Professional Documents
Culture Documents
Group-15
Background facts
1. Black and Decker replaced its culture from complacent manufacturing mentality
to customer driven marketing strategy.
2. B & D acquired GEs small appliances business and successfully merged it into its
mainstream by effective marketing program.
3. B&D majority sales was in US with 52% followed by others with Household Product
Group (HPG) division as the main focus area for future contribution margin.
4. One of the mainline products Coffeemaker named Spacemaker fails quality test
and is to be decided on its fate.
For successful product recall strategy
Readiness
Checklist
For recall readiness, the company must first ensure upper management
support for recall preparedness; senior managers must instil an
organization-wide recognition of the importance and seriousness of good
product recall strategies
Communica
tion
Sooner is
always
better
Don't wait
for
regulatory
agencies to
get
involved
The success of the recall also depends on how much time passes before
product consumers and distributors are notified -- a delay which, in
worst-case scenarios, can cause injuries or deaths. Then, the consumer
courts can impose very high penalties.
Evaluating the decision to recall the product should be based on the cost of recall and/or
the opportunity cost lost in sales.The company through the retail distribution channel had
distributed 88400 coffeemakers. Estimating that 30-35% had been sold, there would be
around 25,000 units with consumers across 90 million households across the US, only
10% of which had submitted warranty cards bearing owners details.
There were several considerations made:
Obligation under the United States Consumer Product Safety Act to recall a
product when there was knowledge of a substantial product hazard.
Low industry standard of return rate for small domestic appliances at 5%
The cost of recall at a 25% return rate was estimated at $ 4 million, excluding
opportunity costs of lost sales.
Damage to the Companys brand name
Estimated time for the recall activity
Several previous unsuccessful recall attempt
HPG had never recalled a product before