You are the top manager for NIghty Night, a maker of children’s sleepwear, and you are having a bad day. Recently, a new government regulation has affected your industry and your product line in particular. The fabric that you have used for young girls, nightgowns for the past 15 years has been declared unsafe and a potential fire hazard. New Standards have been set and your cloth does not meet them.
It gets worse Last week your company lost a lawsuit in which a child was injured wearing your products when she got too close to a gas stove. The settlement will cost almost a million dollars.
It gets worse. Despite the new, expensive regulation and the lawsuit settlement, you have an inventory of over 500,000 nightgowns that you cannot sell. At least you cannot sell them in the United States.
Other countries are not so strict in their regulations. And some countries that have similar prohibitions can be “negotiated” with a little cash in the right hands. If you don’t find another market for the product you will lose big time.
1. Select three courses of action that you may choose. Describe each.
2. Identify and explain the types of costs that might be involved in each.
3. Identify and explain the types of benefits that might be involved in each.
4. What would you do?