1. Sears' stock price and earnings fell. What lesson is there in these consequences?

2. Compute the total costs of the bankruptcy cases to Sears.

3. Are there principles for a credo for, as an example, the mechanics at the auto centers? What about the lawyers who worked for Sears on the bankruptcy issues?

Case 5.5 Sears and High-Cost Auto Repairs In 1991, the California Department of Consumer Affairs began investigating Sears Auto Repair Centers. Sears' automotive unit, with 850 repair shops nationwide, generated 9 percent of the merchandise group's $19.4 billion in revenues. It was one of the fastest growing and most profitable divisions of Sears over the previous two years In the California investigation, agents posed as customers at thirty-three of the seventy-two Sears automotive repair shops located from Los Angeles to Sacramento They found that they were overcharged 90 percent of the time by an average of $223 In the first phase of the investigation, the agents took thirty-eight cars with worn-out brakes but no other mechanical problems to twenty-seven Sears shops between Decem- ber 1990 and December 1991. In thirty-four of the cases, the agents were told that their cars needed additional work. At the Sears shop in Concord, a San Francisco suburb, the agent was overcharged $585 to replace the front brake pads, front and rear springs, and control-arm bushings. Sears advertised brake jobs at prices of s48 and s58." In the second phase of the investigation, Sears was notified of the investigation, and ten shops were targeted. In seven of those cases, the agents were overcharged. No springs and shocks were sold in these cases, but the average overcharge was $100 per agent. Up until 1990, Sears had paid its repair center service advisors by the hour rather than by the amount of work." But in February 1990, Sears instituted an incentive pensation policy under which employees were paid based on the amount of repairs cus- tomers authorized. Service advisors also had to meet sales quotas on specific auto parts; those who did not meet the quotas often had their hours reduced or were assigned to work in other departments in the Sears stores. California regulators said the number of consumer complaints they received about Sears shops increased dramatically after the commission structure was implemented. The California Department of Consumer Affairs charged all seventy-two Sears auto motive shops in the state with fraud, false advertising, and failure to clearly state parts and labor on invoices