Business society ethics sustainability and stakeholder management eighth edition
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Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition. Archie B. Carroll Ann K. Buchholtz. Chapter 14 Consumer Stakeholders: Product and Service Issues. Learning Outcomes. Describe and discuss the two major product issues: quality and safety.

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Business society ethics sustainability and stakeholder management eighth edition

Business & SocietyEthics, Sustainability, and Stakeholder ManagementEighth Edition

Archie B. Carroll

Ann K. Buchholtz

© 2012 South-Western, a part of Cengage Learning


Chapter 14 consumer stakeholders product and service issues

Chapter 14Consumer Stakeholders: Product and Service Issues

© 2012 South-Western, a part of Cengage Learning


Learning outcomes

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.

© 2012 South-Western, a part of Cengage Learning


Chapter outline

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

© 2012 South-Western, a part of Cengage Learning


Two central issues

Two Central Issues

Quality

Productquality means different things to different people.

Servicequality 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.

© 2012 South-Western, a part of Cengage Learning


Ethical underpinnings of quality

Contractual Theory

Due Care Theory

Social Costs View

Ethical Underpinnings of Quality

© 2012 South-Western, a part of Cengage Learning


Product liability

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.

© 2012 South-Western, a part of Cengage Learning


Extensions of the strict liability rule

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.

© 2012 South-Western, a part of Cengage Learning


Other product liability issues

Other Product Liability Issues

Product tampering and product extortion

Product liability reform (Tort reform)

© 2012 South-Western, a part of Cengage Learning


Consumer product safety commission

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

© 2012 South-Western, a part of Cengage Learning


Problems facing the cpsc

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

© 2012 South-Western, a part of Cengage Learning


Food and drug administration

Food and Drug Administration

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

© 2012 South-Western, a part of Cengage Learning


What does the fda do

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.

© 2012 South-Western, a part of Cengage Learning


Customer service programs

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.

© 2012 South-Western, a part of Cengage Learning


Total quality management

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.

© 2012 South-Western, a part of Cengage Learning


Total quality management continued

Total Quality Management (continued)

The foundation upon

which all else is built

TQM emphasizes eight key elements

Ethics

Integrity

Trust

Training

Teamwork

Leadership

Recognition

Communication

© 2012 South-Western, a part of Cengage Learning


Business response to consumers

Define qualityin terms ofcustomer expectations

Convert customer expectations to standards and specifications

Realign the organization to ensure quality is achieved

Business’ Response to Consumers

© 2012 South-Western, a part of Cengage Learning


Six sigma strategy and process

Six Sigma Strategy and Process

Six Sigma

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.

© 2012 South-Western, a part of Cengage Learning


Key terms

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


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