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Peugeot and the problem of product recalls.

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Introduction

Case Study: Question 2.8.4 Peugeot A) Explain why product recalls can be damaging to a firm?s reputation. Products recalls usually have a negative connotation associated with it and would usually cause a certain degree of damage to a firm?s reputation like Peugeot. First of all, the major recalling of the Peugeot 307 shows that Peugeot didn?t spend enough time and during the R&D phase of the vehicle to make sure that there wouldn?t be any major problem on this vehicle. The customer?s perception of the company?s car and the company as a whole would decline and become negative as a result of this. ...read more.

Middle

Lastly, a product recall makes it easier for competitors to convince consumers to buy their products instead. This would hurt the reputation of the company and also the profit that the company makes. B) Evaluate whether it would be in Peugeot?s best interest to spend money on contingency planning or improving the quality of its car. Peugeot can benefit from both improving the quality of its car and on contingency planning. The production of higher quality vehicles essentially means that they would be theoretically be less of a need to recall vehicles in the future. Not recalling any vehicles would essentially save the reputation of the company and improve customer?s trust and loyalty towards the firm. ...read more.

Conclusion

Additionally, contingency planning also ensures the safety of employees and in turn the trust the employees has for the employers would mean greater motivation and ultimately greater profits. Creating a contingency planning before hand would also mean that the negative effects of future crises like another recall would be limited and the company would also lose less ?capital?. Contingency planning also has its disadvantages and the main one would be it needing a lot of capital that sometimes would be a waste if certain crises don?t occur. All in all, the benefits and flaws of both options means that it would be a hard decision to choose only one in Peugeot?s best interest. ...read more.

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