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REVIEW OF THE OF THE BL-5C

BATTERY PROBLEM AND


POSSIBLE COURSE OF ACTION

PRESNTED BY TEAM-5

Compiled by Vidya Shanka

Nokia past and present


Nokia corp. is a Finnish multinational

communication and IT corporation.


Originally founded by mining engineer
Fredrik Idestam ,it started out as a paper
milling company having 2 mills set up in
Finland.
One at Tammerkoski Rapids in southwestern Finland and second mill on the
banks of the Nokianvirta river, from which
the company inherited its name from

Diversified Business
Ventures
The Nokia Corporation had five businesses:

rubber, cable, forestry, electronics and power


generation during the 1970s..
In 1979 Nokia made its first foray into the
telecom sector creating radio telephone
company Mobira Oy as a joint venture with
leading Finnish TV maker Salora.
the Mobira Talkman portable car phone
launched in 1984 , the Mobira Cityman were
the first portable hand-held communication
ever made

Overview
In the project we attempted to analyse the

events of the fall of 2007 when Nokia Corp


began to receive numerous complaints
regarding its phones and incidents of its
phones exploding became high profile
newspaper articles around the world.
The suspect was identified as the battery BL5C whiich could potentially experience over
heating initiated by a short circuit while
charging causing the battery to dislodge.

Overview continued
In the following slides we shall attempt to

recreate the scenario, analyse the various


parameters and try to come upon a solution
which ,manages to allay the fears of the
consumer diaspora ,is most feasible
,economical and that enables it to retain its
position as the market leader in the mobile
industry.

BL-5C Technical Specs


Made by high li-ion battery cell
Capacity :1000mAh/800mAh ,Standard

voltage :3.7V Limited voltage :4.2V


Standby time :110-200 min, talking time :220600 min.
working temperature:
charge:0--+45C ,discharge :-20--+60C

The Problem At Hand


300 million BL-5C have been manufactured.
The issue pertains only to 46 million batteries.

These products have been manufactured by


Matsushita between December 2005 and
November 2006.
Though a small number , the impact felt
would be strong both to the sales and the
brand superiority.
The main task was to allay the fears of
customers and the stakeholders.

Course of Action
We have now two options to go with.
The first option is to ignore the problem..
This has happened before ,,Fiat and Chrysler

turned down the possibility of addressing


inherent defects because they found it
financially more taxing and less economic to
address the concerns
We thought that the decision to not address
the present concern would be a fatal error
considering the increasing competitiveness of
market and possibility of the impact in the

Tackling The Problem


The team deliberated and decided that the course

of action be split into following sectionsManufacturing and design.


Addressal of customer grievances and replacement

of battery .
Legal measures to prevent future incidents like
these.
Addressing concern of the customers(customer
relation).
Financial measures

Manufacturing and
Design
The design of the BL-5C battery was done by the company

itself.
But the manufacture was done offshore by engaging
other manufacturing companies.
While the design was resilient , manufacturing defects on
the batteries from Matsushita Ltd(now Panasonic) were
observed.
We reasoned that Nokia should have some of its personnel
on site to scrutinise the manufacturing in real time.
The need of greater communication between nokia and
its suppliers concerning latest manufacturing technology
and possible defect during the manufacturing process.

Customer relations
At the time of this incident rumours were floating around

the market that tarnished the image of Nokia.


Therefore to instil a sense of accountability of Nokia in the
market the decision to replace the defective batteries was
the decision which all of us in the team agreed upon.
We agreed that the top brass of Nokia should come out and
undertake press conferences to instil confidence among the
customers as well as stakeholders to show that the problem
is being give utmost attention.
One thing that works in our favour is the extensive chain of
nokia servicing centers(nokia care) around the world which
will make the replacement process take less time.

The legal alternative


This was the most debatable issue ,though we managed to

reach a conlusion.
Few members were supporting the fact that nokia should
take legal action against the responsible party which led
to the crises.
But cases of these nature give a bad reputation in the
market and ensures that the incident remains fresh in
memory.
While legal cases of such kind require too much of time
and money you cannot remove the possibility of losing the
case youself.
This case also raises apprehensions among the suppliers
with which good relations have to be maintained.

The legal alternative


contd.
So we thought that strengthening the legal

framework of future contract signed with


suppliers.
These should a include a penalty and liability
clause which will help in offsetting the
exposure and liability of Nokia if future
incidents of this type occur.
The basic idea is that the legal arm should be
used for prevention ,not for damage control.

Financial Measures
The company is bound to suffer some financial loss

because of reduced sales and reduction in the share of


market.
Not to mention the stock could suffer devaluation
because of reduced confidence of investors.
In our view the company should not take decisions that
affect shareholders, but use its reserves to tackle the
financial cold neck. This will ensure that shareholders
remain with the company.
Even with these measures we can assume losses to
Nokia at a maximum of 100 million euros ($137 million)
as predicted by Analyst Richard Windsor of Nomura .

Conclusion
The solutions presented above have

undergone careful scrutiny and deliberation


by all members of our team and will help
reduce if not prevent the impact caused
because of this and future incidents of such
kind.
In our parting note, we would like to mention
that nokia will always remain a part of our
lives, yes it has seen some setbacks in recent
time but our team wishes it to bounce back
and reclaim its lost reputation