Chapter 15, Problem 1AYSED

Chris Dykstra, responsible for loss prevention at

Electronics took a deep breath before he launched into

making his case for the changes that he was proposing to

the company's shoplifting policy. He knew that convincing

Ross Chenoweth was going to be a hard sell. Ross, the

president and CEO was the son of the founder of the local,

still-family-owned consumer electronics chain based in

Phoenix, Arizona. He'd inherited not only the company,

but also, his father's strict moral code.

"I think it's time to follow the lead of other stores,"

Chris began. He pointed out that most Other retailers

didn't bother calling the police and pressing charges

unless the thief had shoplifted merchandise worth more

than $50 to $100. In contrast, Westwind currently had a

zero-tolerance policy toward theft that Ross's father had

put in place when he started the business. Chris wanted

to replace that policy with one that prosecuted only

individuals between IS and 65 who had stolen more than

$20 worth of goods, and who had a previous history of

theft at Westwind. In the case of first-time culprits under

IS or over 65, he argued for letting them Off With a strict

warning, regardless of the value of their ill-gotten goods.

Repeat offenders would be arrested.

"Frankly, the local police are getting pretty tired Of

having to come to Our stores every time a teenager sticks a

CD in his jacket pocket," Chris pointed out. "And besides,

we just afford the costs associated with prosecuting

everyone." Every time he pressed charges against a

shoplifter who'd made Off with a $10 item, Westwind

lost money. The company had to engage a lawyer and

pay employees Overtime for their court appearances. In

addition, Chris was looking at hiring more security guards

to keep up with the workload. Westwind was already in

a losing battle at the moment with mass retailers who

were competing all too successfully on price, so passing on

the costs of its zero-tolerance policy to Customers wasn't

really an option. " Let's concentrate on catching dishonest

employees and those organized-theft rings. They're the

ones who are really hurting us," Chris concluded.

There was a long pause after Chris finished his

carefully prepared speech. Ross thought about his recently

deceased father, both an astute businessman and a person

for whom honesty was a key guiding principle. If he

were sitting here today, he`d no doubt say that theft was

theft—that setting a minimum was tantamount to saying

that stealing was acceptable, just as long as you steal

too much. He looked at Chris. "You know, we've both got

teenagers. Is this really a message you want to send out,

especially to kids? You know as well as I do that there's

nothing they like better than testing limits. It's almost an

invitation to see if you can beat the system." But then Ross

faltered as he found himself glancing at the latest financial

figures on his desk—another in a string of quarterly losses.

If West-wind went under, a lot of employees would be

looking for another way to make a living. In his heart, he

believed in his father's high moral standards, but he had to

ask himself: Just how moral could Westwind afford to be?

Continue Westwind's zero-tolerance policy toward

shoplifting. It's the right thing to do—and it Will pay

Off in the end in higher profitability because the chain's

reputation for being tough on crime Will reduce overall

losses from theft.