Proceedings of the 2012 International Conference on Industrial Engineering and Operations Management Istanbul, Turkey, July 3 – 6, 2012 Car Recalls: A Problem Unique to Toyota or For All Car Makers? Kamrul Ahsan School of Management and Information Systems, Faculty of Business and Law Victoria University Australia Abstract Often automobile recalls are drawing media and public attention. Influenced by Toyota’s recent automobile recalls 2009-2010 this research conducts an empirical study on historical car recalls. The research uses secondary data from recall websites maintained by public and private organizations. For different car model year and manufacturer the study looks at frequency of recalls, recorded customer complaints, and …show more content…
Proper communication channels are also important to handle recalls efficiently. Companies are still not prepared to deal with recalls nor do they recognize how great an impact recalls can have on an organization’s reputation. The point is that risks are higher than ever for the company that fails to anticipate the possibility of a product recall (Monczka & Trent, 1995). The costs of recalls are enormous for all parties in the chain. Product recalls due to safety hazards entail social costs, such as property damage, injury, and sometimes death (Hora et al., 2011). Costs of product recall through the reverse distribution channel are at least two or three times higher than costs incurred in forward distribution, often due to small quantities of shipments, fluctuating and uncertain demand, and the urgency 2027 involved in the recall process (Chandran & Lancioni, 1981; Jayaraman, Patterson, & Rolland, 2003). Costs to customers sometimes amount to death or physical disability. For the manufacturer, costs are quite substantial and can be compared with the cost of quality. The cost function can be the cost of recall operations, cost of product replacement or repair, cost of losing market share or goodwill, cost of marketing the brand value, cost of lawsuit settlements, and cost of closing share price (Berman, 1999; Gomer, 2008). There are various categories of recalled products and these include: automobiles, children’s products, appliances,
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
new brands are at very high risk of failing, as the consumer is more reachable when
© Copyright 2009 by Cambridge Business Publishers, LLC. All rights reserved. No part of this publication may be reproduced in any form for any purpose without the written permission of the publisher.
This memo is report about defective product being shipped. This memo also discusses how to handle the defective product and possibly saving Main Event Solution money without hurting customers. This memo also discusses the risk and reward for each situation.
While newer, mandatory federal safety standards have reduced the need for so many recalls of products such as cribs, strollers, high chairs, and clothing, there are still many baby and child products that, for various reasons, need to be recalled each year in the U.S. If a large number of products are recalled, or a child is injured or killed, the recall notice could receive a lot of publicity.
Many times these products needs to be recalled as they do not meet the safety standards and tend to hurt the image of a well-known organization like Mattel. Therefore, Mattel’s strategy was to focus on making most of its core products at their own manufacturing facilities, and outsource the products that are less popular and non-core.
Q.1 What are the causes and consequences of BMW’s quality problems with newly launched products? What should be done to improve “launch quality”? (583 words)
Reduction of supply chain costs a priority for CEOs Product recalls in the region of 15-20 per week¹ Market penetration, globalization, and geographical expansions have witnessed growth
As if this weren’t enough, quality problems mounted week after week. Only months later in February 2010, the NHTSA revealed that it had received claims citing another life threatening defect in the break system for the Toyota Prius. More than 400 thousand Prius recalls resulted. In April of 2010, customers reported handling issues in the Lexus brand which resulted in another recall of 9,400 Lexus cars and a “Don’t Buy: Safety Risk” rating from Consumer Reports. Also in April, the company voluntarily recalled Siennas to address a problem with corrosion on a spare tire cable. Later that month, Toyota voluntarily recalled 2003 Sequoia SUVs to improve the stability controls. 2010 Tacomas were also recalled for defective front drive shafts. Once the quality icon, Toyota had hit a really low point; so low that credit
In the case of Lululemon, the company's product quality and customer service standards have faced public scutiny on multiple occasions. After the the first publicized incident related to the sheernes of Lululemon's products, the company CEO at the time, Daniel Lieberman, issued a recall (Berg, 2014). While the recall was a succesfull move by Lieberman, the "Bend-over test" was notn(Mail Online, 2013). The bend-over test required Lululemon consumers wishing to return the overly sheer products to wear the item, and litterally bend over for an associate to deem if the sheerness level was sever enough to qualify for recall (Mail Online, 2013).
Product recalls have opened the company to numerous lawsuits from consumers that were hurt by the recalled products.
As the makers of children’s toys, Mattel has the ultimate responsibility to ensure that every toy is made within the tightest of safety standards. With the case of the Mattel toy recall, the company acted within the spectrum of their code of conduct that was titled Global Manufacturing Principles. Once the problem was identified, Mattel quickly addressed the issue, by automatically issuing the product recall and conducted a special investigation. The findings from the investigation led to other issues being found in Mattel toys. Once again, Mattel quickly responded with more product recalls, and a deeper investigation into the reasoning behind the faults. Through these actions Mattel did act in a socially responsible and ethical manner.
Toyota is a key player in global automotive market. Its structure constitutes if various production plants in different locations and a very strong branding which helps it capture a major market share. Like other enterprises, Toyota has several strengths and weakness which makes it what it is now. Toyota heavily invests in Research and development which helps it come up reputable product line which is spread out throughout the world because of its strengthening global distribution network however its recent product recalling, loose grip in key geographic areas and wrong allocation of resources shows that even a strong brand like Toyota has its weaknesses.
One potential threat for Volkswagen is that Toyota may respond strategically by also cutting its prices. However, given Toyota’s quality problems over the past year, they will not be able to lower prices, as this possibly would create the perception of lower quality.. First and foremost, Toyota needs to ensure it handles its quality problems to its customers’ satisfaction. The auto maker needs to ensure the public perception is that Toyota is being upfront, honest, and responsible in dealing with recalls and the