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Chapter 13 Consumer Stakeholders: Information Issues and Responses SUGGESTED ANSWERS TO DISCUSSION QUESTIONS Students should recognize that their answers to these discussion questions should be well reasoned and supported with evidence. Although some answers will be more correct than others, students should be aware that simplistic answers to complex questions, problems, or issues such as these will never be “good” answers. How do issues such as equitable distribution of goods and services and the sustainability of the economy relate to consumer rights, and what are the implications of consumer behavior on global poverty and environmental sustainability? Two concerns that are relevant, but most consumers don’t consider, are the right of all consumers to an equitable distribution of goods and services, and the right to a sustainable economy. Many consumers in the United States are in the enviable position of being able to buy anything and everything they want (within certain economic constraints, of course). But they rarely, if ever, consider the plight of people living in poverty here, or inhabitants of Third World countries who struggle simply to get enough to eat. Related to the first concern is the need to consider the long-term effects our consumption patterns have on the sustainability of life on earth. E. F. Schumacher, in Small is Beautiful (New York: Harper & Row, 1973), points out that, even if we think we have solved the production problem (i.e., have the ability to produce enough to feed, clothe, and house everyone in the world), we are deluding ourselves. He does not argue that we are incapable of doing that, but he points out that in doing so we are depleting non-renewable resources without figuring out how to replace them or use renewable sources of energy. How does the provided answer from "Business & Society: Ethics, Sustainability, and Stakeholder Management" assess the effectiveness of the consumer movement in advocating for quality goods and services, particularly in the context of customer service and the challenges posed by outsourcing? The consumer movement seems to be alive and well, in terms of advocating for quality goods and services. Most of the products we buy today work well and are reasonably safe. Furthermore, as the text notes, while the consumer movement still occurs at the grassroots level, individuals now have the power of the internet to rally the troops. Global companies now must manage their business with the expectation that their transgressions can, and will be, broadcast on the World Wide Web. What we have not accomplished is getting companies to provide good customer service. Regardless of the product or service involved, many consumers remained frustrated by the level of customer service they receive. Companies that outsource customer service functions often experience customer dissatisfaction with the level of customer service provided. Recently, I was on the phone with a satellite provider trying to arrange a hook-up. The provider had outsourced this function to another country, and it took me four hours to set-up an appointment with a technician who lived 30 minutes away. Understandably, this was a frustrating process and almost influenced my decision to switch providers. The other shortcomings of the consumer movement are a result of the movement not focusing on them—those items mentioned in answer #1, equitable distribution of goods and services and a sustainable economy. What are some ethical concerns associated with advertising to children, particularly in the fast food industry, and how do these concerns extend to the practice of product placement in television and movies? Two examples involve advertising to children. The first is the fast food industry’s focus on advertising to young children, who have no concept of a healthy diet. Fast food marketers adhere to the principle that if they can “hook” the children while they are young, they will be customers for life. Many of the ads target children in the 2 to 5 year age, with the idea that the children will then “nag” their parents to take them to the fast food restaurant. Many times they have the additional lure of some toy or related item that encourages a child to frequent a particular fast food restaurant. This brings up the second example, which is that companies that do target young children do so specifically with the “nag” factor in mind. They have done studies that show how much more likely an adult is to buy a certain product or service if “nagged” by a child. Both examples are blatantly unethical, because they target an audience that is incapable of making fully rational choices. I also have concerns over the growing use of product placement for the following reasons (1) individuals may be unable to make conscience decisions regarding the product and may be influenced by the implications of the placement of the product without realizing what is happening; (2) the constant bombardment of the placement of products in television and movies can ruin one’s enjoyment of the show or film; and (3) storylines of television and movies may be altered to accommodate the product of the highest bidder, resulting in a commercialization of artistic expression. What are the arguments for implementing consumer financial products legislation to protect consumers from unfair or predatory practices, as discussed in the 'Consumer Stakeholders: Information Issues and Responses' chapter of the book 'Business & Society: Ethics, Sustainability, and Stakeholder Management'? There has been a need for consumer financial products legislation for some time. Certain businesses have exploited consumers’ financial circumstances, lack of education or general naivety to bind them to unconscionable contracts. As a result, these consumers may find themselves in situations where they cannot realistically meet their debt obligations. To the extent that these businesses use unfair or predatory practices in selling their financial products, regulation is necessary to protect consumers. Consumers expect business to sell goods that are free from defects or extreme risk; many believe that providers of financial service products also should meet this expectation. GROUP ACTIVITY Divide students into groups of four to five students. Have each student keep a journal where they log each television show or movie that they watch during a two to three week period. Students should track each time they spot a product placement or a plot placement in a television show or movie. Once the two to three week period is over, students should meet in their group to discuss the various product placements and/or plot placements that they viewed. Students should discuss any ethical issues related to the product placement and/or plot placements associated with the programs and movies that they watched. Students should select the most controversial product placement and/or plot placement and present it to the class, including an analysis of the ethical issues involved. If possible, students should show a television or movie clip with the product placement and/or product placement for the other students to view. Group Activity: Analysis of Product and Plot Placements in Television Shows and Movies 1. Individual Journaling: Each student keeps a journal for two to three weeks, logging every television show or movie they watch. In the journal, students note down instances of product placements or plot placements they observe during the viewing. 2. Group Discussion: After the observation period, students meet in their groups to discuss the product and plot placements they identified. They share their observations, noting the frequency and context of each placement. Groups discuss any ethical issues they perceive related to the placements, such as potential manipulation of viewers, intrusion of advertising into entertainment, or conflicts of interest. 3. Selection of Controversial Placement: Within each group, students collectively choose the most controversial product or plot placement they encountered. They consider factors such as the subtlety of the placement, its alignment with the storyline, and its potential impact on viewers. 4. Presentation to the Class: One member from each group presents the selected controversial placement to the class. The presentation includes an analysis of the ethical issues involved, such as the blurring of entertainment and advertising boundaries, potential effects on viewer perceptions, and implications for media consumption. If possible, the presenter shows a relevant television or movie clip to illustrate the placement and its context. 5. Class Discussion and Reflection: Following each presentation, the class engages in a discussion about the ethical considerations raised by the placements. Students share their perspectives on the role of advertising in media, the responsibility of content creators and advertisers, and the impact on audience perceptions and behaviors. The activity concludes with a reflection on the influence of product and plot placements in shaping viewer experiences and perceptions of media content. This activity encourages critical thinking about the integration of advertising into entertainment media and fosters awareness of the ethical implications of such placements. It also promotes collaboration and discussion among students, facilitating deeper engagement with media texts and their societal effects. INDIVIDUAL ASSIGNMENTS Individual Assignment 1 – GoodGuide Provide students with the following instructions: Go to www.goodguide.com (a website that provides consumers with information on the health, environmental and social impacts of certain products). Select a product that you use or would consider using. Click on “Full Rating Details for This Product.” Identify the product in your typed response and answer the following questions: (1) What is the product’s overall score? What does this score mean? (2) Environment: What is the product’s score regarding environmental impact? What factors were considered in calculating this score? Why did the product earn this score? (3) Community (Society): What is the product’s score regarding society? What factors were considered in calculating this score? Why did the product earn this score? (4) Employees (Workers): What is the product’s score regarding workers? What factors were considered in calculating this score? Why did the product earn this score? (5) Consumers: What is the product’s score regarding consumers? What factors were considered in calculating this score? Why did the product earn this score? You should include a printed copy of the website with your typed response. You can follow these general steps to complete it: 1. Visit GoodGuide Website: Go to www.goodguide.com. 2. Select a Product: Choose a product that you currently use or would consider using. 3. Find Product Rating Details: Once you've selected a product, look for the option to view the "Full Rating Details for This Product." 4. Identify the Product: In your response, clearly state the name of the product you chose. 5. Answer the Questions: (1) Overall Score: Note the product’s overall score and explain its significance. This score typically reflects the product's overall impact on health, environment, and society. Higher scores indicate better performance in these areas. (2) Environmental Impact: Describe the product's score concerning environmental impact. Discuss the factors considered in calculating this score, such as resource usage, emissions, and waste management practices. Explain why the product earned this score based on its environmental footprint. (3) Social Impact: Explain the product's score regarding its impact on society. Discuss factors considered, such as community involvement, philanthropy, and social responsibility initiatives. Justify why the product received this score based on its societal contributions. (4) Worker Conditions: Discuss the product's score concerning worker conditions. Identify factors considered, such as labor practices, worker safety, and fair wages. Justify why the product earned this score based on its treatment of workers throughout its supply chain. (5) Consumer Safety: Describe the product's score concerning consumer safety. Discuss factors considered, such as product labeling, ingredient safety, and product testing. Explain why the product received this score based on its commitment to consumer health and safety. 6. Include a Printed Copy: Print a copy of the website page displaying the product details, and include it with your typed response. By following these steps, you'll provide a comprehensive analysis of the chosen product's impact on health, environment, and society, as evaluated by GoodGuide. Individual Assignment 2 – It’s Guaranteed Have students research the difference between a full and limited warranty. Ask students to locate copies of written warranties that they have received in connection with the purchase of various products. Students should review the warranties to determine which companies provide a full warranty and which companies provide a limited warranty. Students should summarize their findings and discuss their impressions of the use of such warranties. To complete this assignment, students should follow these steps: 1. Research: Begin by researching the difference between a full warranty and a limited warranty. A full warranty typically covers the repair or replacement of a product for any defects or malfunctions during a specified period, with all costs borne by the manufacturer. In contrast, a limited warranty may have specific terms and conditions, such as only covering certain parts or requiring the consumer to bear some repair costs. 2. Locate Written Warranties: Students should gather written warranties received with the purchase of various products. These warranties might include electronics, appliances, vehicles, or other goods. 3. Review Warranties: Examine each warranty to determine whether it offers a full warranty or a limited warranty. Look for details on coverage, duration, exclusions, and any conditions or limitations. 4. Summarize Findings: Create a summary of the findings, noting which companies provide full warranties and which provide limited warranties. Include details such as the types of products covered and the terms of each warranty. 5. Discuss Impressions: Reflect on the use of such warranties based on your findings. Consider factors such as consumer protection, product quality, brand reputation, and the impact on consumer decision-making. Discuss the advantages and disadvantages of full and limited warranties from both the consumer's and the manufacturer's perspectives. By completing these steps, students will gain insights into the differences between full and limited warranties, as well as their implications for consumers and manufacturers. They'll also develop an understanding of how warranties can influence purchasing decisions and consumer satisfaction. Chapter 14 Consumer Stakeholders: Product and Service Issues SUGGESTED ANSWERS TO DISCUSSION QUESTIONS Students should recognize that their answers to these discussion questions should be well reasoned and supported with evidence. Although some answers will be more correct than others, students should be aware that simplistic answers to complex questions, problems, or issues such as these will never be “good” answers. What are the various dimensions of quality as outlined in the textbook, and how do these dimensions influence consumer perceptions and expectations regarding products and services? Additionally, how might businesses address these different dimensions to meet diverse consumer needs and preferences effectively? As the text notes, quality means different things to different people. Consequently, students may differ on what they consider the major dimensions of quality. The eight dimensions of quality mentioned in the textbook (and examples of products or services in which each is important) are: (1) performance (a sports car or computer), (2) features (a video game), (3) reliability (a watch), (4) conformance (a software program, so that it can communicate with other programs), (5) durability (a lawn mower), (6) serviceability (an automobile), (7) aesthetics (an evening gown), and (8) perceived quality (the panache of a trendy restaurant). How does the provided answer from "Business & Society: Ethics, Sustainability, and Stakeholder Management" outline three ethical theories that influence our understanding of quality in products and services, and how do these theories contribute to shaping business practices in relation to consumer stakeholders? Three ethical theories shape our understanding of quality: (1) the contractual theory, (2) the due-care theory, and (3) the social costs view. The contractual theory focuses on the terms of the sale between the company and the customer, emphasizing the terms of the sale, information provided to the customer, and avoiding some anti-friendly customer behaviors. The due-care theory provides that the customer is the more vulnerable party; consequently, the firm has a greater ethical responsibility to the customer. The contractual and due-care theories do little to inform us about quality because they take the product as a given. The provider knows more about the product than does the buyer, so these theories focus on fulfilling the seller’s duties and protecting the customer. The social costs view can help a business person to focus on quality issues because of the threat of additional costs. This theory says that if a product harms a customer then the provider should bear the cost of that harm. With this sword hanging over their heads, providers may be more inclined to provide high quality, safe products to their customers. What are some factors contributing to the product liability crisis in the United States, and how do issues such as litigation culture, financial awards, and the doctrine of strict liability intersect with the prevalence of lawsuits and the role of legal professionals in this context? The main reason we have a product liability crisis in the United States is our emphasis on litigation as the way to solve problems. If we have a problem we sue someone, rather than try to find a reasonable resolution. Why we are so litigious is beyond the scope of this question, but the fact that we are does impact the state of product liability. Another reason is the growing size of financial awards given to plaintiffs. Again, we should go deeper into why this is occurring. Could it be that businesses bring this on themselves by their cavalier treatment of the customers who are now jurors? Finally, the doctrine of strict liability suggests that anyone in the value chain is liable for harm caused to users of the product in question, if the product was defective and unreasonably dangerous. This opens wide the field of potential targets for product liability suits. Furthermore, while the text does not propose this as a contributing factor to the product liability crisis, the fact that the United States has more lawyers per capita than any other nation may impact the number of product liability lawsuits filed each year. Generally, more lawyers mean more individuals willing to take on product liability lawsuits, whether they are frivolous or not. What are the implications of different liability doctrines such as strict liability, absolute liability, and market share liability on businesses and consumers, as discussed in the 'Consumer Stakeholders: Product and Service Issues' chapter of the book 'Business & Society: Ethics, Sustainability, and Stakeholder Management'? The doctrine of strict liability holds that anyone in the value chain is liable for harm caused to users if the product as sold was defective and unreasonably dangerous. The use of the strict liability doctrine in U.S. courts is a primary reason for the litigious state of the nation. While some parties argue that strict liability increases product safety, others note that the costs of these lawsuits ultimately are passed on to the consumer. Absolute liability goes beyond this to say that a firm is liable for damages even if it had no way of knowing that the product might cause a problem later. Under this principle, it does no good for a company to claim that it did its best at the time, given the prevailing state of the art. Market share liability further extends the concept to cover all companies that produced a certain product, regardless if the plaintiff can prove that he/she used a specific company’s goods. Each company’s liability would be in proportion to the market share it held. This doctrine is not widely upheld at this point. These principles, taken together, point to a movement away from caveat emptor (buyer beware) to caveat vendor (let the seller take care). It is important to emphasize that the liability doctrine applicable to a specific case is largely dependant on state laws. Depending on whether a state is a strict liability, absolute liability or market share liability state, this could, theoretically, impact businesses’ decisions to conduct business in a particular jurisdiction. What factors contribute to the balance of power between businesses and consumer stakeholders in the United States, particularly in the context of regulatory agencies such as the FDA and CPSC, and how might evolving global trade dynamics impact the oversight and regulation of product safety? Although business is, by far, the most powerful social institution in the United States, the consumer movement seems to be holding its own. In part this is due to the fact that business is so competitive that firms cede some power to consumers in the hopes of capturing more business. With that climate as the backdrop, it is likely that the FDA and CPSC will continue much as they are now—going concerns with moderate successes and failures. Business will not be able to get rid of the agencies, nor will consumers be able to bring about their ascendance; however, as global trade increases and other countries import products that fail to meet U.S. safety standards, the role of the CPSC in product oversight may expand. Politics certainly plays a role in this tussle. This fact can be seen in the shifting focus of the CPSC from consumer focused to a more neutral stance. Because business has such influence over government (as discussed in Chapter 12), the fact that politics plays a role means that business has a great deal of control over the process. What factors have driven businesses to focus on improving the quality and safety of products and services in recent years, as highlighted in the provided answer? Additionally, what challenges do businesses face in maintaining customer satisfaction through post-sale customer service, and why do some companies struggle to allocate sufficient resources for this purpose? It seems that businesses have strived to improve the quality and safety of products and services over the last decade. Corporate focus on these issues is driven by businesses’ need to (1) retain a loyal consumer base despite increased competition, and (2) avoid costly litigation. Consequently, business, as a whole, seems devoted to meeting customer expectations with regards to quality and safety. One area with which companies still seem to struggle is customer service once a product has been purchased. Although the text notes that the “key to customer retention is customer service,” many companies seem to either lack sufficient resources to devote to post-sale service or are simply unwilling to divert such resources for this purpose. GROUP ACTIVITIES Group Activity 1 - Product Recalls Divide students into groups of four to five students. Assign each group to research a recent product recall. Students should determine why the product was recalled and whether the company could have taken steps in the production process to avoid the recall. Students should establish whether the firm in question embraces the contractual theory, the due-care theory or the social costs view. Finally, each group should draft a sample press release for the company addressing the recall and how the company intends to manage quality issues. To complete Group Activity 1 on Product Recalls, follow these steps: 1. Group Formation: Divide students into groups of four to five members. 2. Research a Recent Product Recall: Assign each group a recent product recall to research. They can choose from various sources such as news websites, consumer protection agencies, or official recall notices. Ensure that each group selects a different product recall to cover a range of examples. 3. Determine Reasons for Recall: Instruct students to investigate why the product was recalled. They should identify any defects, safety hazards, or quality issues that led to the recall. Encourage them to delve into the root causes of the problem, such as manufacturing errors, design flaws, or inadequate quality control measures. 4. Identify Preventable Measures: Have students analyze whether the company could have taken steps in the production process to avoid the recall. This may involve assessing the company's adherence to quality standards, testing procedures, supplier relationships, and overall manufacturing practices. Students should consider whether implementing stricter quality controls, enhancing product testing, or improving supply chain management could have prevented the recall. 5. Evaluate Company's Approach: Instruct students to determine the company's approach to product quality and consumer safety by examining its adherence to different theories: • Contractual Theory: Does the company prioritize fulfilling contractual obligations and providing products that meet specified standards? • Due-Care Theory: Does the company demonstrate reasonable care in designing, manufacturing, and distributing its products to prevent harm to consumers? • Social Costs View: Does the company consider the broader social implications of its products, including potential risks to public health and safety? 6. Draft a Sample Press Release: Each group should draft a sample press release for the company addressing the recall and outlining how the company intends to manage quality issues. The press release should include: • Clear communication of the reason for the recall. • Acknowledgment of responsibility and commitment to consumer safety. • Details of corrective actions taken or planned to prevent similar issues in the future. • Assurance of ongoing monitoring and improvement of product quality. • Contact information for consumers with questions or concerns. By completing these steps, students will gain insights into the complexities of product recalls, the importance of quality management in manufacturing, and the role of companies in addressing consumer safety concerns. They will also develop communication skills through drafting the sample press release. Group Activity 2 - Quality and Safety Movie Night Invite groups of students to watch the movie Supersize Me. This movie focuses on the fast food industry’s contribution to the growing obesity problem in the United States. Specifically, the subject consumes only McDonald’s food for breakfast, lunch and supper for 30 days and monitors the impact to his health. Initially, students may not view this movie to be about product quality and safety, but the instructor should encourage students to explore the ethical dilemmas raised by the movie. What determines quality/safety in fast food services? Who bears the responsibility for the impact of fast food on the American people – the consumers or the industry? Should the fast food industry address product safety and quality differently? Have students prepare a movie review where they express their opinion regarding the ethical issues this movie raises. For Group Activity 2, organizing a Quality and Safety Movie Night featuring "Supersize Me" can be an engaging way to explore ethical considerations in the fast food industry. Here's how students can approach preparing a movie review expressing their opinions on the ethical issues raised: 1. Watch the Movie: Organize a viewing session for groups of students to watch "Supersize Me." Encourage them to pay attention to the filmmaker's experiment of consuming only McDonald’s food for 30 days and the subsequent impact on his health. 2. Identify Ethical Dilemmas: After watching the movie, prompt students to identify and discuss the ethical dilemmas raised. These may include: • The responsibility of the fast food industry in providing nutritious and safe food options. • The impact of fast food consumption on public health, particularly regarding obesity and related health issues. • Marketing tactics targeted at children and the potential influence on their dietary habits. • The balance between personal responsibility and corporate accountability in addressing health-related concerns. 3. Explore Quality and Safety: Encourage students to consider what determines quality and safety in fast food services. Discuss factors such as food sourcing, preparation methods, nutritional value, hygiene standards, and transparency in ingredient labeling. 4. Debate Responsibility: Facilitate a debate or discussion on who bears the responsibility for the impact of fast food on the American people—consumers or the industry. Encourage students to present arguments from different perspectives, considering individual choices, societal influences, and corporate practices. 5. Evaluate Industry Practices: Prompt students to reflect on whether the fast food industry should address product safety and quality differently. Encourage them to consider potential reforms or initiatives that could improve the nutritional value and safety of fast food offerings. 6. Prepare Movie Reviews: Instruct each group to prepare a movie review expressing their opinions on the ethical issues raised in "Supersize Me." They should address questions such as: • What are the main ethical concerns depicted in the movie? • How do personal choices and industry practices intersect in the context of fast food consumption? • Should the fast food industry be held accountable for the health consequences of its products? • What changes, if any, should be implemented to improve the quality and safety of fast food? By preparing movie reviews, students will have the opportunity to critically analyze the ethical dimensions of the fast food industry and express their viewpoints on the responsibilities of both consumers and corporations in promoting health and well-being. INDIVIDUAL ASSIGNMENT Distribute the following instructions to each student: Research how Toyota handled complaints that it received from 2008-2010 regarding runaway acceleration problems. Specifically, note how the company dealt with the vehicle problem, those directly impacted by acceleration issues, and its own shareholders and employees. Compare Toyota’s response to Johnson & Johnson’s response to the Tylenol crisis. Based on this comparison, evaluate Toyota’s response. What did the company do right? What should it have done differently? How could a company that had been held out as an exemplar of product quality produce over 8 million vehicles with safety issues? To complete this individual assignment, follow these steps: 1. Research Toyota's Response to Runaway Acceleration Problems (2008-2010): • Gather information on how Toyota handled complaints regarding runaway acceleration issues during the specified period. • Look into the measures taken by the company to address the vehicle problem, including recalls, investigations, and communication with affected customers. 2. Examine Impact on Stakeholders: • Identify how Toyota addressed the concerns of those directly impacted by acceleration issues, such as affected customers who experienced accidents or injuries. • Evaluate the company's response to the concerns of shareholders and employees regarding the impact of the acceleration problems on the company's reputation, financial performance, and internal operations. 3. Compare with Johnson & Johnson's Response to the Tylenol Crisis: • Research how Johnson & Johnson handled the Tylenol crisis in the 1980s, where tampered products resulted in multiple deaths. • Compare Toyota's response to the runaway acceleration issue with Johnson & Johnson's response to the Tylenol crisis in terms of transparency, accountability, and crisis management strategies. 4. Evaluate Toyota's Response: • Based on the comparison with Johnson & Johnson's response, evaluate Toyota's response to the runaway acceleration problems. • Identify aspects of Toyota's response that were effective in addressing the crisis, such as initiating recalls, improving safety measures, and enhancing communication with stakeholders. • Critically analyze areas where Toyota's response fell short or could have been improved, such as the timeliness of actions, transparency in communication, and accountability for the root causes of the issue. 5. Reflect on Quality Perception and Safety Issues: • Consider how a company like Toyota, known for its commitment to product quality, could produce over 8 million vehicles with safety issues. • Reflect on potential factors contributing to the acceleration problems, such as manufacturing defects, design flaws, supply chain issues, or oversight in quality control processes. 6. Formulate Recommendations: • Based on the evaluation, propose recommendations for Toyota or other companies facing similar crises in the future. • Discuss strategies for improving product quality, enhancing safety measures, fostering transparency, and rebuilding trust with stakeholders. By following these steps, you'll conduct a thorough analysis of Toyota's response to the runaway acceleration problems and gain insights into crisis management, corporate responsibility, and product quality assurance. Solution Manual for Business and Society: Ethics, Sustainability, and Stakeholder Management Archie B. Carroll, Ann K. Buchholtz 9780538453165

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