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Business Analysis: Sears, Roebuck, and Co. Essay

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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,…show more content…
for violating the state’s Auto Repair Act (Nelson, 2007, p. 208). Sears CEO and Chairman Edward A. Brennan stood up for the company and defended their “focus”. With that being said, he still admitted that some errors and mistakes had been made, and action would be taken to eliminate the compensation program for service advisors, the employees taking the orders and consulting the mechanics, and also in other branches of service. Unfortunately, this was not necessarily the case. Sears ultimately continued their compensation system for the mechanics, which led to the continuation of misleading customers into believing they needed extra parts for certain repairs. In the end, Sears was charged again and agreed to a multimillion-dollar settlement with California and other states. Although the long-term impact is unclear, Sears was placed on three-year probation, and more than likely, saw a decline in their sales for quite awhile. The effects of ethical misconducts not only harm the person creating the problem, but the entire company also suffers from the wrongdoings. Sears, Roebuck, and Co.’s management team had to have been aware of the negative issues this type of compensation program was creating for the business, overall. The managerial team evidently did not follow any type of ethical standards by allowing this type of incentive plan to be implemented. First of all, managers have an obligation to learn and model ethical standards every single day, because their
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