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Source Problem

Discuss about the Product Recalls at Jaguar Land Rover.

Jaguar Land Rover Limited is a behemoth British multinational automotive company that is known for their luxury cars and off road vehicles. The company is owned by Tata Motors a subsidiary of the Tata Group, which manufactures automobiles for all economic groups including military vehicles, construction vehicles and buses. Jaguar Land Rover was initially a part of Ford Motors and was acquired by Tata Motors in 2008. The company has more than three hundred thousand cars sold under land rover and 60000 under Jaguar. The company is a billion dollar subsidiary and owing one of their luxury car is a pride implying the quality and reputation of each of the automobile produced by them.

The need to incur revenue has always been a pressure on luxury car producers as the number of customers are limited. The increasing and consistent competition given by several other brands such as Porsche, Bugatti, and Lamborghini is also a burden. This has led to a situation where several car manufacturers are using parts that are not completely safe or are defective in nature (Shende, 2014). Customer safety here is not being considered as the prime factor. The emphasis is being placed on luxury. Though customer safety is a major part of the features presented by the company, the same is not being prioritized in smaller parts of the car.

Jaguar Land Rover is the manufacturer of several luxury cars that are exported all around the world. However, in the past few years, the company has been recalling several of its models due to safety issues. Recalling of cars always has a negative impact on the company. The call is generally made to minimize the ruination of the corporate image before a bigger issue pops up (Bae, 2014). Every recall is costly.

The short term problems faced by the company would be locating and contacting the car owners, picking the cars, replacing the parts which would involve significant labor and product cost, delivering the car (Isidore, 2014). These are however, insignificant when compared to the long term issues caused.

Recalling a car creates distrust amongst customers. Safety standards are highly valued by customers and when one is investing huge amount into a luxury car it is often expected. The image of a corporate as a negligent company is branded into the market. The sales of models that are being recalled significantly drops (Liu, 2014). The cost for producing a product that is harmful for the customer is intangible and it leads to negative publicity. Also, the company would be lead responsible in case of issue post product replacement. Legal cases may be filed against the company as well tying up the company in judicial hassles that would often lead to monetary retribution (Venugopal, 2012).

Secondary Problem

Recalls in today’s world have become pretty common. It is not just Jaguar land rover that has been recalling. The recent case of the Japan based automobile manufacturer Toyota has recalled several cars and have publicly apologized for their testing setbacks. This would mean that the issue is not focused on a single company but is a much wider than an organization.

In the first week of August, 2016, Jaguar Land Rover recalled Takata airbag equipped cars. The airbags has a degraded propellant in the airbags installed on the front passenger side. At least, 54000 cars have been effected due to the same (Biggs, Lasker, Webb, & Stocksdale, 2016). There is a possibility for the airbags to rupture. Especially in places that are high in humidity and the chances of the car being exposed to high temperatures, faster degradation of the airbag would happen. In cases of an accidents, the rupture may cause the airbags to deploy abnormally causing greater damage due to the chance of exploding metal fragments. Airbags are the key safety measures taken for the safety of the customers. Several companies charge the car based on the number of airbags placed in the car. It is to note here, that not all the airbags in the cars are damaged, but rather the one on the passenger side. Since driver airbags are mandatory for several countries, several other countries do not require the placement of a passenger airbag. In fact an extra amount is charged for the passenger air bag and the same is of low quality when compared to the driver air bag.

In the last week on June, 2016, the company recalled 11,000 vehicles in China due to faulty sensors and gear box (PTI, 2016). This was reported by a local news channel and only then the company has recalled the cars. The faulty sensors may cause the engine to stall while driving. The Chinese industrial watchdog had confirmed these observations and have released the affected car numbers which was reported. The company was made alert by an external entity. The company itself has failed in identifying issues. The issues with the crankshaft sensors caused serious threat to the customers that drive especially on highways. In some cases, the car may not even start. This would be a serious issue with the off road vehicles. 6067, Land rover Discovery 4 vehicles and 5214 range rover models are a part of this recall. Note that the recall is not restricted to one particular division of the company. It is indeed an issue with both the land rover and the range rover models. Though the company operates as a single entity Jaguar, Land Rover and Range Rover are three separate business lines that has separate financial records and manufacturing areas. The testing for all three of them are done in separate conditions as Jaguar is more of a luxury car, while the range rovers are pure off road cars. Land Rover on the other hand is a combination of both. However the above recall is a proof of insufficient testing conditions and ignorant testing results.  

Short-Term Problems

In mid-week of August, 2016 4500 cars in South Korea have been recalled due to possible fuel leak issues (bdk, 2013).  Despite the advancement in technology the safety parameters are being either seriously ignored or are being traded for profits. The vehicle testing is either not being done in all possible conditions or is not being done in the correct way resulting in the errors being caused by the manufactures. Note that recall happens only when the company estimates that the damage done by recalling the calls is less that the damage that would be caused if the issue is found out. So the chances that there are several automobiles with minor safety issues which are not usually highlighted during accidents or are over shadowed by other issues still exist. This would again question how truthful the companies are actually being to the public and how many automobiles are customers driving that are not completely safe.

It is highly unlikely that the company is unaware of the issues. Three incidents in a single year clearly shows the negligence of the company in ensuring customer safety. Merely putting up safety features in not sufficient especially in case of off-road cars as the cars are used in extreme climatic and road conditions. Also, the cars are pretty expensive and hence through testing and safety measures are expected. Apart from this, government authorization is required for the company to release a new model into the market. So the other big question is if it’s only the company’s fault or the government’s as well.

To ensure that the recall issues not occur and the short term and long term problems are handled the below strategies can be applied

  1. Ensure negative publicity is crumbed. Release press notes apologizing and acknowledging the faults.
  2. Find the source of the issue and let the customers know why the incidents occurred and how they are being rectified.
  3. Provide positive assurance on how the issues would not happen again
  1. Thoroughly analyse the cause of the issues.
  2. Change the current testing procedure
  3. Change the current testing parameters to suit extreme conditions
  4. Test vendor equipment before and after installing in the automobiles

The current strategy of the company should be to overcome the negative publicity first by ensuring the customers and the media that necessary steps are being taken to create a better and appropriate testing conditions (Raub, 2014).

Investments should be made to ensure that the testing conditions and parameters are revamped by the finance team. The revamp should be based on the suggestions of the R and D department and also the external test agencies. The analysis of the test results should be made much through. Testing should be done in all possible conditions that the automobile may face and any output that results in impacting the customer safety should be alternated with a suitable solution. Investment in customer safety should be made rather than on marketing (Arp, 2016).

Long-Term Problems

The testing criteria of the automobiles would have a separate segment named as customer safety. The quality of all the parts have to be thoroughly inspected. The assembled parts have to work in all possible condition, both temperature and terrain. Sensor calibrations should be emphasized on (Karabetsos, 2014). The testing parameters should be satisfied 98.5% of the time in testing conditions. Testing should also be done on actual terrain conditions where the customers are likely to use the vehicles. The vendors that supply the parts should also test their products. Jaguar Land Rover should set rules on the minimum testing criteria that the vendor has to pass through to supply the products to the company (Hakim, 2015). The company should ensure that recalls should not arise at least for the next five years.

The recommendations made are all based on the testing capabilities of the company. The criteria needs to be changed and the testing conditions as well. Under laboratory conditions, the vehicle may perform as required but under actual terrain conditions the same not be true as well. Also, the ethic of the company needs an intervention as they would have to be rigorous with themselves to ensure only the right product comes out. This strategy is adopted as it is resolves the crux of the problem rather than talking about the shoots (Vroman, 2012). Our strategy such as publicity and marketing like the current problem intact, and hence customer safety would still be an issue. The above solution directly impacts both short term issues of recall costs and long term issues of reputation.

Conclusion

A lot of budgetary constraints may occur for implementing the solution. Revamping the testing criteria, testing the vendor products while ensuring their current policies are intact is an expensive. However, the company is in the act of repairing its reputation and if changes are not made there is a chance they would lose their customers (Helm, 2013). Financial investments need to be earned either from the parent company or the group company and the issues need to be resolved. Though the impact may not be directly seen, ensuring customer safety will increase the reputation of the company (Saeidi, 2015).

References

Arp, D. (2016). Testing for protection of children in cars. Neuroscience journal of Shefaye Khatam, 3(4), e13-e13.

Bae, Y. K., & BENÍTEZâ€ÂSILVA, H. U. G. O. (2013). The effects of automobile recalls on the severity of accidents. Economic Inquiry, 51(2), 1232-1250.

bdk. (2013, May 9). Nearly 4, 500 Jaguar, land Rover cars to be recalled in S. Korea. Retrieved September 24, 2016, from https://english.yonhapnews.co.kr/business/2016/08/18/0501000000AEN20160818007400320.html

Biggs, J., Lasker, A., Webb, J., & Stocksdale, J. (2016, August 4). Jaguar land Rover recalls Takata airbag-equipped cars. Retrieved September 24, 2016, from https://www.autoblog.com/2016/08/04/jaguar-land-rover-takata-airbag-recall/

Hakim, D., & Bradsher, K. (2015). After Volkswagen revelation, auto emissions tests come under global scrutiny. The New York Times (Sept 24, 2015). Available at: https://www. ny t imes. com/2015/09/25/business/international/vo lk swa gen-emi ssions-pollution-regulations. html.

Helm, S., & Tolsdorf, J. (2013). How does corporate reputation affect customer loyalty in a corporate crisis?. Journal of Contingencies and Crisis Management, 21(3), 144-152.

Isidore, C. (2014). GM cars sold: 12 million. Recalled: 13.8 million. CNN Money.

Karabetsos, E., Kalampaliki, E., & Koutounidis, D. (2014). Testing Hybrid Technology Cars: Static and Extremely Low-Frequency Magnetic Field Measurements. IEEE Vehicular Technology Magazine, 9(4), 34-39.

Liu, Y., & Shankar, V. (2015). The dynamic impact of product-harm crises on brand preference and advertising effectiveness: An empirical analysis of the automobile industry. Management Science, 61(10), 2514-2535.

PTI. (2016, June 23). JLR recalling 11, 000 vehicles in china over faulty sensors. Retrieved September 24, 2016, from Companies, https://www.livemint.com/Companies/2TJGCMpm6tNeW2maWvb2SL/JLR-recalling-11000-vehicles-in-China-over-faulty-sensors.html

Raub, S. P. (2014). What drives extra-role customer service behavior?-The interactive effect of self-efficacy and psychological safety climate. In 32nd EuroCHRIE conference" Hospitality and Tourism Futures", Dubai 6-9 October 2014. EuroCHRIE.

Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341-350.

Shende, V. (2014). Analysis of research in consumer behavior of automobile passenger car customer. International Journal of Scientific and Research Publications, 4(2), 1.

Venugopal, P., Soni, A., Tiwari, R., & Gupta, S. (2012). Product recall: Effect on brand perception. International Journals of Marketing and Technology, 2(12), 199-208.

Vroman, R., Gloyns, P., & Roberts, J. (2012). Testing of Rear Seat Strength in Cars. ANEC
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