Overview
This document will also talk about the extent on the technique applies within a systems approach to organizational conflict management, how each technique will present new challenges, cost benefits or risks to an organization (e.g. financial services institution), how it would convince management to implement some subset of these techniques within the organization's overall conflict management system and how might the techniques improve or change the existing dispute resolution procedures in an organization.
Introduction
For consumers, credit cards serve as a means of payment and as a source of credit. (Ausubel, 1991) Credit cards are frequently used for their convenience, and also because they serve as open-ended, easily available credit source. (Kwon and Lee, 2000) People need not bring cash or checks, and plus, there are lots of promotions being offered, such as dispute resolution services and bonuses for frequent users, that enhance credit card usage. (Chakravorti and Emmons, 2001) One convenience being offered by credit cards is the freedom from having to spend time and effort borrowing from financial institutions; this is one of the reasons why consumers choose to pay high interests for an outstanding credit card balance rather than apply for a loan that offers a lower interest rate (Kwon and Lee, 2000).
In accordance, credit cards play a major role for consumers in the global market. (Baker, 1995) For consumers involved in cross-border transactions, major credit cards and charge cards are fast becoming the universal means of payment. (Baker, 1995) Moreover, for as early as 1987, the Commission of the European community had already considered cards as the “payment system of the future”. (Baker, 1995) Meanwhile, for individual consumers, the use of one major card is usually cheaper and much simpler than any other means of cross-border payment. (Baker, 1995) As Baker (1995) elaborated: “Credit cards also may be the key to resolving a vexing question in the global market-place: how to resolve a dispute with a seller located in another country. For some time now several credit-card networks have offered liberal "chargeback" rights (a refund via the credit card) to the consumers in the event of an unresolved dispute. This procedure is voluntary in the United States, and similar rights exist under common law in the United Kingdom. Indeed, that the US development was voluntary is particularly instructive: increasing consumer confidence in distance selling is seen in the United States as crucial to the growth of this form of distribution. Card associations in the United States will drop merchants from their networks if they cause excessive charge-backs, and report that charge-backs as a percentage of sales have fallen dramatically, to a fraction of 1% of sales. The development of widespread chargeback rights in international transactions will play an important role in the new global market.” (p. 13)
However, despite these good features, credit cards have also been associated with the rise of indebtedness. (Schor, 1998) Between 1990 and 1996, debtors in America pay an average of $1,000 per annum in the interest and fees alone for their credit card balance, where interest rates are reaching nearly 20 percent. (Schor, 1998) While in the United Kingdom (U.K.), official figures show that consumers currently owe a total of ₤52.92 billion (or $20.60 billion) on credit cards, resulting to a growing concern over a possible increase on personal bankruptcies in the country.
If this is the scenario, does this imply that consumer spending is being encouraged by credit cards? Schor (1998) said credit companies are encouraging consumers to borrow more. “Using subtle tactics to encourage borrowing, the recent onslaught has led consumers to hold more cards, to borrow more, and to fork over an increasing fraction of their incomes to the companies. If you don't borrow, the company may cancel your card, since it isn't making money on you.” (Schor, 1998, p.72) But is this encouragement enough to instigate consumer spending to a point where consumers can not even well afford to do so? Or are there other reasons for an increase in consumer spending with the use of credit cards? Is it right to implicate credit cards as the factor that can make consumers to buy more, even to the extent of spending beyond one's resources? With these queries and other assumptions, an in-depth study of the roles of credit cards in consumer spending therefore is needed.
Understanding of the implications of credit cards in the context of consumer spending will be a good breakthrough in solving problems of debt and bankruptcies of not only individual persons but also of a country or society are as well. Also, understanding of consumer spending will impart a valuable lesson on frugality. As Tucker (1991) have commented, “A renewed appreciation of the national value of thrift is essential for the future well-being of our economy. But even if we are unable to restore the old positive definition of frugality, at least the history of thrifty ancestors can be a precious memory to treasure as we struggle to survive with a sharply reduced standard of living.” (ix)
