Product Recall And Its Effect On The Company's Market Value

In 2007, Mattel a California based toy company shockingly recalled 19 million toys that had been manufactured in China. Mattel was founded in 1944, and has produced iconic toys such as Barbie and Hot Wheels. The company had a long established trust with their consumers that had been forged from decades of reliability. However, when the company recalled 19 million toys due to health and safety violations, consumer confusion and outrage soared. The public wanted to know how such an established company’s safety regulations could fail, how Mattel was addressing the issue, and whether consumers could trust Mattel to produce reliable toys in the future.

recalls related to product quality problems. Observers felt the company would have lost even more

Managers and leaders do not welcome crises because they don't realize that problems and crisis if handled with intelligence become an opportunity for the company. The purpose of writing this paper to discuss the case of "Johnson & Johnson" that became a hero in the eyes of public (Rehak, 2002) and gained their market share back with the help of their effective public relations plan. They accomplished this by making good relations with public and by proving how much they were concerned about the safety of their consumers.

Option two can be justified due to the fact that it will produce the best overall results. The company image will be maintained utilizing this option. Although the company will be losing money on wasted product and labor, the consumers’ confidence will increase due to the fact that they will be ensured that safety is one of the key factors in our product. I believe stock prices will remain the same or increase once investors see how we reacted fast

new brands are at very high risk of failing, as the consumer is more reachable when

Businesses could be held liable for negligent tort if their product injury, harms consumers or is falsely represented. Nonetheless, when the circumstances warrant, parties that are not guilty of negligence or an unintentional tort can still be subjected to compensations when their products injure customers (Seaquist, 2012) Recall Negligence is an unintentional tort wherein one party is injured result to some actions of another. There are certain factors that must be considered to determines whether a corporation acted negligently. The elements are the following: a breach of that duty, legal duty to use due care, a reasonable close causal connection between the breach and the plaintiffs resulting in injury, and the actual loss or damage to the plaintiff. This paper is going to discuss a negligent tort due to a company’s recall of its product. The company may be considered liable for negligence if there was no recall on their product and the product caused bodily harm to a consumer (Benjamin, 2015). Throughout the paper will discuss the reason of Toshiba recalling their laptop computer battery packs due to burn and because of its potential to catch fire on March 30, 2016 and the recall number is 16-131. If the company did not make the decision to recall their laptop computer battery could have been diligent. To prove the negligent tort the consumer must prove factors such duty to care and defenses of negligence (Seaquist, 2012).

According to FDA.gov 2009, the definition of recalls is, an action taken by a company to remove a product from shelves. There are three classes of recalls and two other types of recalls mentioned on FDA.gov. Class I recall involves a situation in which there is a probability that the use of or exposure to a product will cause adverse health effects or death. (FDA, 2009) Class II recall involves a situation in which use of or exposure to a product can cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health effects is remote. (FDA, 2009) Class III recall involves a situation in which use of or exposure to a product is not likely to cause adverse health consequences. (FDA, 2009) Market

If a product does not comply with Health Canada's legislation or it is not safe for patients, that product is recalled. When we receive a recall from the manufacturer/ importer/ distributor I need to ensure that all products recalled are identified. I need to determine if other brands, lot numbers or sizes/ strengths are affected by this letter and then put everything away from the distribution to public. Also, I check to see if any of that product were given to our patients and then let them know about it. Then those products are either returned to the manufacturer or destroyed in an environmental manner.

The Food and Drug Administration is a regulation agency within the Department of Health and Human Services. It’s role in our nation is to be responsible for “protecting the public health by assuring the safety, efficacy and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation” ("What We Do."). One of the most important responsibilities and the topic I will be discussing throughout this paper is drug regulation. The Food and Drug Administration approves drugs that are intended for use in diagnosis, cure, relief, treatment, or prevention of disease, and is intended to affect the function of the body. In order to do so, The Food and Drug Administration reviews drug manufacturer’s via application to put drugs on the market; therefore, a drug may not be sold or marketed unless it has and remains approved by the FDA. Even though a drug has been approved does not mean it will remain on the market, drugs have the likelihood to be recalled. For example, when you see those late night personal injury lawyer commercials saying, “If you have been prescribed and taken said drug, and experienced any of these side effects such as blood clots, seizures, etc., you may be entitled to compensation.” those drugs have usually been recalled due to adverse effects

1. The decision facing Mattel is whether to continue to produce their products internationally where cost are low, or produce them in the United States where costs are significantly higher but quality is better. Mattel might want to even reconsider going global if there sales are decreasing more internationally than in the United States. Mattel needs to determine how many of the products produced internationally were recalled versus the amount of products produced in the United States that were recalled. Mattel also needs to decide how they are going to advertise their products in a way that will convince consumers in the external environment to buy their products, without having any

In a competitive market to which Johnson and Johnson operates, the smallest of errors can lead to consequences which can cut revenue. When large mistakes occur, millions of dollars are lost, and even worse, there is a loss of customer confidence. Johnson and Johnson has had numerous recalls in their consumer healthcare division recently, which rocked the organization’s once sound image, and diminished its profits. These recalls have hurt Johnson and Johnson’s stocks and cost the company about $900 million in sales last year (Rockoff, 2011).

However, having the proper controls in place will mitigate the probability and impact. The cost to implement is insignificant compared to the potential loss. This risk event was a wake-up call to many retailers, not just TJX.

Product recalls have opened the company to numerous lawsuits from consumers that were hurt by the recalled products.

Markets are the institutions where the exchange of goods and services among individuals collective agents occurs. The exchange of these goods and services utilizes money as the medium through which equivalence of worth and value is given to the goods and services (Keech and Munger 4). This leads to the formation of prices given for the goods and services. Additionally, markets may be categorized in accordance with the commodities and services traded in them where these categories entail financial markets, labor markets, and housing markets. Similarly, the scope under which these items are traded may provide another level of categorization where some may occur throughout a region, nationally or internationally (Pinotti 2). These may be coupled with categorization in terms of structure where various entities include competitive markets, oligopolistic markets, and monopolistic markets.

1. Do you believe that Mattel acted in a socially responsible and ethical manner with regard to the safety of its toys? Why or Why not? What should or could Mattel have done differently, if anything?