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The Sears, Roebuck and Co - Auto Center Scandal Case Study

Autor:   •  November 25, 2011  •  Case Study  •  895 Words (4 Pages)  •  3,671 Views

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The Sears, Roebuck, and Co. auto center scandal is a scandal that was brought about by the California Department of Consumer Affairs. The facts involved in the case are diverse, and involve top management and auto mechanics in the auto center of Sears stores. Sears, Roebuck, and Co. has been in business since the late 1800s, and the company sold farm supplies and other products. As the years went by, the company expanded and grew in the process. The company enjoyed high revenues for years, but all that came to a halt as competition increased. The company saw great losses to Wal-Mart, and they were lagging behind Wal-Mart in profits (Trevino & Nelson, 2007).

In order to compete with Wal-Mart and other discount retailers, Sears began to focus on increasing profits on every level in the company. The company introduced a productivity incentive plan in their auto centers nationwide. Previously, mechanics were paid an hourly wage; but in the new plan, mechanics were paid a base salary plus commission. In the new plan, Auto service advisors who were previously paid a salary were now getting paid based on how many products they sold and commissions (Trevino & Nelson, 2007).

The ethical issues in this case are numerous, but the number one ethical issue in the case is that the company over looked their values, integrity and just focused on increasing profits. The goal of maximizing profits led employees in the company to cut corners and just focus on the dollar amount. By introducing the productivity incentive plan, service advisors and mechanics were recommending and making customers pay for unnecessary repair services. Service advisors and mechanics were acting unethical because they were motivated to increase their commission. The plan in a way incentivized cutting corners, deceiving customers all in the name of increasing profits.

The affected parties in this case are customers, employees and the reputation of Sears. Customers were misled about services they need it and they were charged for unnecessary repairs. Employees were affected because they were pressured to meet sales quotas, and if they did not, then they could be terminated. In essence, Employees were breaking the deontological principle. Their duty was to serve customers and provide them honest opinions about repairs, but the productivity incentive plan, encouraged them to act unethically. Reaching quotas and getting commissions made it necessary for service advisors and mechanics to overcharge customers for unnecessary repairs and cut corners to save time.

The consequences for customers were that they were charged for unnecessary service repairs and lost trust in the company. Customers were misled and lied to by Sears auto center employees. The consequences for employees were to either meet sales quotas or get terminated. Employees were forced to act unethical due to trying to meet sales quotas and making proper commissions. Employees did not

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