Implications

The issues of management internal control and the problems in handling the returned TV sets
faced by PCL has impacted many stakeholders in various ways. Among the stakeholders that
are effected includes the companys shareholders, employees in the sales department,
customers, retailers, dealers and also the authorised service centres (ASC).
Shareholders
As mentioned in the case study, the issue of returned TV sets causes PCL losses. The
handling of returned TV sets cost PCL an average of US$6 million, equalling about 5% of its
annual TV sales. Moreover, about 37% of the returned goods were no-fault-found (NFF)
returns, translating to a loss of US$2.2 million for PCL. If this goes on for the following
years, then it will affect PCLs net income and cause shareholders a loss.
Employees
Employees in PCL that are most affected due to these problems are the employees in the sales
department and those in the TV division. The after-sales service team had to authorise and
manage their third party ASC in handling so many returned TV sets including receiving the
returned TV sets to the warehouse followed by repair and refurbishment at the factory
workshop. Not to mention that 37% of the returned goods were NFF causing the effort to be
useless. Other than that, the sales team had to maintain their relation with retailers and dealers
in order to gain sales target although many returns were made which eventually causes them
to lose.
Due to this matter, PCLs management had brought together a taskforce to investigate the
situation. The taskforce consists of the product marketing manager, sales operation manager,
the service manager and the financial controller. During the first try, sales team was under
pressure to meet targets. Besides, they were also forced to accept returned goods form dealers
causing their effort in the first try to absolutely fail.
Meanwhile, the second try was a relief to the employees in the sales and service team. The
sales team were required to visit top dealers within their respective regions to solicit feedback
and implement follow-up actions. They were rewarded bonuses to be used for outing and
teambuilding exercise if the reach the target.

Customers
Customers are the ones that are most fortunate when the issue happened. They were able to
purchase and later return the good or get them repaired although the defects were not on the
product but their expectations of the TV sets. Before the actions were implemented by
management, the dealers, retailers, ASC and PCL has been very generous to them. They
could even return the TV just because the picture quality was not their expectations although
the defect was due to their own TV cables.
After the actions in the first and second try was implemented by PCLs management,
customers can no longer easily return the TV sets that they purchased. This is because the
dealers will consider the defects before accepting the returns. ASC will also inspect properly
the goods before proceeding to the factory for repairs.
Dealers and retailers
Before the actions were implemented, dealers and retailers of the TV sets were not trained on
educating customers about the product performance and the criteria for accepting returns.
That is why they often accept the returned products although the defaults were not to be held
on the producer which is PCL. The way dealers and retailers conduct product demonstration
at their stores are also incorrect where in a situation they lead customers in believing that the
picture quality of the TV was very good whereas the quality was due to the high-definition
signals that they use.
Implications on dealers and retailers after the implementation of the actions was that they
were more aware and considerate in accepting return goods form customers. PCL sends its
sales team to follow-up with the dealers and ensure that things are done according to PCLs
policy.
Authorised service centre (ASC)
The ASC is a third party service centre authorised by PCL to handle after-sale services.
Before the implementation of the actions, ASC was in a very bad condition. Retailers will
first send the returned goods to ASC and they will decide whether to accept and repair them
or not. It the defect was serious, the goods will be sent to PCLs factory for repair. The ASC
was less knowledgeable about the return criteria established by PCL. They often fail to
execute the criteria properly and accept returns without proper screening. Even more
concerning was that the ASC sometimes fake their inspection records instead of rejecting the

returned goods and PCL also did not have punishment policy for fraud or incompliance on
the part of ASC.
During the first try, ASCs were informed about a new policy where they would be fined three
times the labour charge for each fake inspection record discovered. But the first try failed as
the after-sales service team fail to take action against ASCs for fake inspections causing NFF
rate to rise.
Meanwhile, the second try was successful in changing the way ASCs handle returns. Service
managers and engineers were sent to ASCs and provide training sessions with detailed
working instruction. A new incentive and penalty scheme was also drawn up. After six
months, NFF rates was reduced indicating that the ASCs are more considerate in handling the
returned TV sets.