case analysis #2

Case #1

Your U. S. company, American ATVs, has started producing all-terrain vehicles (ATVs) in

Brazil for selling in the South American market. The company’s strategy is to build a presence

and market share in Brazil before moving to other countries. In your first international

assignment, the company has appointed you the manager of the Brazilian operation which

consists of a manufacturing plant and a marketing department. Almost all of the employees,

including all of your marketing staff, is Brazilian.

After a year on the job, the manufacturing plant is running smoothly and sales are starting to

grow. You are confident that this assignment will be a major career boost and, when you return

to the U. S., you will receive a substantial promotion and salary raise.

Late one afternoon, Marcus Allen, your head of marketing, comes to your office. He tells you

how happy he is to work for the company, but he is worried that sales growth is slowing and if

that continues the company may abandon its Brazilian investment. He tells you, “The real

problem is that prices are a bit too high for the Brazilian market.” He and the sales force had

been discussing the problem and have come up with an idea to cut manufacturing costs that can

lower the price to a more affordable level.

Allen suggest that you abandon the four-wheel version of the ATV and produce a three-wheel

version like the company did in the 1980s. You can save money by not having an extra wheel

and the associated suspension, and the ATV would probably be lighter and go faster—something

your target market of younger men would like.

You remind Allen that the industry stop producing three-wheelers because they caused so many

accidents and deaths. He counters stating, “It is perfectly legal here in Brazil to sell these

vehicles. All we would need to do is put on a warning label and encourage people to wear

helmets.” You know that wearing helmets is not very popular among your customers, but he

presses: “We need this to survive and people need jobs.” As the manager of the Brazilian

operation, what should you do now? Analyze and format your analysis according to the case

instructions.

Answers

Ethical Issues 1. The Ethical Responsibilities of Business Regarding Product Safety – Simply obeying

regulations and laws does not exhaust the moral responsibilities of business in the area of

consumer safety.

2. The Consumer Product Safety Commission (CPSC) was created in 1972 by the Consumer Product Safety Act (CPSA). Its job is to “protect the public against

unreasonable risks associated with consumer products.”

3. These three principles of fairness, freedom, and well-being can be expressed in the four- point Bill of Rights for Consumers that President John F. Kennedy proclaimed in 1962

(a.k.a. consumerism). These rights are: (1) The right to be protected from harmful products

(well-being).

4. Product Safety – The Legal Liability of Manufacturers – Strict Liability

Stakeholders 1. Manager of the Brazilian Operation (Decision-Maker) 2. Marcus Allen 3. Company 4. Shareholders 5. Brazilian Consumers 6. Brazilian Employees