L$05$ MA$14-31.$ Ethical Issues with Supplier$-$Buyer Partnerships

Tom Wopat was excited to learn of his appointment as Circuit Electronics Corporation's sales repre$-$

sentative to Household Appliance Inc. For the past four years, Circuit Electronics has supplied all of

the electric switches used in Household's washers and dryers. As Circuit Electronics' sales representa$-$

tive, Tom's job involves the following tasks.

Working with Household engineers to design electric switches that can be manufactured to meet

Household's cost and quality requirements.

Assisting Household in resolving any problems related to electric switches.

Monitoring the inventory levels of electric switches at Household and placing orders for additional

switches when appropriate.

This appointment will require Tom to move to Stuttgart, Germany, for two years. Although Tom has

mixed feelings about the move, he is familiar with the success of the program in improving Circuit

Electronics' financial performance. He is also very much aware of the fact that the two previous sales

representatives received promotions at the end of their appointments.

As Tom toured the Household factory in Stuttgart with his predecessor, Catherine Bach, his

excitement turned to concern. It became apparent that Circuit Electronics had not been supplying

Household with the best available switches at the lowest possible costs. Although the switches were

adequate, they were more likely to wear out after five or six years of use than would switches cur$-$

rently on the market $($and being used by Household's competitors$).$ Furthermore, taking into account

the current number of switches in transit by ship from North America to Europe, it also appeared that

the inventory level of electric switches would soon be more than enough to satisfy Household's needs

for the next four months.

Required

If you were Tom, what would you do$?$