...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 yearly sales data. Analysis shows recalls are a common event with the majority of recalls initiated by only a few car makers. Though car makers use many eye catching and popular quality and customer care slogans and programs, many popular car makers still face valid customer complaints and consequently face many unwanted recalls. This study identifies that most recalls occur during the first five years of the car model year. This preliminary study of automobile recalls can be further extended at a later stage to identify key causes of recall. Keywords Product recalls, Reverse logistics, car recalls, product returns, closed loop supply chain 1. Introduction Though manufacturers use state-of-the-art operations philosophies, tools and techniques, it is difficult to make the perfect product and products often need to be recalled. Recalls occur when the customer...
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...Journal of Academic and Business Ethics c Johnson & Johnson: An ethical analysis of broken trust t Karen L. Stewart The Richard Stockton College of New Jersey Whiton S. Paine The Richard Stockton College of New Jersey ABSTRACT For several decades, Johnson & Johnson has been the exemplar of superb ethical behavior in light of the prompt actions it undertook during the 1982 Tylenol cyanide poisoning incident. Now several decades later, J&J’s Consumer Product Division has put the company and . its reputation in jeopardy by its slow and ineffective response to a series of ongoing problems. ineffective This article provides an ethical analysis of those events and addresses the negative impact on Johnson and Johnson’s once sterling reputation. Business, ethics, recalls, Johnson & Johnson, reputation, FDA J&J: An ethical analysis, Page 1 analysis Journal of Academic and Business Ethics c INTRODUCTION: For several decades, Johnson & Johnson has been the exemplar of superb ethical behavior in light of the prompt actions it undertook during the 1982 Tylenol cyanide poisoning incident that left seven dead in the Chicago area. After the 1982 incident, Tylenol quickly even returned to category dominance. A few years later when yet another cyanide-laced Tylenol laced capsule resulted in the death of a New York woman, Johnson & Johnson and its McNeil subsidiary once again took quick action by only making a compressed and easier-to-detectnce easier tampering...
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...Pinto: A Study of Ethics In the 1960s Ford Motor Company, under pressure from stakeholders and the pressures involved in competing with the foreign vehicle market set out to manufacture a vehicle that was smaller, lighter and less expensive than the competition’s product. This vehicle was designed and moved into production within 2 years, much quicker than the 3 ½ year company norm and is still the shortest vehicle production planning schedule in history. The result: The Ford Pinto. While the Pinto was in the design phase it was decided that the fuel tank would be placed under the rear fender instead of over the rear axel to allow for more trunk room in the car. This design however, was quite flawed. The Pinto being smaller than the other American made cars was not built using the same frame design; a design that was manufactured to prevent the fuel tank from exploding upon a rear impact collision. Upon testing a serious defect was found with the placement of the fuel tank. It was determined that if the Pinto was involved in a rear end collision the fuel tank may rupture and burst into flames causing serious injury or death to the passengers. Team A will be examining the ethical dilemmas involved in the case and the solutions that we would recommend today and the solutions that would have been ethically appropriate in 1971. Lee Iacocca was the president of Ford Motor Company in 1971 and was the directive authority behind the creation of the Ford Pinto. He wanted a vehicle...
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...ORGANIZATIONAL BEHAVIOUR Case study- 6 All the Wrong Moves Outline of the case A. Introduction Nutrorim was established in 1986 by an organic farmer and his wife. Don Rifkin had taken the charge of CEO in 1989. Its products were gaining national attention. The sales of organic performance enhancing supplement powder ChargeUp, was increasing enormously. It was the best selling product among the category. ChargeUp has undergone an upgrade with the additive Lipitrene. The new ChargeUp has just been released on a limited basis to local area retailers. Company’s expectation with this upgraded product was high. With the end of first quarter, the sales had been increased by 20% in the test market. Don has a way of trying to avoid conflict. When ChargeUp was in the marketing phase, the marketing manager asked the opinion of the entrepreneur Nora. Nora was not keen on the product with the new ingredient. This caused friction between her and the R&D manager Steve. That time Don had tried to restore the peace. But before the state wide launch, an investigator from a state department of health had informed Don that he was investigating 11 individuals from Syd’s Gym who took ChargeUp, who now had gastrointestinal distress. He advised him to recall the product from the market. Don called an emergency meeting with heads of PR, Sales, R&D, and Legal to decide whether to recall the product. CEO Rifkin had always tried to provide an open and democratic environment for...
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...CASE: MATTEL AND TOY RECALLS Toy Industry Our presentation started with the industry introduction. Based on the case, toy industry was growing if we compared the results with the previous year. In 2007, the global toy market was around $71 billion business. Though 36% of the market was on the hands of North America, the growth pace was slower than Asia. Especially in China and India it was estimated that market would increase 25% more than previous year. The toy industry in USA had about 880 companies. Dominant players were Mattel, Hasbro, RC2, JAAKS Pacific, Marvel, and Lego. Moreover, big retailers were entering to the market under their own brand names creating threat for existing toy companies. Toy market categorized many segments in USA market, among them infant/preschool toy segment was the largest and stagnant. Noticeable growth occurred in youth electronics and video games. Production of the toys concentrated in China with 60%. Company Information Mattel, Inc. founded by Harold Matson and Elliot Handler at a garage in 1944. The company name was generated by using letters from founders’ last and first names. Mattel’s first products were picture frames and doll house furniture. Barbie doll was introduced in 1959 and Ken product followed it. With these products, Mattel guaranteed its growth. Hot Wheels product established Mattel’s position as an industry leader. Company’s products were organized in 3 different business groups: Mattel Girls & Boys Brands, Fisher Price...
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...manufactures and sells vehicles (Toyota annual report, 2012). Toyota chiefly operates in Japan, Europe, Asia and North America. This essay will examine the company position analysis. Further, it will identify key strategic issues and these issues will be analysed and evaluated. Issues can be internal or external in nature and maybe positive or negative to the organisation (Haberberg & Rieple, 2008).The next section will analyse Toyota’s current position. To understand the organisation strategic position the environment, capabilities, culture and its purpose will be analysed (Johnson et al, 2011). Toyota’s culture is the Toyota way which focuses on continuous improvement. In addition it does lean production which concentrate on ‘just in time’ production and ‘Jidoka’ system which emphasises quality and no waste. According to (Toyota, 2013), they concentrate on CSR issues and environmental issues. The environment analysis will be analyses using Swot and PESTLE analysis. According to the evidence, Toyota’s corporate culture has placed the organisation in a position which focuses at adding value to current and future generations of the world, promote activities leading to social contribution, maintain healthy environment with the people, government and its internal human resources. Based on Toyota’s SWOT analysis by Market line (2013) various issues were identified. Toyota’s strengths included strong market position and brand recognition. Toyota has a strong focus on research and...
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...of quality microprocessors is being questioned. Public perception views Intel as insensitive to consumer concerns and overly profit driven. The investments Intel has made in the Pentium chip to secure a competitive advantage will be pointless if consumers lose trust in the Intel brand. Analysis of Issues Intel’s dilemma is whether to recall a product that is defective under certain conditions (p. 2).1 This decision requires consideration of the financial and operational issues, as well as the potential long-term impact to Intel’s competitive advantage in the computer industry and Intel’s relationships with companies that purchase microprocessors. These issues are further described below. Competitive Advantage The new Pentium chip is the embodiment of Intel’s advantage over other companies. Intel has the distinction of being first in the industry to engineer and produce microprocessors (p. 2). In addition, Intel has made significant investments in research and development to design the Pentium, has incurred significant expenditure in promotions, and has secured its investment with a name-based patent (p. 3). 1 All page numbers referenced herein are drawn from the following case study: Narayanan, V.C. (2002). The Intel Pentium Chip Controversy (A). Harvard Business School. 9-196-091. 1 Computer technology is a fast-paced industry. It is only a matter of time before other companies will be able to compete with Intel on the basis of similar technology (p. 2). Given...
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...Ford Motor Company Pinto Case Karen Nollet, Alonso Miller, Michael Morra, Pamela Tenori MGT/216 Abstract In 1971, Ford Motor Company (FMC), on the advice of then vice-president Lee Iacocca, introduced the first subcompact vehicle, the Ford Pinto. After production, Ford discovered a defect in the design on the fuel system; the gas tank was placed in the rear of the vehicle. This error could cause the vehicle to explode on low speed rear end collisions. Ford conducted a risk/analysis to determine whether to recall the vehicles or leave the situation as is and suffer the consequences as they arise. After concluding that the vehicles could be modified for $11 per vehicle, Ford decided not to recall the vehicles. Based on their risk/analysis the cost to recall the vehicles sold would be $137 million, Ford determined that it would be more profitable to leave the vehicles as is and pay out costs in lawsuits because this figure adjusted to $49.5 million, substantially lower than the cost to recall the product. Ethics and morals would appear to be ignored for profit and gain. Ford Motor Company Pinto Case Ford Motor Company Mission Statement (1996), “We are a global family with a proud heritage passionately...
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...University Course # MGT 499 Module 2: Strategic Management: External Analysis In this module, my case assignment was to perform an external analysis of Toyota. Like other companies, Toyota operates in a complex global industry. In order to develop and execute a successful strategy, the Toyota Corporation must take into account the global automotive environment. As part of strategy Toyota must look at their current opportunities in the market. Along with these opportunities, Toyota also faces some threats. Toyota has taken many actions to respond to these environmental contingencies. Based on my analysis, Toyota should continue to focus on its customers, as well as coping with change, and announcing their responses to its customers. Toyota Motor Corporation is a multinational automaker headquartered in Toyota, Aichi, Japan; in the current market they have many opportunities. Currently, Toyota is one of the world’s largest automobile manufactures and employs over 300,000 employees. A major opportunity for Toyota is the new fuel efficient cars that they are producing. With the oil prices reaching record highs, Toyota has the advantage over other car manufactures with their more fuel efficient cars. This is one of their keys to success right now. Toyota is also producing cars that are targeted towards the younger generation of drivers. A great deal of money can be made here also. Acting on any opportunities in the automobile market is a risk...
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...Case Assignment Analysis MRKT 5000 Online Course Toyota Uses Advertising to Restore Trust Case Summary: For decades Toyota had been known for its commitment to reliability and quality however during a two year time frame as Toyota was coming off of becoming the top auto manufacturer in the world they were also hit with massive recalls. Recalls pointing toward safety concerns such as braking systems and acceleration problems began to tarnish Toyota’s reputation that had taken decades to build causing concerns for shareholders and stakeholders alike. Toyota had to pull its ad campaign focusing on safety and dependability and create a new campaign to deal directly with the problem admitting they had strayed from quality amid high sales. Pairing this marketing campaign with sales incentives, maintenance programs, and ads designed to target and segment the market Toyota is once again growing seeking to reclaim the top spot which had been taken over by General Motors. Key Marketing Issues • Advertising Campaign – The creation and execution of a series of advertisements to communicate with a particular target audience. In this case the campaign had many specific targets in mind. Not only was the general public targeted to be reassured regarding safety concerns but minorities were targeted as they were the primary purchasers of Toyotas and African Americans were targeted in order to generate higher sales of hybrid vehicles. . ...
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...to inactivate the bacteria. However, any slip-ups can lead to regulatory issues and multi-million dollar lawsuits. It is recommended that Mike’s should initiate a food recall. Although this is a costly option, but it ensures public safety and garners customer and employee goodwill, which will be beneficial in the long-term. * Number of words: 108 Table of Contents Situational Analysis 1 Problem 2 Options 2 Criteria for Evaluation 2 Evaluation of Options 2 Recommendation 5 Action Plan 5 List of References 6 Exhibits 7 Situational Analysis Michael’s Homestyle Pasta, a leading supplier of gourmet stuffed pasta shells, has recently acquired its arch-competitor, Southern Pasta Company. Mike’s faces a corporate nightmare as the recent lot of seafood stuffed pasta shells shipped out by Southern to a restaurant chain is tainted with Salmonella. The prior knowledge of the poisoning and the demand spike due to New Year festivities further aggravates the problem from an ethical and operational standpoint. The recall costs can be to the tune of $ 0.5 million, which represents almost 2% of the revenues. There is also an impending risk of losing the restaurant chain, which is the largest customer for Southern Pasta, as this is not the first occurrence of Salmonella poisoning in Southern’s products. The restaurant chain is valuable to Mike’s as it accounts for $ 3.5 million of the $ 8 million revenues of Southern and is one of the primary reasons for the acquisition...
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...Case 02-3 Frequent Fixer Frequent Fixer is a heavy equipment manufacturer. Frequent Fixer’s accounting policy for the accrual of the costs of product recalls consists of two methods. The first is the accrual of “small campaigns” that are subject to a threshold of $100,000 (total campaign costs per product). Small campaigns are estimated and recorded together with the warranty reserve at the time of sale, since all payments related to such campaigns are expected to fall within the warranty period. The second is the accrual of “major campaigns” when announcement of the recall campaign is made. A major campaign involves consideration of numerous variables (for example, the number of defect occurrences, public safety issues, public relations concerns, evaluation of potential litigation, and so forth) and requires management approval prior to being announced. As part of a review of its accounting policies, Frequent Fixer began an internal evaluation of its product recall costs and its ability to reliably estimate and record product recall costs at the time of sale. The following summarizes the costs of announced product recall campaigns by Frequent Fixer in recent years: 1995 $ 8,000,000 1996 $ 11,500,000 1997 $ 15,500,000 1998 $ 20,000,000 1999 $ 32,000,000 2000 $ 50,000,000 From the data above, Frequent Fixer identified that the frequency and size of product recall campaigns, either voluntarily or mandated by industry regulators, have increased...
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...Embry-Riddle Aeronautical University ERAU Scholarly Commons Economics, Finance, & Information Systems Daytona Beach 2014 College of Business The Effect on Stockholder Wealth of Product Recalls and Government Action: The Case of Toyota's Accelerator Pedal Recall Jayendra Gokhale Embry-Riddle Aeronautical University - Daytona Beach, gokhalej@erau.edu Raymond M. Brooks Oregon State University Victor J. Tremblay Oregon State University Follow this and additional works at: http://commons.erau.edu/db-accounting Part of the Business Administration, Management, and Operations Commons, Finance Commons, and the Management Information Systems Commons Scholarly Commons Citation Gokhale, J., Brooks, R. M., & Tremblay, V. J. (2014). The Effect on Stockholder Wealth of Product Recalls and Government Action: The Case of Toyota's Accelerator Pedal Recall. The Quarterly Review of Economics and Finance, 54(4). http://dx.doi.org/10.1016/ j.qref.2014.06.004 This is the submitted author’s version that was accepted for publication in The Quarterly Review of Economics and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, and formatting are not reflected in this document. Changes may have been made to this work since it was submitted for publication. The published version is available at http://dx.doi.org/10.1016/j.qref.2014.06.004. This Article is brought to you for free and open access by the College of Business at ERAU Scholarly...
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...Positioning & Creative Strategy Exam project spring 2012 CPR. Nr. 280880-3030 Table of content Part one: Category Background .............................................................................................................. 2 Presentation of chosen product............................................................................................................ 2 Market background information´s ....................................................................................................... 2 Part two: Analysis of Competitive Advertising ........................................................................................ 4 General characteristics of the car industry .......................................................................................... 4 Skoda Citigo advertising analysis ....................................................................................................... 4 Seat Mii advertising analysis ............................................................................................................... 6 Part Three: Brand Advertising Strategy ................................................................................................... 9 VW Up advertising analysis ................................................................................................................ 9 Potential new advertising for VW Up ............................................................................................... 10 Reference...
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...Armour Adith S. Sitaraman 5 force Analysis: Potential Entrants –Threat of entrants Suppliers – Power of suppliers Competitors (Competitive response) Customers – Customers’ power Substitutes Wholesale perspective: Under Armour’s wholesale distribution to retailers contributed 70 percent of its net revenues. From a wholesale perspective, the threat of potential entrants here is low because, Under Armour is known to provide technology and innovation with its products. There might be other entrants with competitive prices but on the long run, Under Armour establishes a better connection with its buyers through its intelligent design and innovative product lines. Strengths Threat of entrants is high. This threat can be other businesses that can produce cheaper products. This threat is high, but for the short run. Furthermore, rise in many such new businesses could divide and bring about a staggered revenues, because consumers are getting divided into buying new brands that are cheap and trying it out initially. Simply put, Under Armour’s potential customers are buying from newer entrants. Power of suppliers is high. Suppliers of Under Armour can be a threatening force, to increase prices. Leading to higher costs for the business. Competitors the competitive response is high, Nike and Adidas are good examples. If they have a competitive price, Under Armour could have to bring down the price of the products to compete with their competition...
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