PROBLEM 1–7 Ethics in Business [LO3] Consumers and attorney generals in more tha

Question

PROBLEM 1–7 Ethics in Business [LO3]
Consumers and attorney generals in more than 40 states accused a prominent nationwide chain of
auto repair shops of misleading customers and selling them unnecessary parts and services, from
brake jobs to front-end alignments. Lynn Sharpe Paine reported the situation as follows in “Managing
for Organizational Integrity,” Harvard Business Review, Volume 72 Issue 3:
In the face of declining revenues, shrinking market share, and an increasingly competitive
market . . . management attempted to spur performance of its auto centers. . . . The automotive
service advisers were given product-specifi c sales quotas—sell so many springs, shock absorbers,
alignments, or brake jobs per shift—and paid a commission based on sales. . . .
[F]ailure to meet quotas could lead to a transfer or a reduction in work hours. Some employees
spoke of the “pressure, pressure, pressure” to bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the
only way to satisfy top management was by selling products and services to customers that
they didn’t really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell
customers unnecessary parts and services.
Required:
1. How would this behavior affect customers? How might customers attempt to protect themselves against this behavior?
2. How would this behavior probably affect profi ts and employment in the automotive service industry?

Explanation / Answer

1. This type of attittude is giving enormous problems to the customers,Because once their vehicle enter into a garrage for some small repair, the real problem starts, as we just rely on the technician or mechanic beofre handover vehicle. To get more amounts simply they will change the spareparts irrespective of its necessity.   Orignial spares are replaced by duplicates, which results the drop in the efficiency of the vehicles.   There are companies where simply they will give ads to get more sales, by allowing more warranties.   The customer by seeing the ads get attracted and into their net like a fish, eventhough knowingly fell in their traps.  
2.There is a competition every where, in every industry. To get more pay to safe guard their employment, the workers will do all easy money making things. As long as this situation is goes on well there is no problem , but once the real things comes into the public, then the company will lose its goodwill, and customers feared to go near them. This will affect the company's reputation and business. Once business is effected, naturally profits will come down, a stage will come the company ceases its existence from the market.

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