Generous credit policy Essay Assignment

Generous credit policy
                               Generous credit policy

Generous credit policy

An on-line retailer that sells home and children’s items, such as children’s furniture, clothing, and toys, was seeking a way to reach a new audience and stop the declining sales and revenue trends it was suffering. A market research firm hired by the retailer identified a new but potentially risky market: lower-income single parents. The new market seemed attractive because of the large number of single parents, but most of these households were severely constrained in terms of their monetary resources.

The research firm proposed that the retailer offer a generous credit policy that would allow consumers to purchase up to $500 worth of merchandise on credit without a credit check, provided they signed up for direct payment of their credit account from a checking account. Because these were high-risk consumers, the credit accounts would carry much higher than normal interest rates. The research firm believed that even with losses, enough accounts would be paid off to make the venture extremely profitable for the on-line retailer.

Should the retailer pursue this new marketing strategy? Why or why not?

Learning Activity #2

How much for that bag?

You work in logistics at Faker, Inc., an import company that buys counterfeit items from suppliers in China. Faker brings these items into the US and sells them on the streets of New York, employing over a hundred “hawkers”, all paid on commission and all making a good living. All of the “hawkers” are trained not to lie about the genuineness of whatever they are selling. In fact, Faker management encourages the “hawkers” to “tell the truth” about what customers are buying. Faker’s position is “no harm, no foul”. In fact, Faker’s CEO frequently states that the company corporate culture is one of honesty, integrity and creativity.

You are having some “issues” with the ethics of this company. You ask your trusted Ethics instructor what you should do. He suggests that you write down your thoughts on the matter by answering the following questions:

  1. Could Jeremy Bentham justify the continued existence of Faker? Explain.
  2. If Immanuel Kant worked at Faker, how would he feel about the corporate culture? Why?
  3. Do you agree with the CEO’s description of the corporate culture at Faker? Why?

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