Skalholtsstigur 2a: Economics, Implied Promises, and the Ethics of a $1,200 a Month Balcony: Instructor's Note

CASE DESCRIPTION The primary subject matter of this case concerns a customer service issue between a business traveler and the small business owner of several rental properties in Reykjavik, Iceland. A secondary issue involves an exploration of the intersection of business practices, expectations, perceived economic value, ethics, and two different cultures. The case has a difficulty level of three/four (appropriate for junior/senior level courses) although it may be used at level five (appropriate for first year graduate level) depending on the amount and complexity of background reading assigned. The case is designed to be taught in as little as one class hour, but may be expanded to as many as three class hours depending on the amount of theoretical material assigned or discussed by the instructor and whether any out-of-class preparations or in-class presentations are required. The case is expected to require from one hour (if the instructor's goal is class discussion only) to approximately four hours of outside preparation by students (if the goal involves more formal presentations by individuals or teams of students). CASE SYNOPSIS What is fair? What is reasonable? What is ethical? Do these answers change across cultures? Student discussion of the case facilitates exploration of these questions in the context of a customer request for a partial refund to the owner of private rental properties in Iceland. A U.S. college professor, coming to the end of an extended, four-month stay in Reykjavik, Iceland has requested a partial refund of monies he has paid for rent to the owner/manager of the property where he has been staying. At issue for the customer is the fact that noise levels in the original apartment he rented after an internet search and back and forth e-mail messages necessitated his moving to an upstairs apartment--the only difference being the addition of a small balcony--at an additional cost of $1,200 per month. Since the entire stay took place in the winter months, January through April, the balcony was virtually unusable during the stay, except for the last several weeks. Introducing students to the topic of customer service from the organization's point of view is always challenging. Students' experiences as consumers provide insights to various principles for developing a rationale as to why organizations do what they do. A difficulty often arises however, from the need for students to know when to divorce their instincts, built upon their experience base, in order to make decisions as managers. In this case, students will draw on their own experiences, those of their friends and family members, and any assigned readings as they take the role of the business owner. As the instructor leads a discussion of the case and proposed questions, terminology and constructs are defined and explored and students try to determine where to draw the line between the needs of the customer and those of their business. INSTRUCTORS' NOTES Potential Pre-Class Readings and Student Preparation The readings below are available from Harvard Business School Publishing and are offered as suggestions if the instructor wishes to assign pre-case readings. * Ethics: A Basic Framework by Lynn Sharp Paine, Revision Date: May 15, 2007, Publication Date: Oct 12, 2006, 307059-PDF-ENG, Length:8p (Provides a basic framework for ethical analysis of management decisions, policies, and plans of action). …