Hillingdon Electricals Ltd Development Perspectives - Case Study Example

Hillingdon Electricals Ltd Table of Contents Overview of the Case 3 Scenario A - Tony and Ursula 4 Scenario B - Vondra and HEL 9 Scenario C - Saeed and Wayne 12 References 15 Bibliography 17 Overview of the Case HEL is stated to be a retail organisation, which is principally involved in dealing with a range of household and electronic products across the South-east region of England. The household and electronic products offered by the retail stores of the organisation include home appliances such as home entertainment systems, washing machines along with Personal Computers (PCs), Tablets and iPads among others. The policy of “lowest prices anywhere” has significantly enabled HEL to successfully complete its ten years of experiences in its target markets across the South-East region of England. Moreover, building strong relationship with its business partners along with enhancing its reputation has also facilitated HEL to obtain significant values within its operating areas. However, since the last two years, HEL has been experiencing a significant decline of its market shares due to the rising competition in the respective business industry along with instability of the global economy. The consequences of significant losses incurred in the market share, resulted to an increase in the target set for its retail stores through the implementation of higher pricing strategy for its wide range of households and electronic products. Moreover, the company has also been identified to implement higher promotional activities in order to refurbish the annual sales of its retail stores. The strategy of changing business policies or regulations was highly motivated the organisation to cope with the potential challenges caused by the market competition and economic instabilities. Correspondingly, the case scenario of HEL demonstrates three major scenarios regarding the difficulties faced by the organisation with respect to the legal regulations and policies. The company has conducted a wide range of advertising programs through different media to publicise its newly developed pricing structure for the products offered by its retail outlets. According to the advertisement results, it has been observed that the newly built pricing structure has incorporated numerous issues associated with the price of each individual product that are significantly cheaper than other marketers. In this regard, the following discussion of the study includes a brief demonstration of each scenario and justifies effective legal policies for the organisation to evade its potential challenges. Scenario A - Tony and Ursula In relation to the issues observed in the case scenario, indicating to the challenges faced by Tony and Ursula, an error as recognised associated with the pricing strategy of the products offered by each individual store of HEL to be the base point of the conflicts witnessed by HEL. In this context, Tony, a customer of the retail store of HEL had accepted the offer made by the company and purchased an iPad from the company’s online website in a price that was published by the organisation through its advertisements. However, the company claimed that advertised price was erroneous due to a manual mistake and that the actual price of the product was much higher. Although, the retail store had also offered different promotional offers to uphold itsgoodwill, Tony refused to pay the actual market price of the product and bargained the product at the advertised price. In the similar context, another customer Ursula had also faced similar issue during the purchase of product Tablet from the retail store, which was similarly advertised at a cheap price as compared to its market price. Subsequently, HEL made a repeat offer to Ursula at a discounted by a higher price of the product, who further denied paying the actual amount against the product to the store. In relation to the brief synopsis of the scenario of Tony and Ursula, it can be apparently stated that the pricing structure of the products developed by HEL is associated with human error that led to misrepresentation of the actual price of the product. These issues can be apparently associated with the breach of the UK Tort Law. In the context of the issue associated with the advertisement process, the practice of misrepresenting a lower price despite the actual market price of the product can be considered as a violation of UK ‘Consumer Protection from Misleading Marketing Regulations 2008.’ According to policies underneath the regulation of the stated law, the advertising activities of the marketers must need to effectively represent the actual features, product information and price to the customers in accordance with the market trends and the customers’ possible reactions in response to the advertisement ([1]The Stationery Office Limited, 2000). According to the advertising campaign of HEL, it has been apparently observed that the product was advertised below its actual retail price, which although unintentionally due to manual error, attracted a large group of potential customers unethically. However, the company can also be alleged on the grounds of the claim for the actual price of the product from Tony and Ursula after they have purchased the similar products from online and offline stores of the company. Therefore, with regard to the UK Consumer Protection from Misleading Marketing Regulations Act 2008, it can be stated that the company had misled both Tony and Ursula through misrepresenting the actual price of the said product (Office of the Trading, 2008). Correspondingly, the misleading act of HEL can also be considered under the violation of the UK tort law. According to the basic standards of the tort law, the provisions significantly justify the crimes pertaining to the use of unfair means, which can negatively influence the interests of other parties involved in the process. Moreover, in accordance, the basic principles of tort law not only cover the bodily harms caused by the actions of others, but also encompass those psychological or monetary injuries that impose a negative impact on the emotional and social status of the victim (Office of the Trading, 2008). In the context of HEL as per the presented case scenario, the application of any human error that leads to breach the tort policies and causes negative impacts on others’ feelings can be deemed as liable to compensate the damages caused through penalties or punishment. The provisions underneath the UK tort law also incorporates adequate measures with regard to the negligence of care, which can be considered as significant carelessness that can lead to damages of other parties. With respect to the advertisement of HEL regarding the price of the product, the company can face severe challenges due to its non-compliance with the UK ‘Consumer Protection from Misleading Marketing Regulations 2008, along with the tort law of the country (E-Law Resource, n.d.). The practice might lead to severe implications on the goodwill of the organisation inhibiting its brand image, reputation along with inability to be permitted for further advertising opportunities. Moreover, the process of falsifying customers often impose the risk of losing customers’ confidence along with their reliability, which can further have a severe impact on the organisation to successfully accomplish its long-term goals and sustainability in the market. In this regard, the customers can take adequate legal procedures to make the company liable to compensate damages owing to the misrepresentation of the price of the product. For instance, the case of Nettleship v Weston [1971] 2 QB 691 can be considered to exhibit a similar issue as that in the context of HEL being involved with Tony and Ursula. According to the case of Nettleship v Weston [1971], the allegation was made by the plaintiff due to the inappropriate representation of relevant information (1E-Law Resource, n.d.). With reference to the case of Tony and Ursula, it can be further stated that the customers have been motivated with the advertisement information coupled with a large discount of the product. However, the company had claimed the actual price after the purchasing of the product, which can further be considered as damage suffered by the customers of HEL. Although the misleading advertisement regarding product pricing did not involve any physical injury, it can be identified that certain emotional nuisance was caused that can be treated as a damage faced by the customers. Hence, both the customers, i.e. Tony and Ursula, will be liable to obtain compensation from the company. Furthermore, as per the tort law of UK, this particular action of HEL, apart from being involved in the breach of duty of care and negligence might also regarded as an instance of fraud. It has been noted that low price always attracts customers to buy any particular product. Additionally, the customers are also liable to claim legal measures against HEL, which can impose a severe impact on the organisation. Therefore, it can be suggested that the marketing and promotional strategies of HEL should be focused on maintaining transparent advertising policy and deliver greater significance to ensure strict compliance with the relevant regulations. Stating precisely in relation to the issue, the company should adequately uphold the provisions in UK ‘Consumer Protection from Misleading Marketing Regulations 2008’ in order to minimise potential issues associated with the advertising and promotional practice of its range of household and electronic products (Crown, n.d.). Scenario B - Vondra and HEL According to the scenario involving Vondra and HEL, it has been recognised that the customer Vondra who had purchased a product at £150 instead of the actual price, which was quoted at £190 from the Ealing store of HEL, had to face significant concerns, while the company refused to cover the warranty of the product as it was sold in accordance with a discounted amount. The customer had visited to the Ealing store of HEL and claimed regarding the actual price of the product. The customer had also stated that the company does not have any legal obligation and instead offered significant amount of discount on the similar product to maintain its goodwill with the customers. However, HEL was also alleged by Vondra due to the denial of guarantee while selling the product with a discount rate, although the customer had agreed to the terms through a written contract. Contextually, the company have also made agreements with Vondra under the clause stating that HEL provided the discount offer in an exceptional circumstance; hence the goods sold by the company would not cover any warranty or guarantee. Moreover, the agreement clause with Vondra also identified that the company would not accept any liability regarding the malfunctioning or fault of the sold product, which however will not affect Vondra’s rights to claim for compensation from the manufacturing company i.e. Sumsum Corp. Inc. After agreeing with the terms and conditions with HEL, Vondra identified significant faults in the product within the guaranteed term period of 12th months by Sumsum. However, according to the manufacturer’s terms and conditions, Vondra has to bear the risk of returning the purchased item at her expenses to Samsum. Therefore, the customer decided to repair the product by own and suffered an electric shock due to the loud explosion resulting in minor burns to the victim’s hand. The injury had also led Vondra to take couple of weeks off from workm which altogether accounted for a monetary compensation. With reference to the damages suffered by Vondra, a major dispute within the contractual procedure can be identified while she agreed with the terms and conditions stated by HEL. It is noteworthy in this context that a fundamental concept of contract needs to define a valid agreement where two parties mutually agree to accomplish any particular legal objective adhering certain rules and guidelines. Moreover, both the parties also need to be mutually committed to comply with a set of promises in accordance with the contractual regulations (Simpsons Solicitors, 2000). The contractual disputes of HEL has been observed with both the manufacturer i.e. Sumsum and the customer Vondra. In the context of the agreement made between Sumsum and HEL, both the parties have agreed that the manufacturer would not be liable to cover the damaged or malfunctioned product if it was bought in a bulk by the retailer or customer. Moreover, the agreement clause between HEL and Sumsum also incorporated legal norms stating the denial of any compensation for the products that are found malfunctioning or faulty by Samsum. In this context, HEL shall not be deemed as liable to claim any compensation as the company was motivated by the discount for bulk ordering offered by Samsum. Therefore, HEL shall have no claim for any compensation from Samsum regarding the malfunctioning of the products that were sold to the retail customers and the consequent losses beard by the company. In the similar context, Vondra shall also not be deemed as eligible to claim for adequate compensation of the product that led her to face physical injuries due to its faults from HEL based on the grounds that Vondra had also mutually agreed with the contractual clause along with terms and conditions whereby HEL was excluded from the liability to compensate any losses suffered by the customer. According to the in-depth analysis of the issue, the Sales of Goods Act 1979 and 2002 can be considered as an appropriate legal regulation in accordance with the scenario of Vondra and HEL. In relation to the fundamental concept of the Sales of Goods Act 1979, the provision incorporates wide ranging regulations that must be abided by the sellers or retailers when serving their customers in an ethical and legitimate manner. During the process of selling goods, the retailers or sellers are directly involved into a contract with the customers through the incorporation of certain essential clauses regarding the quality, durability and fit for use of the product(s). Moreover, the law also considers that the manufacturing companies or the retailers are not liable to sell products with malfunctions or faults (Office of Fair Trading, 2011; The Stationery Office Limited, 2000). Therefore, the provisions mentioned under the act protect customers from different fraudulent practices of the retailers and manufactures due to their selling of disputed or faulty products. According to the regulations of Sales of Goods Act 1979, Samsum can be accused of selling disputed products to HEL that lacked in maintaining the industrial standards of quality and durability. However, HEL is not liable to claim for the products that are involved in disputes as the company had entered mutually agreed clause while purchasing the products in a bulk from Samsum (The Stationery Office Limited, 2000). Irrespective of the contractual terms, HEL possesses adequate right to take legal measures against Samsum under the clauses in the Sales of Goods Act 1979 due to selling of faulty products. Moreover, the company can also take legal obligations as it had to refund a huge amount to its customers due to the significant faults of the products purchased from Samsum. Correspondingly, Vondra, the ultimate victim of the scenario, is also not liable to claim against HEL as the company had sold faulty product that led her to face physical injury. However, Vondra shall not be deemed liable to claim compensation for her physical injury as she had suffered the damages due to her lack of technical skills. Scenario C - Saeed and Wayne The third scenario of the case demonstrates a growing conflict among the internal members of the organisation due to the issue associated with misrepresentation of product price to the customers. According to the observation, it has been recognised that Saeed, the E-Commerce director of HEL has been called before in order to clarify regarding the rudimental causes behind the occurrence of data misrepresentation in the company’s information, which had created a major conflict between HEL and its customers. On this ground, Yolanda, the Human Resource Director of HEL decided to demote Saeed for six months, following which he was also shifted into the General office from the office of the Board of Directors of the organisation. In this regard, the scenario of demotion and relocation of designation provided a base to Saeed to resign from the organisation and arguing the issue as an unfair employment action. In the similar context Wayne, the store manager of the retail store located in Hayes was also given with a three months’ notice of discharge due to his lack of competences that resulted in significant losses in sales of the retail store. In this concern, Wayne had also considered the issues of his three months’ notice under the grounds of unfair law of employment. Considering the above illustrated scenario of Saeed and Wayne, the decision of HEL, in view of its Human Resource Director, cannot be considered as a breach to the UK employment law as alleged by the two employees. According to the employment law of the UK, both the employee and employer possess equal rights while performing business operations to achieve their common goals. In relation to the fundamental process of employment, both the parties (employer and employee) involve into a mutual agreement within the ground of certain commitments aimed at the purpose of satisfying their individual needs (Turner, 2013). It is worth mentioning in this context that Saeed and Wayne should also have adequate responsibility regarding their roles and responsibilities towards the furtherance of HEL. As their actions had been in direct contrast to the interests of the company, HEL’s action to take punitive measures can be justified. Under this circumstance, it can be observed that Saeed’s lacuna to ensure that advertised information was error free affected the company’s goodwill, which justifies the punitive measure imposed on him by the management. Subsequently, Saeed, as the E-commerce director of HEL must need to justify with each board members in terms making any decisions associated with the online business of the organisation and take due measures to ensure that further occurrences of such fallacies are strictly prevented. However, he shall not have the legitimate right to protest against the managerial action given the degree of damages incurred by the company due to his inefficiency. The issue associated with misrepresentation in pricing of the products have severely impacted the brand image along with reliability of the organisation towards its major stakeholder groups. Moreover, the issues have also coupled various concerns that have also led the company to face significant financial losses for the season as the company had to refund substantial amounts due to the faults in the products sold by the organisation. Therefore, based on these implications that the company had to suffer, the managerial decision to demote Saeed can be deemed as justified. On the other hand, Wayne was also made aware of his performance errors to satisfy the set targets, which were intended to boost company performances that were declining over a certain period of time. He was also notified regarding the possible step that the management could take, following his repeated failure to satisfy the fixed target. In addition, following a legitimate way of dismissing an employee, HEL had provided Wayne with a six months’ notice period. According to the employment law of UK, an employer is liable to dismiss employee(s) on the grounds of non-competences, which can be proved with reference to the fact that Wayne had failed to meet the set targets at repeated occurrence. The employment law also mentions that a notice period must be offered to the employee before dismissing him/her, which was also sufficed by HEL in the case of Wayne (Holland, 2013). Therefore, the decisions of HEL cannot be considered to involve unfairness in taking punitive measures against Saeed and Wayne. References [1]The Stationery Office Limited, 2000. The Business Protection from Misleading Marketing Regulations 2008. Trade Descriptions. [Online] Available at: http://www.legislation.gov.uk/uksi/2008/1276/pdfs/uksi_20081276_en.pdf [Accessed November 29, 2013]. 1 E-lawresources, No Date. Donoghue v Stevenson [1932] AC 562 House of Lords. Home. [Online] Available at: http://www.e-lawresources.co.uk/Donoghue-v-Stevenson.php [Accessed November 29, 2013]. Crown, No Date. Marketing and Advertising: The Law. Advertising Codes of Practice. [Online] Available at: https://www.gov.uk/marketing-advertising-law/advertising-codes-of-practice [Accessed November 29, 2013]. E-Law Resource, No Date. Tort Law. Negligence - Duty of Care. [Online] Available at: http://www.e-lawresources.co.uk/Duty-of-care.php [Accessed November 29, 2013]. Holland, J., 2013. Employment Law 2013. Oxford University Press. Office of Fair Trading, 2011. Why you need to Know about the Law on the Sale of Goods. Sales of Goods Act. [Online] Available at: http://www.oft.gov.uk/shared_oft/738369/738375/OFT002_SOGA_explained.pdf [Accessed November 29, 2013]. Office of the Trading, 2008. Business to business promotions and comparative advertisements. Business Leaflets. [Online] Available at: http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft1056.pdf [Accessed November 29, 2013]. Simpsons Solicitors, 2000. The Principles of Contract. Documents. [Online] Available at: http://www.simpsons.com.au/documents/visarts/visarts89/1Princip.pdf [Accessed November 29, 2013]. The Stationery Office Limited, 2000. Sale of Goods Act 1979. Chapter 54. [Online] Available at: http://www.legislation.gov.uk/ukpga/1979/54/pdfs/ukpga_19790054_en.pdf [Accessed November 29, 2013]. Turner, C., 2013. Unlocking Employment Law. Routledge. Bibliography National Computing Centre, 2005. Developing a Successful Governance Strategy. IT Governance. [Online] Available at: http://www.isaca.org/Certification/CGEIT-Certified-in-the-Governance-of-Enterprise-IT/Prepare-for-the-Exam/Study-Materials/Documents/Developing-a-Successful-Governance-Strategy.pdf [Accessed November 29, 2013]. Tamanaha, B. Z., 2007. Understanding Legal Pluralism: Past to Present, Local to Global. Sydney Law Review, pp. 375-411. Read More