Case Summaries for Feb 12

Case Summaries for Feb 12 - Case Summaries 2/12/2009 9.3...

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Case Summaries – 2/12/2009 9.3 – Sears and High-Cost Auto Repairs: The California Department of Consumer Affairs began investigating Sears Auto Repair Centers, in 1991. Agents posed as customers at 33 repair shops and found that they were overcharged 90 percent of the time, by an average of $223. In the second phase of their investigation, the average overcharge was $100. Up until 1990, Sears paid their repair service advisors by the hour rather than by the amount of work. However, in February of 1990, Sears instituted an incentive which paid the repair service advisors based on the amount of repairs customers authorized. They had to meet quotas on specific auto parts. As a consequence, those who did not meet the quotas had their hours reduced or were assigned to work in other departments in the Sears stores. As a result, the California Department of Consumer Affairs charged all 72 Sears auto-motive shops in the state with fraud, false advertising, and failure to clearly state parts and labor on invoices. Ten days after the complaint, the chairmen of Sears, Edward A. Brennan, announced that the company was eliminating the commission-based pay structure for employees who dealt with repairs. A New Jersey undercover investigation revealed that 100 percent of the Sears stores in its investigation recommended unneeded work compared to 16 percent of stores not under Sears ownership. Result: Sears was forced to close 89 stores and in 2004 K-Mart purchased Sears. Key Stakeholders: consumers 9.12 – Toro and Its Product Liability Program: Toro is a manufacturer of lawnmowers, snow blowers, etc. In 1991, the company began a program of early case resolution. The program has reduced costs for resolving claims from an average of $115,000 to $35,000 and its claims have
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This note was uploaded on 02/22/2012 for the course BUS 101 taught by Professor Rollins during the Spring '08 term at Miami University.

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Case Summaries for Feb 12 - Case Summaries 2/12/2009 9.3...

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