Sears Auto Center Scandal

1490 Words Mar 2nd, 2008 6 Pages
LGST001 – Ethics and Social Responsibility

Sears Auto Center Scandal
Managing Business Ethics Text (pp.207 - 210)

Ethical Decision-making Issue:
Should Sears remove its commission-based compensation scheme?

Group Stand:
The majority of the group believes that Ellen should be removed from the team.

Support for Motion:
Rawl's theory/Egalitarianism
The underlying inequality is that car owners are paying for repair services they do not require while Sears benefits by earning higher profits. This is a result of information asymmetry given that the repair advisors are in a more knowledgeable position regarding the available and required services, and clients act upon their advice. Thus, there is an opportunity for advisors
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Objection against inequality
There is no inequality in the case because customers have the rights to refuse any recommended services by the Sears mechanics. Being the paying parties, they are in the position to demand for specific services and not accept any other types of repairs and checks. Even if inequality exists, the inequality is fair since there is no information asymmetry which can render it otherwise. Consumers can always increase their understanding of their cars by researching, seeking advice from other auto repair companies, or learning from peers. Furthermore, the inequality is just if it increases utility in society. Using Utilitarianism theory for Distributive Justice, the compensation plan maximizes profits which in turn affects the economy positively. With the additional profits, Sears is hence able to expand and hire more employees, and this will benefit shareholders in terms of dividend growth and increase share prices. More workers will be employed. This benefits economy and society altogether, thus the inequality is just.
Ethical Egoism
Following the argument for ethical egoism, everyone will do what is to their best interest first. Ultimately, this will achieve utilitarianism since problems regarding wastage and inefficiency will be tackled. The compensation scheme supports ethical egoism and society will be able to benefit as a…

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