MGMT 3880 Ch14-18 Exam Questions And Answers

Safeguarding consumers while continuing to supply them with the goods and services they want, at the prices they want, is a prime social responsibility of - ANS business Many companies recognize that providing customers with _____________ and _____________ is an effective, as well as ethical business strategy. - ANS excellent service and product quality Government agencies serve as ___________________ for consumers, supplementing the actions taken by consumers to protect themselves through self- advocacy and use of the courts and by the actions of socially responsible corporations. - ANS watchdogs Chaz Dean's WEN brought in how much in its first year of sales? - ANS 100 million dollars What did WEN's ingredients cause? - ANS itching, rash, hair loss, and even total baldness. Twenty-one thousand __________ poured into WEN Hair Care from extremely upset users, and others expressed their frustrations in online forums. - ANS complaints Eventually, the company settled, agreeing to pay customers ______________, although it insisted its products were safe and denied any link between WEN and hair loss. WEN began mailing out checks to its aggrieved customers in 2018—but continued to sell the product line. - ANS $26 million One reason so many consumers were exposed to a potentially harmful product is that the government has limited authority to ___________ beauty and personal care products. - ANS regulate Pharmaceutical drugs and medical devices must be tested and shown to be safe and effective before they can be sold to the public. But in 2018 that was not true for most cosmetics and personal care products such as shampoo, lipstick, and deodorant. Companies like WEN Hair Care were not required to report adverse reactions to the government, even if a customer was seriously injured or died. In response to the WEN case and others like it, a bipartisan group of senators proposed legislation called the Personal Care Products Safety Act. Backed by environmentalists, public health organizations, and some big companies like Estée Lauder and Procter & Gamble, this proposed law would require companies to report problems with personal care products to the government and give regulators the power to recall dangerous ones. It would also require that ingredients be tested for safety. But many smaller companies, represented by a t - ANS 5 core consumer rights - ANS 1. The right to be informed: to be protected against fraudulent, deceitful, or grossly mis- leading information, advertising, and labeling, and to be given the facts to make an informed purchasing decision. 2. The right to safety: to be protected against the marketing of goods that are hazardous to health or life. 3. The right to choose: to be assured, wherever possible, access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and government regulation is substituted, to be assured satisfactory quality and service at fair prices. 4. The right to be heard: to be assured that consumer interests will receive full and sympathetic consideration in the formulation of government policy and fair and expeditious treatment in the courts. 5. The right to privacy: to be assured that information disclosed during a commercial transaction or while using social media or searching online—such as health conditions, financial status, or identity—is not shared with others unless authorized. 4 methods of protecting consumers - ANS 1. Consumerism 2. Government Regulation 3. Law/Courts 4. Industry "self regulation" Consumerism - ANS consumers act to protect their own interests. Government Regulation - ANS the government regulates product safety and protects consumer privacy. Law/Courts - ANS people sue when they are injured by a product. Industry "Self-Regulation" - ANS Businesses and industries protect their customers through product recalls, quality programs, and voluntary codes The government can protect consumers through the regulation of - ANS product safety, quality, data privacy, and fair dealing. People can use the courts to seek compensation when they have been injured by unsafe products or unfair practices and to compel businesses to pay greater attention to consumer rights. And finally, companies can proactively protect their own customers through careful attention to safety and quality and by taking swift action when something goes wrong. This chapter will take up each of these methods in turn, beginning with consumer self-organization and advocacy. - ANS As long as business has existed—since the ancient beginnings of commerce and trade— consumers have tried to protect their interests when they buy goods and services. They have haggled over prices, taken a careful look at the goods they were buying, compared the quality and prices of products offered by other sellers, and complained loudly when they felt cheated by shoddy products. So, consumer self-reliance—best summed up by the Latin phrase caveat emptor, meaning "let the buyer beware"—has always been one form of consumer protection and is still practiced today. However, the increasing complexity of economic life has led to organized, collective efforts by consumers to safeguard their own rights in many nations. These organized activities are usually called consumerism or the consumer movement. Today, many organized groups actively promote and speak for the interests of millions of consumers. - ANS Consumers International (CI) is an international nongovernmental organization that represents more than 200 consumer groups in more than 100 nations. Headquartered in London, it has offices in Asia, Latin America, and Africa. Its growth since 1960 has paralleled the expansion of global trade and the integration of many developing nations into the world economy, as discussed in Chapter 4. CI's approach is to partner with member organizations to deliver coordinated, multi-national campaigns to address common problems faced by consumers in the global marketplace. For example, in 2017 CI hosted a Consumer Summit in Berlin, Germany, focused on "building a digital world consumers can trust." "As tech increasingly integrates into people's lives, it is no longer sufficient to tell consumers it will bring convenience and speed or save them money," the consumer group said on its website. "Companies have to offer more than just - ANS In the United States, one organization alone, the Consumer Federation of America, brings together nearly 300 nonprofit groups to espouse the consumer viewpoint. Other active U.S. consumer advocacy organizations include Public Citizen, the National Consumers League, the Public Interest Research Group (PIRG), and the consumer protection unit of the American Association for Retired People (AARP). Consumer Reports (CR, formerly called Consumers Union) conducts extensive tests on selected consumer products and services and publishes the results of its tests, with ratings on a brand-name basis, online at . Consumers also self-organize online, for example by creating groups of people injured by a specific product on social media platforms or using review tools to express approval or disapproval of products and services. For example, Trustpilot is a Danish website where consumers can post and share rev - ANS The role of government in protecting consumers is extensive in many nations. This section will describe legal protections afforded consumers in the United States and offer some comparisons with other countries. - ANS Figure 14.2 lists some of the safeguards provided by U.S. consumer protection laws. Taken together, these safeguards reflect the goals of government policymakers and regulators in the context of the five rights of consumers outlined above. Many of these safeguards are also embedded in the laws of other nations. First, some laws are intended to provide consumers with better information when making purchases. Consumers can make more rational choices when they have accurate information about the product. For example, the laws requiring health warnings on cigarettes and alcoholic beverages broaden the information consumers have about these items. Manufacturers, retailers, and importers must spell out warranties (a guarantee or assurance by the seller) in clear language and give consumers the right to sue if they are not honored. The Truth in Lending Act requires lenders to inform borrowers of the annual rate of interest - AN