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Question:
Define the Crisis Management for Dealing of Nokia.

 
Answer:
Objective(s) of Nokia in dealing with the crisis

While managing the crisis related to BL-5c battery, the organization’s objectives were,

  • To understand the severity of the situation
  • To communicate with their customer base in order to start damage control process
  • To understand the effect of product recall on Nokia’s brand image
  • To figure out the steps that should be followed during product recall process
  • To analyze whether Nokia would be able to regain trust of its customers or not
Literature review on cases similar to the crisis

In the year of 2007, nearly 46 million batteries of Nokia turned out to be defective. Due to overheating while charging, the batteries of model number BL-5c were exploding and were creating a lot of chaos among the customers. It not only raised customer safety issues but also hampered the brand image of the company (Elliott 2014). For a company like Nokia where they were the pioneers of establishing friendship and trust, this crisis came as a huge blow. Volkswagen’s emission cheating scandal was a similar situation where the organization misused the trust and loyalty of its customers.

 
Volkswagen cheating emission scandal

The Volkswagen emission scandal, which is also known as “Emissionsgate or Dieselgate”, erupted in the year of 2015. Environment Protection Agency or EPA sent a notice for not following Clean Air Act to the German car manufacturer organization (Reitze 2016). This incident happened when it was found that the organization had deliberately programmed turbocharged express injection diesel engines to control certain emissions only throughout emission testing in laboratories. As a result of this programming, Volkswagen vehicles meet the standards of Nox output of US during regulatory testing (Lando 2014). However, in real life those vehicles used to release up to 40 times more Nox. This encoding was added in more than eleven million cars worldwide (Hoekman, 2016).

After this scandal was public, the automaker organization became the target of regulatory investigation in several countries. Stock prices of the organization fell in value by a third in the days instantly after the news. The first step that the organization took was to suspend Audi R&D head Ulrich Hackenberg and Porshe R&D head Wolfgang Hatz. However, this was not the end as the higher authority of Volkswagen had to implement an effective crisis management plan to deal with this critical situation (Anwar 2014). Their crisis management plan of Volkswagen had some objectives such as,

  • To admit its transgressions
  • To admit full responsibility for their mistakes
  • To issue an explicit apology
  • To oblige with regulators and investigators
  • To assure is customers that the company will fix the cars as soon as possible
  • To replace its leadership including CEO
Some steps by Volkswagen taken to manage the crisis

The major step taken by the public relations department of the German automaker organization was to launch a public campaign. The aim of the campaign was to rebuild its reputation following the hugely damaging revelation of its scandal. It was their first pan-European campaign since the emission scandal. A little nostalgia was included in the campaign with a hope to connect with the customers once again. Their advertisement showed that a young lad in the rear seat of a Volkswagen Beetle. The lad was looking out of the glass and saw an elder version of him in a newer Volkswagen car (Dung et al. 2016). This condition continued though the years viewing he started a family of his own, before ending on the son of the real boy cuddling the similar teddy bear and looking out from the window of a  brandnew Volkswagen car. The advertisement was released with a background song “I’ll be your home” by Phillip LaRue. The campaign carried a message of “Then, Now, Always.” Besides, Volkswagen also recalled all its affected vehicles unconditionally and promised that they will compensate their customers as early as possible (volkswagen.com 2016).

Target public in this crisis   

Target public in this crisis was the customers of the organization all over the world who were affected because of the company’s carbon emission scandal. Besides, the company also wasted to assure the rest o the customers that to keep their faith on the company as nothing like this will take place in the future.

 
Communication Strategy-channels used to reach out to public (internal and external)

While managing the Bl-5c battery crisis, Nokia did not hide anything from the media and from the consumers. The CEO of Nokia conducted a worldwide conference where he asked for apology from the customers who were affected. The conference was shown in all the news channels across the globe (Nokia 2015). Radios installed in the mobile phones were also used by the organization to communicate with the public. Mobile radios had its coverage even in remote areas. Thus, the public relations team of the organization could easily reach to a wider audience.

Information communicated using media:

As pointed by Newsom, Turk and Kruckeberg (2012), media plays the most vital role in communication at the time of crisis management. According to Coombs and Holladay (2013), using media in a correct way helps in remodeling the opinion of people. If media is used in the correct way, it helps to propagate any message to the targeted group of people and can make people aware of the crisis.

Immediately after acknowledging the fault from their end, the management used different media platforms to disseminate the information related to the crisis. The primary message sent by Mark Squires, head of Nokia’s communication in the UK, was to aware people of the crisis that occurred as a result of engineering defect. By the time, Nokia recognized the problem of the battery, there were many users who were not aware of the problem. Therefore, primarily, Nokia made people aware of the problems and assured them for rapid recovery from the current crisis situation. Nokia used social media that was already popular in countries like America to reach Nokia users. In this respect, it has to be mentioned that India was also an important market for Nokia at that time. However, at that time, social media was not popular in India. It is for the same reason, Nokia selected traditional approach of connecting with people. The management called for press conference and stated that every user will be served with a new battery (Wearden, 2007). 

Key messages:

In 2007, Nokia issued a warning over its BL-5C batteries across the world with the message that the battery is overheated while charging. Every Nokia phone user with a BL-5C battery will be provided with a new battery if the user reach out to the nearest Nokia customer care centers. This was the key message from the management of Nokia. The management also added that one should not panic about the condition of the battery and apologized heartily for the major inconvenience caused by the company (Cox 2012). It was exclaimed that due to over usage and frequent charging of the battery, it is being deformed. However, there is nothing to panic because the Company can manage the crisis. The message was delivered with the intension of creating a faith on the product and service of an experienced telecom company.

 
Response from the organization and other publics:

Nokia at that time had truly ubiquitous connectivity. The company has emerged as a world leader in the mobile technology. Position of Nokia was undoubtedly moving towards making their vision successful of creating a connected world. The goodwill and service that Nokia provided with its mobile handsets generated loyalty among its users. Therefore, the users trusted on the approach undertaken by the management of this telecom company and it was found that people cooperated with the unfortunate engineering defect (Coombs 2014).

Outcome of the crisis management:

Nokia had already established customer care outlets at various locations. It was observed that the users who were facing this crisis rushed to the nearby customer care outlets and queued to get their batteries replaced. Nokia did not compromise in providing a helping hand to its users and replaced the batteries of the sufferers. This made people retain their loyalty towards the Company. Although the Company had to spend a good sum of money in replacing about thousands of batteries, it helped them to keep their image strong in the market (Austin and Pinkleton 2015).

Position of Nokia at the end of crisis:

As per 2007 statistics, Nokia had almost 36% of mobile market worldwide (Wray and Wearden 2007). Therefore, it cannot be denied that majority of people relied on the service of the company. The crisis management went for quite a long time. It took almost a couple of months time to replace the batteries of the prospective users. The crisis resulted in wiping off of almost half a billion pounds from the Nokia’s stock market when the company announced that 46 million products are at the risk of overheating. The company had to knock down about 557 million pounds off its market capital. Nokia had lost 1% of its share on the very same day. The incident marked on the reputation of the Company.

 
Evaluation of the crisis management:

As stated by Austin and Pinkleton (2015), Nokia’s battery blast incident was handled with great care by the company and created an example of effective crisis management on a global platform. The incident occurred before the advent of smart phones. Nokia had a good position in the market due to its product durability and longevity of battery power. The crisis was managed with full efficiency.

In the viewpoint of Coombs (2014), crisis is a part of any business. Managing the crisis shows the efficiency of the management of a company. A company might get drowned in major crisis but selecting the best avenue to come out of the crisis is what matters the most. In case of Nokia, the crisis was a major one. Nevertheless, the management had come up with right avenues to come out of the crisis. Informing people and replacing the batteries and taking the responsibility of the crisis over themselves proved to be really fruitful to retain customer loyalty over the company.

If the same kind of situation was to be handled by me as a Public Relation Officer, I would have used the communication platform like television and internet. It has to be understood that every problem has to be dealt with different approach depending upon the region of operation. As observed by Dozier, Grunig and Grunig (2013) that a mobile user is expected to rush to the dealer from whom the purchase is made. Therefore, another approach might have been made at that time. The dealers would have been given the authority of replacing the batteries rather than using only the customer care stores. This would have made the situation less chaotic and the approach that was made to provide new batteries would have been made easier and faster.

Conclusion    

In the end, it can be said that the BL-5c battery crisis of Nokia put them in serious troubles. The company lost a huge amount of customers in no time. However, thanks to a brilliant and apt crisis management strategy allows the organization to rectify their faults and regain the loyalty and trust of its customers. 

 
References

Anwar, C.M., 2014. Rationale to the Crisis of Nokia Smartphone Portfolio.International Journal of Management, Economics and Social Sciences, 3(3).

Austin, E.W. and Pinkleton, B.E., 2015. Strategic Public Relations Management: Planning and Managing Effective Communication Campaigns(Vol. 10). Routledge.

Coombs, W.T. and Holladay, S.J., 2013. It's not just PR: Public relations in society. John Wiley & Sons.

Coombs, W.T., 2014. Ongoing crisis communication: Planning, managing, and responding. Sage Publications.

Cox, R., 2012. Environmental communication and the public sphere. Sage publications.

Dozier, D.M., Grunig, L.A. and Grunig, J.E., 2013. Manager's guide to excellence in public relations and communication management. Routledge.

Dung, L.R., Yuan, H.F., Yen, J.H., She, C.H. and Lee, M.H., 2016. A Lithium-Ion Battery Simulator Based on a Diffusion and Switching Overpotential Hybrid Model for Dynamic Discharging Behavior and Runtime Predictions. Energies, 9(1), p.51.

Elliott, D., 2014. Disaster and crisis management. In The Handbook of Security (pp. 813-836). Palgrave Macmillan UK.

Hoekman, S.K., 2016. Comment on “Damages and Expected Deaths Due to Excess NO x Emissions from 2009 to 2015 Volkswagen Diesel Vehicles”.Environmental science & technology, 50(7), pp.4135-4136.

Lando, A.L., 2014. The Critical Role of Crisis Communication Plan in Corporations' Crises Preparedness and Management. Global Media Journal,7(1), p.5.

Newsom, D., Turk, J. and Kruckeberg, D., 2012. Cengage Advantage Books: This is PR: The Realities of Public Relations. Cengage Learning.

Nokia,. 2015. Nokia | Nokia. Nokia. Retrieved 19 August 2016, from https://www.nokia.com

Reitze, A.W., 2016. The Volkswagen Air Pollution Emissions Litigation.Environmental Law Reporter, 46, p.10564.

volkswagen.com,. 2016. Volkswagen International. En.volkswagen.com. Retrieved 19 August 2016, from https://en.volkswagen.com/en.html

Wearden, G. 2007. Nokia hit by battery fears. [online] the Guardian. Available at: https://www.theguardian.com/business/2007/aug/14/mobilephones.money[Accessed 19 Aug. 2016].

Wray, R. and Wearden, G. 2007. Fears of €500m faulty battery recall hits Nokia reputation. [online] the Guardian. Available at: https://www.theguardian.com/business/2007/aug/15/mobilephones.technology [Accessed 19 Aug. 2016].

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