Business in Islam

Khadim Husain

Introduction  

Islam is often perceived as an impediment to  business activity. Business history in Islam begins  a long time ago and historically has been  favourable to the merchant, beginning with  Prophet Muhammad ﷺ who was a merchant)  and his wife Khadijah (RA) (who was also a  merchant). Shariah literally translated, means  "the way" or "path". The Shariah and Shariah  compliance is used to refer both to the Islamic  System of law. It deals with many things,  including banking, business, contracts,  economics, family, hygiene, politics, and social  issues. 

There are two primary sources of Islamic law  believed by Muslim: the precepts set forth in the  Holy Qur’an, and the example set by the Islamic  Prophet Muhammad ﷺ in the Sunnah. In Islam,  the law is analogous to the "natural law" of the  physical sciences; something to be discovered  rather than invented (Ahmad, 1992). 

Islam supports business activity as mentioned in  the Holy Qur’an many times. Sustenance often  came from business activity which gives rise to  marketing activities. The marketing activities in  Islam had reached East and West Africa as well as  East Asia. Both the Prophet Muhammad ﷺ and  his wife Khadijah (RA) were merchants at the  holy city of Makkah. Being a distant and barren  inland town and having but a small port of  Shu'ayba, Makkah grew into a great trading  centre by somehow forcing trade under its control  (Bulliet, 1975). Makkah is still one of the centres  of commercial activities of the Arabs. Beginning  with business, continuing with marketing, and  ending up with the consumer which can also be  known as producer. 

"It is God Who hath created the heavens and the  earth and send down rain from the skies, and  with it bring out fruits wherewith to feed you; it is  He Who hath made the ships subject to you, that  they may sail through the sea by His command;  and the rivers (also) hath He made subject to you.  And He hath made subject to you the sun and the  moon, both diligently pursuing their courses; and  the night and the day hath he (also) made subject  to you. And He gives you of all that ye ask for. But  if ye count the favours of God, never will ye be able to number them. Verily, man is given up to  injustice and ingratitude" [Surah Ibrahim 14:32-34]

Islam has no distinction between the religion and  life. Islamic law not only covers rituals but also  many aspects of human life. The authority in  Islam is of four basic roots: the Holy Qur’an in its  legislative segments, the example of the Prophet ﷺ as related in the Hadith, the consensus of the  Muslims (ijma). Islam strongly emphasises on  moral codes of conduct in every human behaviour  and the aspect of life. Moreover, Islam has also  explained the ethics of business.

There is also a very effective and popular Islamic  business system observed by many people all  around the world. Lots of European business  scholars and related people did not believe in any  kind of ethics in business but Islamic teachings  gave different ethical codes of conduct for the  betterment of the society. The concept of going  “green” is evident in Islamic literature, thus  humans, who have been created as the leaders of  the earth, are held responsible for the environment. Humans should uphold and spread  the message of Islam as the noblest and heaviest  trust (amanah).

Islamic Marketing  

The approach of business in Islam continues with  Islamic marketing and, as always, this comes with  a collection of moral responsibilities. This concept  offers morality, sustainability, durability, self sufficiency, security, and adequacy. This is a  robust foundation built on top of a harmonised  living with the Creator and other creations  including all that composes the environment and  of course, mankind. it is opposed to, for example,  the “religious" pursuit of heroically prevailing over  the others, of piling up figures in a bank book or  having a better home in a neighbourhood, a  bigger car or better children: of being heroes in  our own fallible ways. 

Islam could be applied in the realm of modern  marketing theory. Though not all of its elements  could be applied in Islamic society, modern  marketing theory will provide some elements  which could be utilised in developing Islamic  marketing theory. At the heart of Islamic  marketing is the principle of value-maximisation based on equity and justice for the wider welfare  of the society.

Although the purpose of Islamic  marketing is this "business for profit", the  importance is given to the satisfaction of  customer. Islamic business rules cannot be  changed nor amended by individuals or  companies. Unique rules are forever and for  everyone (Damirichi, G., and Shafai, J.., 2011). 

Waking up from this endless and fruitless  acquisition of goods is what we may compare to  the acknowledgement of the imminence of death  as Sigmund Freud convincingly put it: 'This  hardly seems indeed a greater achievement, but it  has the merit of taking somewhat more into  account, the true”. Islamic marketing should  appeal to consumers outside the traditional  Islamic niche in order to expand although it is tempting to believe that the best measures or rules  for business success are a company's current sales  and profits; that the right sales and marketing  efforts will always get a company more customers  and that the company value is created by offering  differentiated products and services. Hence, it is  only natural that marketers ask themselves, "If  consumers use ‘Islamic’ products, what's in it for  them?" 

"...As for those in whose hearts is deviation [from  truth], they will follow that of it which is  unspecific, seeking discord and seeking an  interpretation [suitable to them]. And no one  knows its [true] interpretation except Allah. But  those firm in knowledge say, "We believe in it. All  is from our Lord." And no one will be reminded  except those of understanding."  [Surah Al-Imran, 3:7] 

As humans are social creatures, they tend to  interact with each other in multiple ways, what  we would describe as Muamalah. An Islamic  Muamalah consists of five major components: Rabbaniah (Godliness), Akhlaqiah (righteousness), Insaniah (humanity) Wasatiah (equality/balance) and Waqi'iah (realisticity).  Genuine Islamic marketing puts equal emphasis  on all five. This, we would later link to the notion  of Islamic Green Marketing. 

 "And prepare against them whatever you are able  of power and of steeds of war by which you may  terrify the enemy of Allah ﷻ and your enemy and  others besides them whom you do not know [but]  whom Allah ﷻ knows. And whatever you spend in  the cause of Allah ﷻ will be fully repaid to you, and  you will not be wronged" [Surah Al-Anfal 8:60]  

Consumer Behaviour  

Due to importance of the consumer in business, it  is useful to discuss consumer behaviour.  Consumer behaviour is a psychological  (intrapersonal), sociological (interpersonal) and  economical study starting from the search for  information to actual purchase to consumption to  disposal of goods or services by consumers and to  possibility of future purchases that tend to map  the why, when, where and how a product is or is  not bought. An outcome of this methodology is  market segmentation based on customer  characteristics relative to product attributes,  benefits sought, service quality, buying behaviour  and more recently, propensity to switch suppliers.  Consumer behaviour has changed over the years  due to market saturation, unemployment, and  increase in intensity of competition. These and  many more triggered policy adjustments among  manufacturers that are intended to satisfy  customer needs and acquire new markets. 

In Germany, between 1960 and 1990, a 40%  decrease in number of retails and a 50% increase  in the respective sales floor (meter squared) were  recorded. It took only ten years for the number of  products to increase by 130%, the number of  product varieties to increase by 420% and the  product lifecycle to decrease by 80% (http://www.nzzfolio.ch). What the consumers  are dealing with is an ever-expanding illusion of  choice, which, under the influence of money,  would only benefit the manufacturers. 

This unsustainable sequence is what led to the  environmental and social crises that we are facing  today. With the mass production of goods that  would eventually, after a predetermined period,  end, manufacturers are getting more and more  money while at the same time, using more and  more unrecyclable plastic materials, for example.  Instead of investing in prolonging the lifespan of  the goods, they are investing in advertising that  more frequently than not, involves boundless  exposure of the female anatomy. 

Islamic Marketing Mix  

The marketing mix term coined by Neil Borden in  1953 and then reformulated by his associate,  James Culliton (1948) is based on earlier idea  proposed. He describes the role of the marketing  manager as a "mixer of ingredient". Marketing  mix comes with price, product, distribution, and  promotion. 

Saeed, Ahmad, and Mukhtar (2001) mentioned  that Islamic marketing ethics based on the principles of justice and equity in Islam differs  from secular ethics in many ways. The Islamic  Marketing Mix in terms of the traditional "4Ps"  refers to the traditional marketing method. The "4  Cs" approach puts the customer - "you" - first. The  "4Cs" changes the marketing mix definition from  Product, Price, and Promotion to Customer Value,  Cost, Convenience and Communication. This  approach on marketing mix seeks to turn  traditional marketing thinking on its head by  looking at sales.

Khadim Husain

Business Personnel, Alimiyyah Graduate

and Student of Shaykh Faizulhaq Abdulaziz حفظه الله