...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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...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 produced that cost no more than $2,000, and weighed no more than 2,000 lbs. When the fuel tank design flaw was brought to his attention it was not made a priority because in his words, “safety doesn’t sell.” This statement would come back many times in the numerous lawsuits filled against the Ford Motor Company by grieving families and injured motorists due to the lack of safety features...
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...Management report on supply chain management and quality management ---based on a case of Mattel recall scandal 1. Introduction Experiencing a steady growth, global toy industry has attracted many research in studying this field, in which one of the largest toy manufacturers Mattel Inc. suffered from a recall scandal in 2007. This essay directs at exploring reasons that lead to Mattel’s operation failure in this scandal regarding two key frameworks in global operation management, namely, supply chain management and quality management. Providing potential recommendations to prevent or react to supply chain failure as well. 1.1. U.S. toy industry According to Statista (2016), the U.S. toy industry amounted to $43.1 billion in 2015. It was projected to reach $45.02 billion by 2016. By means of global supply chains, U.S. enormous demand for toys is satisfied. For example, most toys sold in the U.S. are designed in the U.S., but approximately eighty percent of those sold in the U.S. are manufactured in China (Boyle, 2015). The main characteristics of toy industry are ‘volatility’ and ‘seasonality’ (Wong & Johansen, 2005). Roughly seventy percent of toy sales occur in the final three months of the year, in which families conduct bulk purchase as gifts to children for Christmas. Therefore, during early months of a year when demand for toys are considerably lower, toy manufacturers face problems with much of the unutilized capacity. They also need to appropriately...
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...Gender Differences in Verbal and Non-Verbal Tasks and Memory Recall Abstract Females are better at recall tasks than males. To test the level of recall a study was administered to test recall abilities in verbal and non verbal tasks and also immediate and delayed recall among males and females. It is often believed that males have a more superior recall memory than females due to the fact that more men are hired over women in jobs. And also men make more money than women. While females may earn less than men, through this study, females proved to be just as capable as males, in fact, more so, in the ability to recall memory. Introduction and Literature Review Comparing males and females is a natural occurrence: it occurs in the work force as well as in everyday happenings. Men are often hired over women, and men make more money than women. Psychologists Agneta Herlitz and Jenny Rehnman in Stockholm, Sweden asked a complicated question of human predisposition: Does one’s sex influence his or her ability to remember every day events? Their surprising findings did in fact determine significant sex differences in episodic memory, a type of long-term memory based on personal experiences, favouring women. Specific results indicated that women excelled in verbal episodic memory tasks, such as remembering words, objects, pictures or everyday events, and men outperformed women in remembering symbolic, non-linguistic information, known as visuospatial processing. For example, the...
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...headlines throughout the world regarding an electronic failure or mechanical problems causing sticking accelerator pedal and floor mat pedal entrapment is not something that an automotive organization would like to hear. However, this is the case with Toyota. Within the years 2009 and 2010 Toyota recalled millions of vehicles due to a mechanical problem of sticking accelerator pedal and floor mat pedal entrapment. This recall resulted in $48.8 million in lawsuits that Toyota received due to some fatal car accidents involving their vehicles and the nonresponsive actions that Toyota integrated (Wald, 2011, para 4). Eventually the reputation of Toyota had decreased tremendously. Despite the fact that in the early 1960s Toyota implemented Toyota Quality Control (TQC) activities, this did not respond well with the recalls and the trust that customers had instilled in Toyota. TQC is used to solve quality issues early and prevent any reoccurrences. Unfortunately, TQC did not solve the recall issues that made headlines worldwide. Within the 1960s specifically 1968, there was an implementation of a vehicle recall system in the United States. Furthermore, this recall system did not require the automobile industries to publicly announce the recall issue. Perhaps this system would have helped Toyota in 2009...
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...Toyota, Inc. A Communication Breakdown TOYOTA, INC. A COMMUNICATION BREAKDOWN Careful examination of the internal and international communication operations of Toyota, Inc. will prove that there is an immediate need for innovation when handling consumer complaints. HISTORY For over fifty years Toyota has been a brand its consumers considered to be trustworthy, and reliable. The first Toyota dealership opened within the United States on October 31, 1957 in Hollywood, California. This would become its headquarters and a mere 288 vehicles were sold this first year. Since this time Toyota has expanded across the United States currently operating a total of ten plants which assembles more than a million vehicles per year. The company currently has nearly 39,000 employees. It prides itself on extending its managerial hand to other corporations such as Apple and Google, contributing more than 700 million dollars towards the American economy. Specifically focusing on safety, education, and the environment within the United States. In 1961 Toyota ceased the manufacturing of the Toyota Toyopet, making the Land Cruiser the companies golden goose until 1965 when the Toyota Corona was developed. This caused the companies sales to increase in the upwards of twenty thousand vehicles per year by 1966. By 1972 Toyota had sold a million vehicles, and in 1975 it took the title of “No 1. Imported Vehicle “from Volkswagen. Over many years Toyota pitched many campaign slogans such as:...
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...GM Ignition Switch Scandal General Motors recalled about 800,000 cars due to faulty ignition switches on February 6, 2014. The problem with the faulty part was that it could shut off the engine while driving, thus preventing the airbags from deploying and inflating. General Motors to recall more of its small cars, which resulted in almost 30 million cars worldwide recalled and them having to compensate for 124 deaths. The faulty part had been well known to GM for upwards of ten years prior to them declaring the recall. (Smith, 2014) This major issue began in 2001 during pre-production testing of GM’s Saturn Ion. GM engineers experience problems with ignition switches on the Ion. The exact problem was with a mechanism in the car that is supposed to hold the ignition key in place. According to GM’s records, an internal report shows that the problem was resolved when the switch was redesigned and fixed. Not too long after this initial issue in 2004 a GM service technician sees a Saturn Ion stall while being driven stating that "several other keys on the key ring” was the issue. The technician then records within the same report that "the additional weight of the keys had worn out the ignition switch." (Valdes-Dapena, 2014) Another major ethical dilemma occurred in the testing and manufacturing of another GM car, Chevrolet Cobalt. In 2004, A GM engineer bumps into the key in a Chevrolet Cobalt during testing, thus causing it to immediately lose power. In 2005 General Motors receives...
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...The case of Toyota recall By Daniel Opoku Abstract Purpose: the main purpose of this study is to find out about the recalls of Toyota vehicles which lead to the death of some innocent lives. The recall was due to unintended acceleration. Toyota ultimately recalled millions of its cars for floor mat issues, brake problems and "sticky" gas pedals. Methodology: Data was collected online, by the help of some selected search engines. Information was collected from Toyota’s national website as well as other private sites. Findings/results: Most organization should seek for customers or consumer’s satisfaction rather than targeting of making high profit. Arrogance and choosing to ignore quality warnings when failures begin to happen is also a problem facing most organization. Implications: Companies or organizations should design and manufacturing information and traceability data that can be shared with suppliers for effective root cause analysis. Paper type: case study Keywords: recall, unintended acceleration, floor mat, sticky gas pedals. Introduction Toyota has long been recognized as seventh largest company in the world and the second largest manufacturer of automobiles, with production facilities in 28 nations around the world (Toyota Assembly and part, 2011). As been the world third largest manufacturer of automobiles in unit sales and in net sales, Toyota has also created good customer relationship and provides customers with the products they need. Toyota Motor...
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...The case of Toyota recall By Daniel Opoku Abstract Purpose: the main purpose of this study is to find out about the recalls of Toyota vehicles which lead to the death of some innocent lives. The recall was due to unintended acceleration. Toyota ultimately recalled millions of its cars for floor mat issues, brake problems and "sticky" gas pedals. Methodology: Data was collected online, by the help of some selected search engines. Information was collected from Toyota’s national website as well as other private sites. Findings/results: Most organization should seek for customers or consumer’s satisfaction rather than targeting of making high profit. Arrogance and choosing to ignore quality warnings when failures begin to happen is also a problem facing most organization. Implications: Companies or organizations should design and manufacturing information and traceability data that can be shared with suppliers for effective root cause analysis. Paper type: case study Keywords: recall, unintended acceleration, floor mat, sticky gas pedals. Introduction Toyota has long been recognized as seventh largest company in the world and the second largest manufacturer of automobiles, with production facilities in 28 nations around the world (Toyota Assembly and part, 2011). As been the world third largest manufacturer of automobiles in unit sales and in net sales, Toyota has also created good customer relationship and provides customers with the products they need. Toyota Motor...
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...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 that the technology is...
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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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... | | | |Plastic Case |0.75 | | | |Alarms |0.40 | | | |Labor |3.00 | | | |Overhead |0.50 | | | |Purchase Cost | |11.00 |4.00 | |Relevant Costs |6.65 |11.00 |4.00 | | | | | | |Selling Price |14.50 |14.50 |14.50 | |No. of Units | 5,000.00 | 5,000.00 | 5,000.00 | |Total Sales | 72,500.00 | 72,500.00 | 72,500.00 | |Total Cost | 33,250.00 | 55,000...
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...CAMBRIDGE SOFTWARE CORPORATION: QUANTITATIVE ANALYSIS Learning Objectives: Benefits of product variety Factors limiting product variety Strategic considerations in product-line pricing III. Quantitative Analysis: We will first consider the product-line design and pricing decisions for the case when CSC can offer only one version. In this case, the product-line design only involves selecting the “right” version to offer. Note further that targeting/positioning decision is synonymous with pricing decision in this case because the price selected by CSC completely determines which of the potential 5 segments will actually buy the version introduced by CSC. In the second part of this document, we consider the multi-version case. a) Single-Version Case: Decisions Rule: Choose the version which gives the highest contribution margin Options: (i) “Student” version; (ii) “Commercial” version; (iii) “Industrial” version Optimization Procedure (Managerial Logic): The managerial logic involved in this case can be represented by the following decision tree: [pic] In the decision tree, there are two levels of decisions/optimizations. The first level involves selection of the model to introduce. The second level decision is the targeting/positioning/pricing decision. In the figure above, Consultants refers to the fact that targeting includes Consultants and more high-end segments (i.e. Large Corporations and labs). Note that with any...
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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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...Under 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...
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