CASE SEARS, ROEBUCK, AND CO.: THE AUTO CENTER SCANDAL Sears, Roebuck, and Co. be

Question

CASE SEARS, ROEBUCK, AND CO.: THE AUTO CENTER SCANDAL Sears, Roebuck, and Co. began in the late 1800s as a mail-order company that sold farm supplies and other consumer items. Its first retail store opened in the mid-19s Responding to changes in American society, such as the move from farms to facto and the presence of the automobi ries ie in many homes, hundreds of retail stores opened ly it diversified to include real estate (Coldwell Banker), r the years. The company expanded rapidly, and eventual ove er businesses: insurance (Allstate Insurance), securities (Dean Witter Reynolds), and credit cards (Discover). E businesses became its own division, in addition to the included retail stores, appliances, and auto service centers. By t company was reporting revenues and earnings in the billions of dollars. ach of these other that merchandising group he early 1990s, the history of high earnings and its penetration into the U.S. market, ess began to experience serious financial difficulties in the 1980s the Sears retail busin

Explanation / Answer

Answer 1:

In 1991,the compensation plan was changed to include commission component. To increase sales, commissions and product specific sales quota was introduced, this was actually a sort of ethical issue in disguise as for example, a service advisor was given a goal of selling a certain no. Of front end alignments or brake repairs during each shift. This issue was revealed in an undercover investigation of brake repairs. The problem was a consequence of sears auto center's compensation system.

Answer 2:

The investigations pointed out that sears Auto centers had been misleading customers and charging them for unnecessary repairs. One major reason, as reported in a complaint by sears employee in an email is that on jan1, 1991, the mechanics, installers and tire changers had their hourly wages cut to an amount termed as fixed dollar amount which varied depending upon classification. It, in essence means that more work done per hour, tge more pay they get which is nothing but commission in other words. It is obvious that sears profits will increase in this way and the workers will prefer quantity over quality to earn more.

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