Nov 2, 2017 in Business

Effectiveness and Profit

It is about effectiveness and profit. Therefore, in the current situation with unsold product for $10,000,000 there is a serious concern regarding the effectiveness of the company. There can be serious consequences in the future –market share decrease, stock price issues, and negative net income this year. From the business point of view, the company is in a disastrous situation. There is a way out that can solve this issue, partially or completely. The only problem to solve is a dilemma of ethical nature (Chapter 3; Singla). The question is as follows: should the company risk with thirty years of excellent reputation in every meaning of this word and cross the ethical, moral line of conducting business or not?

In order to resolve the dilemma, it is necessary to understand the positive and negative consequences of each solution. In case of solution A (do not sell products anywhere and destroy the entire stockpile for $10,000,000), the company will have the image of a socially responsible company with impeccable reputation. However, the loss can be more that substantial – negative net income and decrease of stock price. In case of solution B (sell products in the Caribbean countries in full), the company most probably will break even on the investment. However, the image of the company will be damaged and reputation might become questionable (Chapter 3; Singla).

The Core of the Problem is the Production of the Company

Toddler and baby clothes manufactured by the company are not fire retardant. The lack of legislation regarding this issue in the Caribbean countries does not make these products fire retardant – it only makes these products legal to be sold on the market. It is the only issue with the product because all other characteristics are perfect. Considering the situation, the decision to sell products having such a substantial flaw is questionable (Chapter 3; Singla). The customers will not be happy to find out afterwards they have purchased products that might be dangerous for their children despite the newness of the fire retardant standards.

There is a solution potentially solving both moral and business issue in this case. It is necessary to produce special stickers for the entire stockpile that will warn the customers regarding the fire retardant issue. The stickers should be placed on each product tag. Then, specially marked clothes for toddlers and babies can be sold on the Caribbean markets. Such step will provide the company with the following positive and negative consequences. All customers will be warned regarding the issue and will be responsible for the conscious choice. The company will gain the image of socially responsible and caring market player. The company will be honest with customers and will not lose its reputation. Of course, the cost of such initiative will add to the $10,000,000 however, it will be substantially lower than $10,000,000 of loss in case of destroying the products.

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Well-thought decision should be made in this case (Chapter 3; Singla). The situation can be win-win for both customers and the company. However, only the appropriate attitude towards regular and potential clients can provide the company with the opportunity to solve the emerged problem with minimal loss. Psychological significance of the problem is utter due to the targeted market of clothes for toddlers and babies. Only the careful approach can be used to get the maximum of the situation. In any case, it is an excellent experience for the company for the future – analytical department should work better because legislation issues must be foreseen beforehand. The company should be focused on its reputation mainly in order to keep its share on the market as the producer of the highest-quality products. 

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