Business Analysis: Sears, Roebuck, and Co.

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Sears, Roebuck, and Co. seemed to have the right idea when beginning their business in the late 1800s. Instead of just opening up one type of company, Sears, Roebuck, and Co. expanded from retail to insurance, real estate, securities, and credit cards (Nelson, 2007, p. 207). Until the early 1990s, the company seemed to be doing very well considering the revenue and earnings reported that equaled up to billions of dollars. Then, the company began to experience financial difficulties due to the fact that other discount retailers were coming into business. Therefore, Sears decided to implement an incentive plan to increase their profits within the auto centers nationwide (Nelson, 2007, p. 207). Once the commission based plan was evaluated, many ethical standards seemed to have been overlooked during the development process.

According to Nelson and Treviño, Sears changed their wage policy to a commission based policy, where “mechanics were paid a base salary plus a fixed dollar amount for meeting hourly production quotas” (p. 207). Even the auto advisors that took the orders and consulted with the mechanics were also placed on commission and product sales quotas to help increase sales (Nelson, 2007, p. 207). Ultimately, this type of incentive pressured the employees to begin charging their customers for parts that were not necessarily needed for their repairs. By doing this, the employees were misleading their customers to pay extra money on certain parts so they could ultimately gain their commission earnings. According to Hoffman, ethical misconduct can be done more easily within the service sector of a business because the majority of the customers do not have any knowledge about the service when it comes to the technical and sp...

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...be treated with the upmost respect, because, in the end, if they are treated poorly, the company will be the only one to suffer. While ethical misconduct seems to be on the rise today, Patricia Harned, president of ERC, states that “creating a strong ethical environment should be a top priority of all companies” (Millage, 2005, p. 15).

Works Cited

Hoffman, K., & Siguaw, J. A. (1993). Incorporating Ethics Into the Services Marketing Class: The Case of Sears Auto Centers. Marketing Education Review, 3(3), 26-32. Retrieved from EBSCOhost.

Millage, A. A. (2005). Ethical Misconduct Prevalent in Workplace. Internal Auditor, 62(6), 13-15. Retrieved from EBSCOhost.

Nelson, K. a. (2007). Sears, roebuck, and co: The auto center scandal. In K. a. Nelson, Managing business ethics: Straight talk about how to do it right (pp. 207-209). Hoboken, NJ: John Wiley & Sons, Inc.

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