Based on your research, understanding, and the scenario, answer the following questions:
What violations has Natural Balance, Inc. committed in its dealings with the retailers?
Is Natural Balance�s current plan to distribute products in Mexico legal and ethical? Why or why not?
Which two government agencies might be able to assist Rachel? How would they be able to help Rachel?
How would an administrative agency handle Rachel’s complaint? What would be the possible challenges
by Natural Balance and the possible outcome?
In one paragraph, summarize the case you found related to energy drinks or deceptive advertising of
other products.
Assessing Natural Balance Violation’s
Natural Balance violates the laws of supply and demand by establishing a fixed price for
its product in the market. Such tactics are considered unethical since they increase the revenue
collected by the firm on the sale of the commodity and discourage competition. Whenever a
company sets up its price, it influences the supply of the product all through the year (Federal
Trade Commission, 2016). Furthermore, a consistent price implies the company does not follow
the laws of demand and supply exposing the consumer to a constant high rate for purchase of the
product. When Natural Balance forged an alliance with its retailers, the undertaking was wrong
since it led to the establishment of a cartel that would uphold the commodity’s price throughout
different market segments, regulating the ability of all individuals to access it.
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Natural Balance’s plan to expand its operation in Mexico is not ethical since it plans on
commencing the operation through illegal means. The company asserts that due to Mexico’s
unstable state it should take the opportunity and move into the region without appropriate
validation. This implies that Natural Balance will sell its produce and not compensate the
government its dues (Tax) due to lack of appropriate filling documents. Moreover, the company
can abuse its entry into the region and provide substandard products since it is illegally operating
in the region, hence not liable for lawsuits when compared to the legally registered companies.
Mexico is a sovereign state governed by its regulations and policies, an aspect that implies that
before any firm sets up operations in the region, it should be willing to comply with the
territories regulations.
Consumer Product Safety Commission (CPSC), and Food and Drug Administration
(FDA) are two important consumer agencies in America that can assist Rachel, who is a victim
of false advertising. Rachel is a woman who is suffering various health complications as a result
of unethical advertising. Although most of the energy drink firms are excluded the freedom to
reveal various components on their products such as caffeine, Rachel’s lawsuit should target
misleading advertisements conducted by Natural Balance (Carlan and Nored, 2011). It is
paramount that the consumer agencies understand that Rachel was a victim of deception, hoaxed
to purchase the product based on its vitamin content but at the end suffered side effects
associated with extended consumption of the product.
The administrative agency would file a lawsuit, where it will accuse Natural Balance of
falsified advertising and demand for compensation to Rachel based on the unforeseen health
implications that the buyer is vulnerable to. Rachel purchased the product with an intention of
obtaining energy to work effectively in her environment. The drink although at inception
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promised results; Rachel later experienced the side effects of the drink after continuous
consumption. Based on this aspect, Rachel should advise her agency representatives to file a
lawsuit where detailing how she was compelled by the firms advert to purchase the product
based on the companies withdrawal of information, that its products contained numerous
unforeseen side effects (Carlan and Nored, 2011).
A common case of falsified advertising involved Red Bull energy drink, a firm that was
accused of its misleading advert that its drink gave you ‘wings to fly’ and ‘vitalizes one’s body
and mind.’ Both of these catchy phrases implied that the product enhanced the consumer’s
mental and psychological output. It was charged for lack of concrete research to support its
falsified claims and finbally had to part with over 13 million in settlements to reconcile the
aggrieved consumers (O’Reilly, 2014).
References
Adams, R. J. (2011). A Brief Review and Assessment of the Leegin Decision: Who Wins and
Who Loses When Manufacturers Are Free to Set Retail Prices? Business & Society
Review, 116(2), 213-236.
Carlan, P., Lisa, S. & Nored, L. S. An Introduction to Criminal Law. Wall Street Burlington, MA:
Jones & Bartlett Publishers, 2011
Federal Trade Commission. (2016). The Antitrust Laws. Retrieved on April 15, 2016 from
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O’Reilly, L. (2014). Red Bull Will Pay $10 To Customers Disappointed The Drink Didn’t
Actually Give Them ‘Wings’.
