1. Archie B. Carroll Ann K. Buchholtz
Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
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2. Chapter 14 Consumer Stakeholders: Product and Service Issues
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3. © 2012 South-Western, a part of Cengage Learning
Learning Outcomes
Describe and discuss the two major product issues: quality and safety.
Explain the role and functions of the Consumer Product Safety Commission and the Food and Drug Administration.
Enumerate and discuss the reasons for concern about product liability, and differentiate strict liability, absolute liability, and market share liability.
Outline business’s responses to consumer stakeholders, including customer service, total quality management (TQM programs), and Six Sigma.
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Chapter Outline
Two Central Issues: Quality and Safety
Consumer Product Safety Commission
Food and Drug Administration
Business’s Response to Consumer Stakeholders
Total Quality Management Programs
Six Sigma Strategy and Process
Summary
Key Terms
Discussion Questions
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5. © 2012 South-Western, a part of Cengage Learning
Two Central Issues
Quality
Product quality means different things to different people.
Service quality usually means that the service was performed as expected and on time.
Interest is driven by an increase in family income and intense global competition.
Safety
Nearly all consumer products or services entail some small degree of risk.
Interest about safety is driven by the public’s concern with safety and risk-free products– and business’ responsibility to address this concern.
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6. Ethical Underpinnings of Quality
Contractual Theory
Due Care Theory
Social Costs View
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Product Liability
Reasons for the concern
The sheer number of cases where products resulted in injury, illness, or death and the amount of the financial award.
We have become an increasingly litigious society.
Rise in the doctrine of strict liability.
Anyone in the value chain of a product is liable for harm caused to the user if the product is unreasonably dangerous because of a defective condition.
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8. Extensions of the Strict Liability Rule
Expansion of the strict liability rule is at the heart of the explosion of litigation in the U.S.
Absolute liability
Is more demanding that strict liability.
Market share liability
Evolved from delayed manifestation cases where delayed reactions to products appear years after exposure.
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9. Other Product Liability Issues
Product tampering and product extortion
Product liability reform (Tort reform)
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10. Consumer Product Safety Commission
An independent regulatory agency that was created by the Consumer Product Safety Act of 1972.
Develops voluntary safety standards with industry
Issues and enforces mandatory standards
Bans consumer products if no feasible standard would protect the public
Obtains the recall of products or arranges repair
Conducts research on potential product hazards
Informs and educates consumers through media, government and private organizations, and by responding to consumer inquiries
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11. Problems Facing the CPSC
Having adequate resources to do the job
Having sufficient staff to address current needs
Being forced to shift priorities
New challenges from a changing world
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12. Food and Drug Administration
Grew out of experiments with food safety by Harvey W. Wiley in the late 1800s.
The FDA resides within the Health and Human Services Department.
Engages in three categories of activity
Analysis
Surveillance
Correction
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What does the FDA Do?
The FDA is responsible for
Assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products, medical devices, the U.S. food supply, cosmetics, dietary supplements, and products that give off radiation.
Regulating tobacco products.
Advancing the public health by helping to speed product innovations.
Helping the public get the accurate, science-based information they need to use medicines and foods to improve their health.
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14. Customer Service Programs
Building life-long devotion among customers takes serious commitment and hard work.
Companies address customer service through
Money-back guarantees
Warranties
Offices of consumer affairs
Top management must be committed to quality customer service.
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15. Total Quality Management
TQM
All business functions are blended into an integrated philosophy built around quality, teamwork, productivity, and customer understanding and satisfaction.
The customer is the final judge of quality.
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16. Total Quality Management (continued)
TQM emphasizes eight key elements
Ethics
Integrity
Trust
Training
Teamwork
Leadership
Recognition
Communication
The foundation upon
which all else is built
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17. Business’ Response to Consumers
Convert customer expectations to standards and specifications
Define quality in terms of customer expectations
Realign the organization to ensure quality is achieved
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18. Six Sigma Strategy and Process
A general heading under which is grouped a number of strategies, methodologies, and techniques
Aims to improve quality and reduce costs.
It stresses the importance of customers.
Six Sigma level of operation is 3.4 defects per million.
Most companies have 6,000 defects per million.
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Key Terms
Absolute liability
Consumer Product Safety Act of 2008
Consumer Product Safety Commission
Consumer stakeholder satisfaction model
Contractual theory
Delayed manifestation cases
Due care theory
Food and Drug Administration
Market share liability
Product liability reform
Six Sigma
Social costs view
Strict liability
Tort reform
Total Quality Management
© 2012 South-Western, a part of Cengage Learning