Product Harm Crisis Management
Product Harm Crisis Management
Linda Chingosho
DDBA 8006 – Contemporary Challenges in Business
Walden University
Abstract
A company affected by a product harm crisis runs the risk of inheriting a tainted reputation, massive financial loss, and the loss of consumer trust. It is imperative that every company implements contingency planning and risk mitigating strategies to minimize the damage incurred as a result of such an event. This paper seeks to analyse the different strategies that can be employed to arrive at an amicable solution to a pending product harm crisis. Three pieces of literature will be analysed and the results synthesized to formulate an appropriate product harm crisis management strategy.
Product Harm Crisis Management
What is Product-Harm Crisis?
A product harm crisis is a negative event which occurs when a defective or tainted product is launched into the market and discovered within the course of its lifecycle (Vassilikopoulou, Siomkos, Chatzipanagiotou, & Pantouvakis, 2009). It reaches crisis stage when the product’s defects are discovered, and swift crisis management strategies need to be implemented to lessen the damage to the company brand. It is imperative for management to devise contingency plans ahead of a crisis to protect the company in the event that such incidences do occur. Such incidences may result in a loss of revenue, a destroyed company reputation, and a loss of faith in the company by the consumers. For instance, Toyota Motor Corp. is notorious for having product recalls due to faulty parts and other health and safety vehicle issues. One such event occurred when the company recalled 2.77 million vehicles worldwide (Reuters, 2012) – this was barely a month after it recalled over 7.4 million vehicles for a totally different safety issue. As an individual, I have totally lost trust in Toyota Motor Corp. due to the frequency of product recalls, and wonder why no long-term structures are put in place to prevent
Linda Chingosho
DDBA 8006 – Contemporary Challenges in Business
Walden University
Abstract
A company affected by a product harm crisis runs the risk of inheriting a tainted reputation, massive financial loss, and the loss of consumer trust. It is imperative that every company implements contingency planning and risk mitigating strategies to minimize the damage incurred as a result of such an event. This paper seeks to analyse the different strategies that can be employed to arrive at an amicable solution to a pending product harm crisis. Three pieces of literature will be analysed and the results synthesized to formulate an appropriate product harm crisis management strategy.
Product Harm Crisis Management
What is Product-Harm Crisis?
A product harm crisis is a negative event which occurs when a defective or tainted product is launched into the market and discovered within the course of its lifecycle (Vassilikopoulou, Siomkos, Chatzipanagiotou, & Pantouvakis, 2009). It reaches crisis stage when the product’s defects are discovered, and swift crisis management strategies need to be implemented to lessen the damage to the company brand. It is imperative for management to devise contingency plans ahead of a crisis to protect the company in the event that such incidences do occur. Such incidences may result in a loss of revenue, a destroyed company reputation, and a loss of faith in the company by the consumers. For instance, Toyota Motor Corp. is notorious for having product recalls due to faulty parts and other health and safety vehicle issues. One such event occurred when the company recalled 2.77 million vehicles worldwide (Reuters, 2012) – this was barely a month after it recalled over 7.4 million vehicles for a totally different safety issue. As an individual, I have totally lost trust in Toyota Motor Corp. due to the frequency of product recalls, and wonder why no long-term structures are put in place to prevent
References: Chen, Y, Ganesan, S., & Liu, Y. (2009). Does a firm’s product-recall strategy affect financial value? An examination of strategic alternatives during product-harm crises Product liability for negligence. (2011). Out-Law.Com. Retrieved from http://www.out- law.com/en/topics/commercial/supply-of-goods-and-services/product-liability-for- Siomkos, G. J., Malliaris, P. G. (2009). Consumer response to company communications during a product harm crisis Vassilikopoulou, A., Siomkos, G., Chatzipanagiotou, K., & Pantouvakis, A. (February 16, 2009)