Module 4 Graded Submission
This Assignment has four parts. Parts 3 and 4 refer to the situation presented in the Woodhaven Case Study in the Zimmerman Text (Case 4-2). Please do not respond to questions included with the case in the text, instead respond to the questions in Parts 3 and 4 below.
Conduct an Internet search to understand the scandal Sears faced in 1992 when Sears settled consumer fraud charges in California related to automotive repairs made by the Sears Auto Centers in California. Then comment on the following:
A. How did this scandal affect the overall brand image that Sears must manage?
B. What measures were taken by Sears to prevent a repetition of the alleged fraudulent behavior?
Recently Wells Fargo bank was fined 185 million dollars for creating more than 3.5 million unauthorized accounts or credit cards.
A. What steps has Wells Fargo taken to prevent a repetition of the events that resulted in creating the unauthorized accounts and credit cards?
B. Describe the “costs” to Wells Fargo of this scandal.
C. Should Wells Fargo have foreseen the possibility that their organizational architecture could bring about this result?
Conduct an Internet search to learn about an arrangement common in beauty salons (and some real estate firms) whereby hair stylists lease space from the owner of the salon. That is, instead of being employed by the owner of a salon, a hair stylist leases space in a salon and works as an independent contractor.
Then, respond to the following question:
If Harold Marteen, the owner of Woodhaven Service Station in the Woodhaven Case Study, implements the lease approach rather than continuing with his current method of employing mechanics, this would be a significant change in his business model. From Harold’s perspective what are the potential advantages and disadvantage of this change in organizational architecture? Explain.
It is worth taking time to notice that in this case Harold has diagnosed the problem: profit from gas sales is higher than average; profit from automotive repairs is below average; therefore, something is wrong with the automotive repair segment. In a similar fashion a grocery store might say: profit in our meat department is higher than average; profit in our prepared foods department is higher than average; profit from our produce department is lower than average; therefore, something is wrong
BUAD 5107: Module 4
with the produce department. These diagnoses may be correct. Or, they may not be correct. Either way, it is always important to ask if you are solving the right problem before you set off to seek a solution. Explain why pursuing higher profitability in one area could “back-fire” and result in higher profits for that segment but lower profits overall for the company.