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2) Product recall can be damaging to a firm's reputation because the company would be accepting that the product is faulty and that can lower the brand loyalty from the customers leading to a decrease in sales and market share

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2) Product recall is when a firm appeal customers to return back their product that had been sold to them due to fault in safety issues. Product recall can be damaging to a firm, as Toyota had many issue with their cars like problems with the accelerator and gas they had to recall many cars back into the garage. This can lower the brands recognition and loyalty from customers. The brand image of Toyota will experience hardship.
Another problem they might face in a long term situation is that any car produced by them in the future may put concerns to the customers and therefore can affect their selling of cars. Also trying to get the car to past certified test may be hard as they were associated with the recall of past products.
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* Explain why product recalls can be damaging to a firms corporate reputation (4 marks)

When a firm announces that they would be doing product recalls, it can create doubts for their consumers and trust can potentially be lost which could lead to the firm losing existing customers alongside the loyalty that they hold. Another group that is negatively impacted is the general public, being the potential consumers – By knowing that products are being recalled, they may be more likely to choose an alternative firm to get the product from.
A firm’s reputation is at stake in these situations and it depends on how a firm treats the situation in terms of crisis management, being their appeal to the public and also the reasons to why the product had been recalled.

* Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars (8 marks)

In 2009, Toyota became the world’s number one auto company, having their success built over decades as well as being documented from a survey as being among the best car making brands in the world. The consumers perceived Toyota vehicles as safe and high quality cars, furthermore, they gained a competitive edge by having such great customer loyalty. Later in the year, a fatal flaw was put to the company’s attention which was that Toyota vehicles suffered from an electronic defect that caused uncontrolled acceleration. The flaw is claimed to be fatal as it has been reported to be responsible for several deaths and also puts its consumers in risk. Toyota neglected the issue and claimed that the accidents were not caused by their vehicles directly but it may be due to the floor mats. As the accidents continued, Toyota recalled 2.3 million cars to fix its sticky pedals, though, the problems for Toyota only grew and cost them more as the issues built up. Toyota should find investing in contingency planning to be in high interest as a crisis can be extremely damaging and would typically cost substantially less than what would be invested into the planning procedure. If they had improved the safety of their vehicles as well as incorporate contingency planning, they could have resisted shutting down its manufacturing plants which cost 54 million USD a day as well as having the company’s stock drop 16%.

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2)  Product recalls can be damaging to a firms corporate reputation, because as Toyota had many issues with its acceleration as well as gas pedals, it can have an effect on their brand loyalty. Brand loyalty is one of the important aspects of it, as it refers to customers wanting to buy Toyota's new car's from time to time again. However, by the issues and problems which Toyota has had over several years, it may get to a long term effect that customers are preventing to buy Toyota's new car products in future. Another point is that Toyota will suffer with its company's brand image, which later on will have as another long term effect difficulties with its brand value through entering higher barriers. By higher barriers is meant that Toyota's  brand value might have difficulty from its problems for entering into the market by its lack of customer being loyal to the existing brand.

2) A contingency plan is a developed plan that is proactive to changes in the business environment. It is there for businesses to identify all probable threats before an unwanted or unlikely event occurs with “what if”.

Toyota could be interested in spending money on both things, but firstly if its the case that they would start spending money on contingency planning. This could then enable Toyota to be able to state, which probable threats can be occurring throughout them inventing and creating new car products. So in this case, one of the threats that they might be stating is “how stable is the accelerator” or “How well does the gas pedal work this time, compared to the other time when it had problems”. These are the threats that can be analysed and solved in order to prevent the previous issues which Toyota has had for a long time to solve.
However, the disadvantages would be that even though Toyota is clearly planning or stating its threats, it will not be the case that this will improve the condition of its cars which had problems over several years. There is also another disadvantage which is that even though the contingency plan is accurately planned and states the things they want to prevent, how is Toyota going to turn this into a successful creation of its product.

3) On the other hand, should Toyota spend money on improving the quality of its cars which suites better to its situation, Toyota will have to look at its product quality in which it is supposed to represented what the product offers and makes it good. In addition, Toyota also has to look on its product safety in which it represents on how its product is well protect and also safe during driving without having any issues. Both factors are important because they give customers awareness in the case of them feeling confident about buying their product without having any worries of issues or problems.

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2).  A product recall is when a firm requests customers to return an already purchased product due to safety issues or a product defect. In doing so, the firm’s reputation is damaged as it inconveniences the customers, preventing future purchases from the brand. The brand image of the company will suffer, therefore the brand loyalty the company has established with it’s customers will also suffer. A long term effect will be as the business tries to introduce new products in the future, it will be more difficult to get past barriers of entry as the brand will be associated with the product recall that was issued in the past.

3).The product recall that occurred for toyota was a crisis, and required proactive crisis management. Crisis management is a company’s response to a crisis whereas contingency planning is a preventative measure for future crises. Being that the crisis ensued solely as a cause of the lack of quality of Toyota’s cars, a necessary action would be to invest into the improvement of the cars - this would be a matter of simultaneous contingency planning and crisis management. This would be advantageous as it addresses the customers' worries, while also preventing a future crisis due to poor quality. However, a disadvantage of doing so would be the failure to address the lack of preparation that was exposed in the previous crisis. The advantage of focusing money solely to contingency planning would be the broad coverage of future crises that would be provided. Toyota would be more prepared for a possible different crisis to occur in the future, and would handle it exceptionally better than the one they just faced - minimizing loss and damage to the company. A disadvantage would be the lack of acknowledgement given to the crisis that has already occurred. Therefore, limiting customers’ willingness to purchase the product as they will question the safety of the product. Due to this, the better decision would be for toyota to primarily focus their resources into the quality and safety of the cars.

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1. Explain why the product recalls can be damaging to a firms corporate reputation:
Recalling a product can be damaging to a firm's corporate reputation as recalling means that the firm is admitting to a problem, that is potentially very dangerous, in Toyota's case. This will mean that the consumers will be much more cautious when looking at Toyota's products, and will shy away from them because of the fear of the potential problem. This will mean that the firm's reputation and brand image will be damaged, and for Toyota's case, it is clear that their trustworthy image has disappeared. Recalling products can also be a very cumbersome process for the consumers, and in Toyota's case, recalling a car, could mean that the customer may experience difficulties in travelling and daily functions as a consequence. From a service point of view, this can be very harmful to the business's reputation and image.

2. Evaluate if ti would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars.
Contingency planning or improving the quality control of the production of the cars would definitely reduce the chances of another crisis happening for Toyota. If safety control is set in place and is effectively managed, then it will help what would be Toyota's goal to rebuild their brand image and reputation of 'trustworthy'. Furthermore, a strategy that Toyota could implement is to be more open and transparent about the said quality management, to ensure safety to the customers.
Contingency planning can be beneficial for Toyota if another crisis happens again. Contingency planning could alleviate the possible damages that could be done if another crisis is to happen. This can mean that damages might not be as big for Toyota if they were to go through another crisis.
However, quality management and contingency planning also has their cons. Firstly, the costs involved with planning can be very high, especially when you take into account that for contingency planning, the business cannot be sure if a crisis is even going to happen or not. Furthermore, in Toyota's case, contingency planning might not be as effective, as the company has already gone through a crisis in the past. If another crisis regarding safety is to occur, the public will turn against Toyota very fast, and the brand image will be damaged very highly as it is a repetition. Therefore, as well thought-out the contingency planning may be, it might not be able to stop the brand image and reputation to see big damages.

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Explain why product recalls can be damaging to a firms corporate reputation (4 marks)

Product recalls are a request to return/ take back a product right after a discovery of a certain product issue/ defect. This action can be damaging to a business’ corporate reputation since a return of products would show the public that the business has not been producing products up to their promised standards. This could lead to a negative impact on the consumer loyalty that was built and established by the business and could ultimately lead to the decrease of the business’ market share and consumer/ customer base. Also the negative reputation gained by the business through their product recalls could be problematic and damaging to a firm since they  would have to re-establish and earn back customer trust which could take time, effort and money.

Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars (8 marks)

With reference with Toyota’s situation and crisis it may be that the firm has to consider the possible options on investing into contingency planning or improving the company’s product quality. Contingency planning is about being proactive to changes in the business environment. It involves developing a plan in case of an unwanted or unlikely event occurring which could impose negative effects on the business. Due to the crisis that the company has wen though I would say that Toyota should focus on improving on the quality of their cars before even considering spending money on contingency planning.  This is because the problem started with the quality of Toyota’s cars which are the cause of their loss of customers and the decrease of their market share. It would be in the company’s best interest to focus on the product quality issue of their cars and the new marketing that needs to take place.
In doing so, they could start to re-gain and and re-establish customer loyalty and start to build their brand image to overcome the negative reputation gained by the company from the crisis.

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2. Explain why product recalls can be damaging to a firms corporate reputation (4 marks)

Product recall is when a firm decides to return a product after discovering something with wrong with it such as safety issues or product defects. This is usually a firms last resort when encountering problems because it can cause many problems to the firm’s reputation. Some of the problems could include: a weak internal connection, which is when a reputation can be damaged by poor communication within the businesses units and functions, loss of customer loyalty and brand perception as customers might not trust and want to buy products from them as they feel like they are not getting a quality product.

3. Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars (8 marks)

Improving the quality of their cars could be advantageous for Toyota to spend money on because with better quality cars they can market to higher class customers thus able to make a higher profit margin as selling price can be increased. Also, it could be beneficial in the long term as it could increase customer loyalty if they believe and are happy with purchasing a high-quality product. Also with higher quality products they can improve their brand value as it can be considered a more prestigious company. The disadvantages of spending money on improving the product quality are because it can become costly in the short term for the firm as they will have to re market the product and gather a new class of customers. Also, depending on the cost of improving the quality it could lead to a decrease in profit because even though the selling price is higher the production will also be potentially much higher.

Contingency planning is when a firm prepares a response in the case of an unexpected crisis or emergency occurring. It would be in the interests for Toyota because with the chance of a crisis occurring then it could result in highly damaging effects on the company which would outweigh the cost saved by taking the risk and avoiding to prepare a contingency plan. Also by avoiding to prepare a contingency plan then it could decrease customer loyalty and interest as the customer might not feel reassured or safe about the products and services provided by the firm. By implementing the plan it could help to maintain the firms operation as it provides the firm with alternatives to various problems such as equipment failure, shortage of resources and by keeping the firm operational it allows it your firm to continue getting revenue which will help mitigate the problem while contingency plan is solving the issue.

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1. Explain why product recalls can be damaging to a firms corporate reputation
1.Product recalls can be damaging  to a firm’s reputation  because  company guarantees  customers  high quality of their products and safety but in practice they  don’t. Toyota is the one of the biggest car dealers in the World, their brand and reputation on market is the same important as their quality of products, so they have to guarantees their customers the best products.  After this accident many  of the toyota’s customers would change opinions about this company. Also in this  accident  died people what seems extremely scary  for customers as they would not buy a car with an issue that can lead them to the huge troubles.
2.  Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars
2.

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1. Product recalls can be damaging to a firm's reputation because by doing so, the company is admitting the fact that its products have problems and hence the firm has been ineffective during its production. Therefore, customers who have been loyal to the company are likely to lose brand loyalty and switch to another brand; this can be fatal to the market share of the firm. Moreover, the company will struggle to attract new customers since they are not willing to purchase products with potential problems. Once the firm's reputation is damaged even if it fixes its problems, customers will be reluctant to buy the firm's products again. Not only that, product recalls are highly costly, harming its profit margin as well.

2. It might not be in the interest of Toyota to spend money on contingency planning or improving the safety of their cars because both methods are highly expensive practices. Given that Toyota has recalled more than 2 million cars, lost a big portion of market share and its potential customers due to the damaged reputation, it may not have enough retained profits to invest in neither the contingency planning nor improvements of quality. In fact, the company may need to spend much of its profits in  paying back the harmed customers.

Moreover, the firm needs to hire specialists to conduct such practices or use previously working employees to create a special team; this also incurs costs as well as time. For a profit-orientated company, costly practices might not be in their best interest.

Despite the high costs and time management issues, it is in the best interest of the firm to conduct contingency planning and improve the safety of its products. Improving the quality can contribute to improving its brand reputation and the consequent brand loyalty. Therefore, it may be able to attract more customers, recovering the previously damaged market share as well. In this way, the firm will be able to offset the costs that it lost due to the previous crisis. Moreover, a good contingency planning will help the firm to not be as fatally damaged when such a crisis takes place again. It will help the firm react quickly and appropriately, imposing the least damage to itself.

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2. When a firm does a product recall, it can damage the firm's reputation as it would mean the acceptance in the fault or flaws of the products and therefore the consumers would question the product's safety, functionality, or durability. It would create a bad image to the customers and they would slowly lose their trust in the company as they would be concerned if their future products would have the same issues. If the product is being recalled then the customers will have to deal with bringing the product back to its retailer and this means they cannot use the product. Additionally, the event of the product recall, it could be well remembered due to how impactful the faults/flaws were to the customers thus it will be difficult for the company to gain back the customers trust.

3. Contingency planning is a step taken for a firm to plan out actions to be done in case of any emergency. The main objectives in the planning are to be able to contain any damages or loss to the firm and continuity of the key operations in the firm. If Toyota would invest in their contingency planning then it would show to the customers that the company is taking the project seriously as the company have planned out and considered any case scenarios that could potentially come up. The company will then be prepared to take action if anything happens.

Although, if a large amount of signs of potential risks have been identified then this may raise doubts over the success of the product sale. If however, no risks has occurred then the investment in the contingency planning may have been for nothing. The money that has been put in the planning could very well be used to improve the quality of their car.

On the other hand, by either investing in contingency planning or improving the quality of their cars then it will ultimately help the company to ensure the safety of their product and raises trust from its customers.

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2. Product recall can be damaging to the firm's corporate reputation, because the firm's reputation is heavily dependent on the consumer response to the product. A product recall suggest that the firm manufactures unreliable products, because by having a recall the firm is publicly accepted and confirmed a defect and has taken responsibility. This results in loss of trust, therefore leads to drops in sales, as the brand is perceived differently by the market. External stakeholders such as the customers are less willing to buy goods, as the damage brand gives the customer a reason to pick a competitor's product.

A recall causes inconvenience to consumers, whom already bought the product, because the product will be taken away. The success of the recall will be dependent on customer service tactics.

On the other hand if the business fails to respond quickly when a defect is detected, then it could damage the business's corporate reputation even more. As it makes the business look irresponsible and defensive of their mistakes.

3. A contingency plan is designed to handle crisis in the most efficient manner, therefore help forecast and reduce the damage that the business will take. In the case for Toyota, I believe that it is necessary, because having a contingency plan.

The most important factors to successful crisis management is to be confident, clear and responsive, without being defensive. By having a contingency plan, Toyota will be able to respond to the crisis in a more efficient manner. This will reduce the damage on the brand, as their response is already thought through. Another advantage is that it will reduce stress due to clear protocols of response. These will lead to less damage on current and future sales, however the short term cost of researching and creating a contingency plan may not be a priority for the business as resources are limited, and the process of creating a contingency plan can be time consuming and costly.

On the other hand investing in improving the quality of Toyota's cars is a more marketable approach. This gives the customers a reason to buy the product, and insures the quality of the products to the customer. Another benefit is the investment allows Toyota to invest more in product development. However the recall is due to a product safety issue, therefore if the issue is not resolve then Toyota will make the product more desirable but will not meet the customer's safety needs as Toyota produce family cars.

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2) Product recall can be damaging for the firms reputation, a product recall means that there is something wrong with the product. This could result into the loss of customer trust, which could lead to decrease of the loyal customers and that will result in the decrease of sales. Also this will have a negative impact on the brand image. For example even if people who aren't using Toyota will hear about the product recall, they may not trust this company already and in the future not consume its products at all. Also Toyota will have to spend money in order to improve the quality of their product

3) In my opinion Toyota should spend money on improving the quality of their cars and contingency planning because it could reduce the chance of the similar crisis to happen in the future. Toyota needs to focus on the safety of its products, this will help Toyota to recover from this crisis. Their main objectives right now are gain the trust of their customers back as well as try to improve its brand image. But both improving the quality of the product and contingency planning are costly because you need to do a lot of research and analysis in order to improve the safety of the car but this could potentially increase the cost of production for Toyota. Contingency planning would help Toyota to prevent similar crisis from happening in the future, even if they will happen Toyota will react to them a lot quicker, because they already will know what to do. However, contingency planning may not be so effective for Toyota as they are already been through crisis, so they expedience in those type of situations.
Toyota should spend money on improving the quality of their cars and contingency planning because it will help the company to recover its customer loyalty and brand image.

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-Product recalls can be damaging to a firms corporate reputation as such operation mean that there were errors with the initial products. It is difficult to earn back the consumers' trust that is already lost through the damage caused by the problematic products and this may lead to the consumers looking for substituted goods from other competitors.

-Toyota could allocate their finance on improving the quality of their cars to win back the hearts of the consumers. This means they could be targeting a broader range of consumer as Toyota's previous cars might have failed to satisfy their needs. The improved products may have fixed the acceleration issue and added better functions which could possibly earn them new customers and raise its reputation once again. However, there are disadvantages to this, mainly cost-wise. To Toyota, it might be dangerous to invest on such a high-cost decision as it already lost $54million a day from shutting down as a response to the previous crisis. Also, it is the safety that most customers are looking for in cars so the firm should invest more in improving the safety of their products over the quality of them.

Toyota already understands and is aware of the situation. It already experienced such crisis back in 2002, "when the company began installing drive-by-wire systems in its vehicles." So there would be no need to carry out further researches and this cuts the costs. However, It would need to plan how and when to respond. Time wise, the firm is quite behind of responding, as it chose to get defensive instead of admitting and solving the problem. This could be amended by an effective, forward-looking and a realistic method to save itself from getting into worse crisis'.  Then it needs to decide upon the solution to deploy people to take actions in attempt to solve the problem. The business would have to invest time, effort and some but not as much money to come up with a contingency plan. It is crucial for the business to be aware of its position within the market and within the relation with its consumers who've already lost faith and hence the brand loyalty.

Toyota should consider Contingency planning to prepare for possible future problems instead of improving the quality of their products. This is because their customers would have already lost faith in the business which means even if the products are improved, they won't be willing to consume Toyota's products. Contingency planning would be much more effective and possibly cost saving for the business. However, Toyota will need to plan an effective and suitable response that they can carry out in a suitable time.

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Explain why product recalls can be damaging to a firms corporate reputation (4 marks)
Product recalls may be damaging to a firms reputation as it can change how consumers look at the quality of the product. Consumers may have fear over the product being faulty again if purchased based on there being evidence of the product being prone to mistakes. It is more likely that would pick a company without any previous recalls as they may have a better reputation over having less issues with their product. Recalls may also cause employees to waste time and money as they are unable to use their cars when sending in the car to be checked.

Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars (8 marks)
A contingency plan specifies how the business responds to a crisis, and is often put in motion after a crisis has happened. However, if Toyota invest in improving the quality of their products instead this could be more effective in actually preventing a crisis. Although a contingency plan helps Toyota quickly resolve crises, Toyota should focus more on reducing crises as if Toyota is continuously hit with many problems it can negatively affect the the brand image, which consumers pay more attention to usually rather than how well the company confronts the  crisis that may arise. Instead, improving quality of the product can continuously improve the brand image and bring in even more consumers. Other companies have also been hit with quality issues and recalls, therefore Toyota investing in improving its product in ensuring it's product doesn't have any quality issues again can help gain customers to them over their competition. Also, investing a contingency planning comes as a disadvantage as often it is really difficult for the company to predict what will happen, therefore the contingency planning may not always be guaranteed to work effectively regardless of how much is invested in. However, investing in improving product quality is more predictable as the company are free to do anything with the product that may potentially bring in more consumers.

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1. Read the case study and post your answers onto the wall
2. Explain why product recalls can be damaging to a firms corporate reputation (4 marks)
3. Evaluate if it would be in the interests of Toyota to spend money on contingency planning or improving the quality of their cars (8 marks)