To: Meg Whitely
From: Maxwell Berman, Advisory Committee
Date: April 1, 2021
Subject: Advisement on LectroKitty situation
Dear Mrs. Whitely,
After discussing with the other members of the appointed advisory committee we have come to
some conclusions on the LectroKitty situation and would like to inform you about the general
position we find ourselves in.
- Background: We are facing a financial and ethical dilemma with the LectroKitty toy that
requires a multifaceted approach to fix the problem. LectroKitty is our fastest selling, and
most profitable product. There have been a number of instances reported by parents
that involve the LectroKitty. Some parents report children choking on the small plastic
kibble bits while others report shocks from the toy itself. Currently there are 4 reported
cases that have resulted in trips to the emergency room, where the children have been
shocked and burned or chocked on the kibble pieces. With potentially three more
companies wanting to distribute the LectroKitty there is a question of safety and financial
losses if the toy is recalled. There are reports that the U.S. Consumer Product Safety
Commission are investigating this product and the CPSC called about an initial inquiry,
so time is of the essence. The design team believes that they can explore what the
problem might be and have it fixed within 3 months. Furthermore, because Kanga
committed to a profit sharing deal with employees who unionized there are other
considerations that have to be taken into account when looking for a solution. We need
to create a response that will balance the company’s bottom line with the ethical
considerations that have to be taken into account in order to maintain our company's toy
reputation.
- Ethical Considerations: There are some main ethical considerations that need to be
made in order to make the proper plan.
1. LectroKitty has hurt children and although the percentage is small at this time,
the number of children injured could rise very soon. This is damaging to our
image as a safe toy brand, and it is immoral to allow a toy to continue to hurt
others.
2. We know that the CPSC already made an initial inquiry and it would be better to
get ahead of this and make a proper statement about the situation.
3. The unionized workers and profit sharing agreement is a tough situation, both
financially and ethically. If we stop production and selling of this toy, it would
impact our workers, but yet it could continue to injure children and eventually lead
to the downfall of our company.
- Conclusions and Recommendations: Recall the LectroKitty and make a statement
about the toy in order to get ahead of any inquiries or lawsuits. We also suggest that it
would be good to reach out to the parents and reassure them that we take pride in our
safety. An agreement will have to be made and it would be better to be settled out of
court, as a lawsuit would hurt the company image and it would also take a long time. If
we were to not take action, we would surely be sued, an inquiry by the CPSC would be
made formal and this would ruin the company’s future sales. If we allow the design team
to work on the product and roll it back out eventually, the least amount of harm will be
done and all employees will be able to keep their jobs. The workers that would be getting
reduced profit-sharing benefits would be a hard financial situation to deal with but some
agreement with the union would have to be made. Some executives might have to take
salary reductions in order to offset the loss of revenue for the short time the toy is being
redesigned. A totally rebranded today might also be ideal in order to keep ourselves from
the LectroKitty name as it is now tainted by the child injuries.
Maxwell Berman, Advisory Committee
