1. Consumer Stakeholders: Product and Service Issues
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer Stakeholders: Product and Service Issues
Chapter 14
Prepared by Deborah Baker Texas Christian University
Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

2. Chapter 14 Learning Outcomes
Consumer Stakeholders: Product and Service Issues
Chapter 14 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 TQM programs and Six Sigma. 2

3. Chapter 14 Outline Two Central Issues: Quality and Safety
Consumer Stakeholders: Product and Service Issues
Chapter 14 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
Summary
Key Terms
Discussion Questions
Two Central Issues: Quality and Safety
The Issue of Quality
The Issue of Safety
Consumer Product Safety Commission
Food and Drug Administration
Business’s Response to Consumer Stakeholders
Consumer Affairs Offices
Product Safety Offices
Total Quality Management Programs
Customer Satisfaction Measurement
Summary

4. Introduction to Chapter 14
Consumer Stakeholders: Product and Service Issues
Introduction to Chapter 14
The chapter focuses on product quality and safety issues. In connection with safety, product liability and tort reform are discussed.

5. Two Central Issues: Quality and Safety
Chapter 14
Consumer Stakeholders: Product and Service Issues
Two Central Issues: Quality and Safety
The Issue of Quality
Driven by an increase in family income and intense global competition
The Issue of Safety
Driven by the public’s increasing concern with safety and risk-free products—and business’s responsibility to address this concern

6. Critical Dimensions of Product Quality
Chapter 14
Consumer Stakeholders: Product and Service Issues
Critical Dimensions of Product Quality
Perceived Quality
Aesthetics
Serviceability
Features
Reliability
Conformance
Performance
Durability
Dimensions of Quality

7. Ethical Dimensions of Quality
Chapter 14
Consumer Stakeholders: Product and Service Issues
Ethical Dimensions of Quality
Contractual Theory
Due Care Theory
Social Costs View

8. “Let the seller take care”
Chapter 14
Consumer Stakeholders: Product and Service Issues
The Issue of Safety
1900s Caveat Vendor
“Let the seller take care”
1800s Caveat Emptor
“Let the buyer beware”
Historical Perspective

9. Top 10 List of Safety Principles
Chapter 14
Consumer Stakeholders: Product and Service Issues
Top 10 List of Safety Principles
Build safety into product design
Do product safety testing for all foreseeable hazards
Keep informed about and implement latest developments in product safety
Educate consumers about product safety
Track and address products’ safety performance
Fully investigate product safety incidents
Report product safety defects promptly
If a defect occurs, promptly offer a comprehensive recall plan
Work with the CPSC to make sure your recall is effective
Learn from mistakes—yours and others’
Figure 14-1

10. Consumer Product Injuries
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer Product Injuries
Sports and recreational activities and equipment
Home structures and construction materials
Home furnishings and fixtures
Housewares
Personal use items
Home workshop apparatus, tools, and attachments
Packaging and containers for household products
Home and family maintenance products
Toys
Space heating, cooling, and ventilation equipment

11. Reasons for the Concern
Chapter 14
Consumer Stakeholders: Product and Service Issues
Product Liability
FIRST Product liability has become a major issue because of the sheer number of cases where products resulted in injury, illness, or death and the amount of the financial award.
SECOND We have become an increasingly litigious society.
THIRD… Rise in the doctrine of strict liability.
Reasons for the Concern

12. Extensions of the Strict-Liability Rule
Chapter 14
Consumer Stakeholders: Product and Service Issues
Product Liability
Extensions of the Strict-Liability Rule
Absolute liability
Market share liability
Delayed manifestation cases

13. Product Liability @ @ Other Issues Product tampering Product extortion
Chapter 14
Consumer Stakeholders: Product and Service Issues
Product Liability
Other Issues
Product tampering
Product extortion
Product liability reform (tort reform) @ @

14. Consumer Product Safety Commission
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer Product Safety Commission
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

15. Consumer Product Safety Commission
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer Product Safety Commission
Indoor Air Quality Hazards
Children’s Product Hazards
Fire / Electrical Hazards
Other Hazards
Carbon monoxide detectors
Formaldehyde in wood
Bunk beds
Drawstrings on children’s clothing
National Electrical Code
Handheld hair dryers
Automatic garage door openers
Swimming pools
VOLUNTARY SAFETY STANDARDS
Figure 14-3

16. Consumer Product Safety Commission
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer Product Safety Commission
Problems Confronting 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
Figure 14-4

17. Food and Drug Administration
Chapter 14
Consumer Stakeholders: Product and Service Issues
Food and Drug Administration
The Mission of the FDA
The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation. The FDA is also responsible for advancing the public health by helping to speed innovations that make medicines and foods more effective, safer, and more affordable; and helping the public get the accurate, science-based information they need to use medicines and food to improve their health.
Figure 14-5

18. Total Quality Management
Chapter 14
Consumer Stakeholders: Product and Service Issues
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.

19. Business’s Response to Consumers
Chapter 14
Consumer Stakeholders: Product and Service Issues
Business’s Response to Consumers
Convert customer expectations to standards and specifications
Define quality in terms of customer expectations
Realign organization to ensure quality is achieved @

20. Total Quality Management
Chapter 14
Consumer Stakeholders: Product and Service Issues
Total Quality Management
Figure 14-6

21. Strengths & Weaknesses of Quality Definitions
Chapter 14
Consumer Stakeholders: Product and Service Issues
Strengths & Weaknesses of Quality Definitions
Figure 14-7

22. Chapter 14
Consumer Stakeholders: Product and Service Issues
Six Sigma
Methodologies and techniques for improving quality and reducing costs.
It stresses the importance of customers.
Six Sigma level of operation is 3.4 defects per million.
Six Sigma

23. Consumer-Stakeholder Satisfaction Model
Chapter 14
Consumer Stakeholders: Product and Service Issues
Consumer-Stakeholder Satisfaction Model
Consumer Satisfaction
Continued Purchases by Consumers
Firm Profitability
Firm Reputation
Product Quality and Safety
Service Quality and Safety
Figure 14-8

24. Key Terms Contractual theory Due care theory Social costs view
Chapter 14
Consumer Stakeholders: Product and Service Issues
Key Terms
Contractual theory
Due care theory
Social costs view
Strict liability
Absolute liability
Market share liability
Delayed manifestation cases
Product liability reform
Tort reform
Consumer Product Safety Commission
Food and Drug Administration
Total Quality Management
Six Sigma