Then, the subsequent step is that of preparing the risk management strategy. Then, the management team is to undertake procedural assessment for every aspect that could result in risky outcomes. Then, the risk management strategy is acquired. The fact that having employees in a building that is not safe is uncouth. Hence, it is essential that the company such as Primark ensures that every aspect of the building is assessed. It is certain that the project manager or the company project management team is expected to undertake procedural assessment of all the facilities where the employees are working. Ensuring that the facilities are well structured and that safety measures are established becomes indisputable (Workers’ health and safety 2017). Cases where the company could have facilitated better measures in terms of risk management implies that the company could have managed to protect the employees from unwarranted deaths and injuries.

Accordingly, in light with this argument, the directors in risk management possess an oversight and ensure that the working environment is safe for all the stakeholders. In as far as production is concerned, the most valuable stakeholder that the directors in risk management ought to consider are the employees (Tricker & Tricker 2014). The process of securing these employees starts with the directors setting up a system, policies and then pushing for their implementation. When these policies are implemented, it becomes easy for the risk management team to proceed with installing and reviewing the measures that have been made at Primark to ensure that workers do not lose their lives again.

Corporate Social Responsibility (CSR)

Corporate social responsibility, a concept that applies the acronym CSR. It reflects on an entity’s or corporation’s initiative to both assess and even take absolute responsibility of any effects that its operations has on the social welfare or environmental status of the society. Usually, the initiative taken by the companies or entities to operate in the social, environmental and even economic environment is often considered to be voluntary. However, it is very essential and could attract the attention of the market forces in case scenarios where the failure of a company to consider this important aspect. That feasibly results to depletion of the level of popularity and market dominance. Usually, successful CSR is often experience when the company operates in a manner that it encourages shared value and social license.

After conducting a detailed review of the issue or scandal, the most appropriate Corporate Social Responsibility is that of the Carroll’s CSR pyramid model.  It is a four-part pyramid that attempts to embrace the entire spectrum affiliated with the society’s expectations of business responsibilities. In fact, the model proceeds to categorize them into differentiated sectors or categories. These social responsibilities include the ethical, economic or profit making, legal and even philanthropic aspect.

 In this case, the most essential aspect is that of being ethical and obeying the law. According to the law, it is ethical to ensure that the rights of all the members of the society and even laborers are respected. That includes ensuring that the right measures are taken in ensuring that the working environment is favorable for both men and women (Our Ethics 2017). In addition, the right compensation is supposed to be granted especially in the case of overtime working. According to the case scenario subject to analysis, Primark failed to observe the ethics of work in hiring children and rewarding them poorly as compared to the expected level of remuneration.

The directors at Primark have a responsibility of ensuring that they come up with policies and procedures that stipulate the essence of observing labor laws. That includes considering crucial issues such as those of remuneration and the working environment. In the context of handling the human resource aspect of the business, the directors also have the responsibility of overseeing the process of implementing the said policies. Accordingly, the directors at Primark have the responsibility of ensuring that policies are developed and implement towards protecting the minority in the society from any courses of exploitation.


The element of ethics is often integrated with that of corporate social responsibility. However, in this case, the applicability differs slightly since there are different scenarios in question. From a definition viewpoint, ethics refers to the moral principles that are expected govern an individual’s demeanor. In philosophy, it is considered to be that branch or section of knowledge that deals with the moral principles. In the business arena, the normative and the applied ethics take precedence of the other area of ethics (Daily Mail Online 2008). For instance, in the context of the normative ethics, the issue of the practical approach of determining action is followed. Alternatively, in the applied ethics, persons are obliged to facilitate a certain form of action and are expected to act in a certain manner when accomplishing these responsibilities. 

There are myriad ethics models from which the utilitarianism model is most applicable in this case (Our Ethics 2017). The utilitarianism model of ethics focuses on the moral rightness of the results. Ideally, it is argued that actions are bad if the outcomes are bad. At the same time, it argues that good actions are considered to be good if the consequences are also good (Guardian 2008). That provides an alternative for the moral relativism and even deontology. In the case of Primark, the decision to employ children and even pay them less is unethical. The decision to employ these children is definitely bad. The same account, the results or consequences are bad. That calls for better decision if the consequences or outcomes have to be excellent.

The process of decision making is supposed to be the limelight of facilitate excellent decisions. However, the value of decision making is facilitated by the incumbent policies and provisions established to streamline specific sectors. Ideally, the directors’ role feature here. They are highly responsible for instituting policies that would otherwise be very essential in guiding the conduct of the other sectors in the company including the human resource department that is responsible for hiring and firing, as well as, compensation the laborers (Trading updates 2017). Hence, the directors are expected to ensure that they develop policies that will act as a guideline for operations and a platform for any necessary executions.

Theories and Literature

Stakeholder Theory

Basically, this theory attempts to outline the extent in which the management stands a position to satisfy the interests of the stakeholders in a respective business (Tricker & Tricker 2014). As such, it focuses on the relationship that exists between the company and the internal, as well as, external stakeholders. Usually, the stakeholders are expected to experiences the highest level of risk whenever the performance of an organization improves or declines. Accordingly, in light with the theory, it is the absolute responsibility of the board of directors to establish a realistic CSR approach in a bid to address the interests of the stakeholders.

The theory applies in absolute terms in the case of Primark Company’s poor approach of addressing the expectations of the employees. For instance, in the case of the collapsed building, the management fails to address the interest of the employees in terms of safety (BBC News 2013). In addition, this theory applies very much in the case where the company fails to pay the employees appropriately but takes the advantage to overwork them (Butler 2014). Regarding this theory, it is clear that the management was less interested in satisfying the interests of the stakeholders from within the organization.

Stewardship Theory

The stewardship theory, from a general understanding, stipulates that the management of the company, if left will little or no supervision, will exhibit actions that will demonstrate that they are responsible stewards of the entity that they control. It is often considered to be the alternative theory of the agency theory that considers that the managers will be assumed to act in their own interests at the expense of the shareholders.  Accordingly, it attempts to underpin the legal concept of a business. In that context, it claims that the directors have embraced and put into consideration the lives of the people through operating responsibly and carefully, as well as, acting by the law. In light with the case of Primark that is subject to analysis, the theory provides that the management or the board of directors is expected to observe the health and safety law, the contract and employment law amongst others (Health and Safety at Work 2017). According to the health and safety law, the employer is expected to protect the health, as well as, the welfare of the entire taskforce (Health and Safety Regulations 2008). Alternatively, the employment law demands that the employers are entitled to at least three categories of rest breaks and also an employment contract according to the contract law (GOV.UK 2017; Rest breaks 2017).

Primark’s leadership, through the directors, fails to consider all these laws and hence result in the catastrophic scandal. For instance, regarding the issue employee safety, the company does not have an internal control system resulting to the collapse of the Rana Plaza Building and even loss of lives (Hickman 2009). Ideally, the scandal can explain that the leadership of the company does not understand the implications of ignoring the safety laws (Daily Mail Online 2014). The same case applies to the company failing to engage employees in meaningful contract. Instead, it allows for people to operate in unfavorable working environment.

Agency Theory

The theory is mainly concerned with addressing problems that may emerge in agency relationship usually between the principal and agent as a result of the unaligned goals or even different aversion levels of risk. In this context, the directors of the company are said to have ignored all the health and safety legal expectations with the intention of maximizing profit and minimizing costs. However, they fail to think of the feasible outcome of ignoring these regulations (Guardian 2008). It is imperative to stipulate that the most feasible reason for the directors to ignore the expectations of the employees in terms of their safety and even remuneration is the intensive efforts to elevate the amount of profit and dividends that could be shared amongst the shareholders. Unfortunately, the Primark company management fails one class of stakeholders and attempts to address the expectation of the other good (Guardian 2008). The imbalance in dealing with the different categories of stakeholders including the employees and the shareholders by the directors implies that there is certainly going to emerge a break-down in the relationship between the employer and the employees. Feasibly, when serious outcomes like loss of life were experienced in the company, it is certain that a large number of employees and even shareholders withdrew from the company’s stakeholder portfolio.

UK Corporate Governance Code 2016

According to the codes, the board of directors is designated with the role of providing entrepreneurial leadership of the company but within a stipulated framework that is characterized by prudent, as well as, effective controls that will facilitate and allow for the assessment and management or risks. In support of this role, it is imperative to understand that effective development, as well as, delivery of a company’s strategic aims, its potential to seize emerging opportunities and ensuring long-term operation will always depend on how risks are managed. That includes the identification, fathoming and even responding to these risks. 

According to legislation CA (Company Act) 2006 of the UK, the directors have the responsibility of exercising reasonable care, skill and diligence as stipulated in section 174 of the act. Further, they are expected to promote the success of the company by operating in such a manner that will benefit the stakeholders as stipulated in section 172 of the act.

Section three

Primark Response to the Issues

After each issue or scandal was highlighted, the Primark Company has been making frantic efforts to respond and address the issues that emerged. The section intend to address the steps that the company has taken with regards to each scandal towards achieving sobriety.

Primark’s Response to the Collapsed Rana Building Case

Immediately after the disaster transpired, Primark made efforts to work with the local partners in Bangladesh to offer financial support, as well as, food aid to the victims and even their families (Gayle 2013). Concurrently, the company commenced working on a long-term plan that would be intended to facilitate compensation to the victims and their families. Accumulatively, the company paid approximately 14 million dollars in the short-term, as well as, long-term compensation. In the year 2015, the company managed to launch the Pasche Achi project (Trading updates 2017). The central purpose of the project was to improve the self-confidence and capabilities of the most vulnerable recipients of the aid. That way, these individuals would gradually retain access and control of their financial compensation towards restoring their well-being.

The company has since joined the rest of the industry in ensuring that the garment making or manufacturing in Bangladesh is safer towards the future. In that case, the company’s management has established a highly dedicated team of experts whose objective is to ensure that they work with the factories on matters affiliated with safety (Workers’ health and safety 2017). In addition, the team will also focus on offering in-depth training for the factory management team, as well as, the entire task force on issues of ensuring that the safety requirements are adhered to and met. In the year 2013, for instance, the company commenced a program whose main objective was to build surveys in Bangladesh. The program would facilitate the assessment of the structural integrity of the factories from which the garments were made. Since the scandal transpired, the company has made efforts to remit its responsibility of making short-term financial payments to the victims as its attempts to improve the systems in a bid to ensure that such a scenario is not experienced within its premises in the long-term (Ticker 2015).

Primark’s Response to the Child Labor Scandal     

The issue of child labor was a prevailing issue that could have cost the company its reputation and even sales in the retail market. The UK clothing firm, however, confirmed that it was not aware of any case of child labor that was going on with the subcontractors that it had. According to the management of the company, there were approximately three Indian subcontractors who acted in the capacity of supplying garments. These sub-contractors often took advantage of the children by offering them job, an issue that the company was not aware of according to the management of Primark.

The company is said to have acted with regards to its codes of practice for suppliers which did prohibit the use of child labor in the manufacturing chain. Accordingly, the company declared that it would terminate the relations it had with these three supplier entities. It also declared its intentions to terminate its relations with any supplier who was not willing to make the necessary changes in as far as employment practices are concerned. According to research, the company proved to comprise the UK high street successful entities especially in its efforts towards that the employees are not exploited in their line of work.

It is also imperative to stipulate that the company, upon identifying the hitches in its supply chain, decided to keep the clothes acquired from these suppliers from sales. Instead, the company decided to take the initiative of refunding the customers who would return them (Siegle 2013). The company then made attempts to integrate with the society through attempting to help improve the lives of the young people in the areas it acquired its products. The chief executive declared that the company would establish a substantial six figure sum for that purpose.

Primark’s Response to the Sweatshop Working Conditions Scandal

It is indisputable to stipulate that this scandal resulted in a serious blow towards the company’s reputation. The argument was that the website of the company itself declared that the company would pay the living wages, the child labor shall not be condoned, environmental expectations shall be met and there shall not be inhuman treatment of the task force. That was in accordance with the ETI code of conduct. Most consumers were devastated by the company’s unethical demeanor resulting in heavy criticism.

In response to this experience, Primark commenced by proposing the renewal of its vision statement. The new one stipulated that, “as an international brand with a global supply we have a responsibility to act ethically.” The vision goes further to declare that the company embraces that responsibility considering it as an opportunity toward which it will be a great force of good. The company declared that it was intensively committed toward providing value for the customers and not at the expense of those employed to make the products. Ideally, the new vision statement provided a clear pathway towards which the company intended to act responsibly and even ethically.

In line with these declarations, it is critical to also stipulate that the company has moved on towards embracing corporate social responsibility as a way of restoring the company’s reputation. Hence, the first initiative that the company took was to rebrand its image in the public domain. Then, the company created a slot for an Ethical Trade Director whose responsibility was to audit new and current suppliers and even conduct a training on corporate social responsibility. Hence, he or she was to be in charge of teaching the stakeholders of the ethical issues and awareness towards ensuring that the company does not experience similar outbursts. From a professional perspective, all these were efforts to rebrand the company and ensure that it retains its public image in the long-run. Consumers would certainly restore the level of trust they had in the company.

Possibility of Similar Events Happening In the UK

Ideally, from an individualized perspective, the possibility of similar events happening in the United Kingdom varies. If, in any case, the management of Primark learned from the past mistake that cost it more than 14 million dollars in the compensation scheme, then, the feasibility is intensively low. Particularly, the issue of workers’ safety has been in the lime light with the company making frantic efforts to restore sanity in as far as risk management is concerned (Workers’ health and safety 2017). In the UK, the legal system provides a series of codes within which the directors are expected to act concerning the issue of risk management. In as much as the company’s management may fall out in some incidences in as far as facilitating the welfare of the employees is concerned, there are clearly stipulated rules regarding its responsibility.

In reference to the recent cases that have continually hurt the reputation of the company, the company has had a tough time trying to restore its lost reputation and market. Initially, the company was considered to be a strong player in the industry and particularly regarding its value priced retailing approach. These issues, from a personal perspective, have resulted from the director’s ignorance of the feasible outcomes. For instance, the fact that the company allowed workers in Bangladesh to work under poor working conditions did not rhyme with the company’s escalating profits. That cost the company a lot, a direction that the company may not want to trend in the same path.

Currently, the company has revised its vision statement in such a manner that the objective of the company not to allow such events to recur is vivid. As stipulated in the previous section of the case study, the company’s vision statement features the intentions of the company to ensure that it acts in a responsible and ethical manner. The forces that drive a company towards not conducting a risk assessment especially regarding the premises in which the workers are supposed to operate from include attempts to maximize profit by reducing the costs of risk management. However, as experienced in Primark’s case, it is evidence that the cost of not investing in risk management and employee safety is higher. Accordingly, it is rational that in the case of Primark, the feasibility of such events occurring in the United Kingdom is very low. First, from experience, entities including Primark are likely take the welfare of the employees very serious in the UK. Secondly, the legal system from which monitoring of the practices of entities in the UK is undertaken is very clear. Any attempts to act otherwise will most likely attract legal penalties.

General Lessons Learned

The entire case study sheds a clear message regarding the essentiality of operating in a responsible and ethical manner by companies. There are distinct lessons that are affiliated with each case scenario. For instance, in the context of the case that involved the collapsing of the Rana building, it is essential to ensure that the working environments are assessed in terms of their fitness to support operations. The end results of failing to assess the environment was loss of life, property and leaving others with disabilities. That calls for the need to put into place internal control measures that will conduct frequent check-ups on the safety levels of the working environments (Internal controls 2016). That reduces the feasibility of losing life and even incurring a cost of compensating victims like in the case of Primark.

In addition, regarding the issue of employee welfare including appropriateness in compensation especially for the extra-hours worked also draws immense attention. From a personal perspective, I have learned that failure to compensate employees appropriate reflects absolute ignorance of the rights of employees in as much as their welfare is concerned (Ticker 2015). Failure to address the interest of the workers or overemphasizing the interests of the shareholders at the expense of the workers is likely to result in poor outcomes in the long-run. Ideally, that implies that in as much as any company would wish in cost efficient manner. It is equally important to ensure that the approaches taken are ethical and responsible.            

Investment Decision

In light with the case scenario at hand, any investment decision ought to be accompanied by a comprehensively prepared risk management plan. A designated team is necessary in the process of evaluating the feasibility of experiencing risks, the magnitude of these risk and the appropriate approaches towards addressing these risks. Ideally, the risk may require that an investment decision be made and that the financial expectations be resolved in appropriate terms. A risk can either be accepted or prevented. Accordingly, just like in the case of Primark, it would be equally important to ensure that before commencing the operations, the necessary risk assessment be conducted to ensure that the investment decision is lucrative (Tricker & Tricker 2015).    


Primark Company has had a series of challenges most of which are associate with how it deals with the stakeholders. These challenges, upon a detailed review, expresses indefinite failure to consider and prioritize the welfare of the employees and the legal provisions governing the labor sector. As a result, inadequacy in the measures necessary to ensure workers operate in an safe and healthy environment resulted in deaths, and permanent disabilities in cases such as that of the Rana building collapsing. Similarly, the case of the company’s supply chain falling out of the stakeholders’ expectations by having young children being employed has also cost the company its reputation hence a loss in the market control. For the company to restore its reputation, the case study provides that it has had to rebrand itself all the way from its vision statement (Ticker 2015). Its efforts to institute structures that would facilitate easy implementation and monitoring of employee safety and ethical practices in the company, the company has gradually restored its initial reputation. Accordingly, the bottom line is that if Primark did what was expected of it’s in the internal and external business environment, there exists a possibility that its competitiveness in the retail industry would surpass most of the competitors in the industry.        


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