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A bomb in your pocket?

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by

Krysta Meza

on 12 September 2013

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Transcript of A bomb in your pocket?

A Bomb In Your Pocket?
Nokia 2007
Operates in 150 countries.
Global net sales of $66.7 billion.
Brand value of $33.69 billion.
Top 5 "Best Global Brands"
40% of market share.
Second largest wireless network (India).
Major competitors: Samsung, Motorola and Sony Ericsson.
August 2007
Customers complained about overheating while charging. Over 100 complaints were made.
Nokia advised customers on the BL-5c model in their phones and offered replacement batteries.
Nokia's History
Name originated from the Nokianvirta River, Finland.
1865- Started as a paper pulp bussiness which morphed into a telecommunications leader.
The very first G.S.M. cell phone was the Nokia 1011, which was released in November of 1992. Photograph: Nokia.
BL-5C Battery
1 of 14 batteries used.
Featured lithium-ion technology.
A particular batch of batteries manufactured by Matsushita from December 2005 to November 2006, were suggested to be defaulted.
Problems
Poonam Kaul (director of communiations) was concerned people of India would not understand the difference between advisory and recall. Additionally, she was concerned customers would not have access to internet to check on their battery.
Media
Flashed reports saying Nokia phones could explode! Coupled with footage July 2007 Mumbai train blasts, kids crying and other gory photographs.
Each television channel added more panic with more intensive comparisons.
Customers began to flood care centers.
Management Response
Use SMS (Short message service) instead of internet for customers to send their battery information. This would allow instant response to the customer about the battery.
Customers would input battery information at Nokia's website, which would advise the customer if their phone was affected or not.
If affected Nokia would replace the defaulted battery.
Solution
Advisory Videos
http://www.metacafe.com/watch/767448/nokia_recalls_batteries_on_over_heating_complaints/

http://ibnlive.in.com/news/dont-worry-your-nokia-phone-wont-explode/47019-3.html
Question 1

Why is Nokia facing this crisis? What went wrong when everyone at Nokia headquarters thought this was not an issue meriting the Indian CEO’s intervention?
What happened?
In order to cope with this matter, MEI (Matsushita Electric Industrial Co.) has established a "Corporate Lithium-ion Battery Customer Support & Management Division" and is taking appropriate measures to restore the trust and confidence of its customers and society.
Estimated cost to fix issue was at $170 million.
What is Nokia doing today (2013)
Microsoft acquired Nokia's devices and services unit and licensed the company's mapping services in a deal worth $7.2 billion in a bid to bolster the company's position in the smartphone market.
Now known as (Micro)Nokia.
Nokia laughs at Apple's new iPhone 5C saying "imitation is the best form of flattery".
Nokia 2013
Apple iPhone 5C 2013
Question 2
Would you blame the media for this crisis? Why or why not?


Question 3

Assess the magnitude of the crisis; how do you expect it to unfold in the ensuing weeks/months? How would you prepare your management team for this?

Because the people of India did not understand the difference between a product recall and product advisory. This product advisory was taken as a discovery of safety issues.
They didn't think it would be an issue because it was just a routine of material information.
After the advisory, the media twisted the recall into something it wasn't.
Yes. The media played the recall into something it wasn't. When the media compared the recall to train explosions it created unnecessary panic. The media made the people of India believe that there was in-fact a bomb in their pocket.
Question 4

As a leader, how would you communicate with your various stake holders (e.g., media, customers, suppliers, dealers, employees, headquarters)?

Additional Discussions
How could Nokia prevent false rumors of battery explosion from being linked to the product?
How could Nokia hold onto the customers and stop losing them to competitors?
How could Nokia control the damage and consolidate the brand image as market leader?
The magnitude of the crisis at Nokia appears to be a great measure.
Crisis is also susceptible to the sensationalism by the Indian media.
Take the right leadership approach. Time is of the essence.
Set up a task force dedicated to responding to local business & customer complaints.
Ensure that the advisory message that was sent via SMS has a dedicated cross-departmental team to handle all the battery replacements.
Empower the local dealers by giving them replacement batteries.
Communicate with stakeholders by utilizing the media.
Inform headquarters of development of the crisis and ask for additional resources and employees to help mitigate the crisis.
Full transcript