Nokia- A Bomb in your Pocket

Based on Case Study "A Bomb in your Pocket? Crisis Leadership at Nokia India"

1. A BOMB IN YOUR POCKET Kritika Jindal Manas Ranjan Tripathy Rutviz Dhanani Sahil Jain Unni Krishnan S

2. Nokia- An Overview Started as Paper Pulp B usiness in 1865 Morphed into Global T elecom L eader Operates in more than 150 countries Net Sales(2007)- $66.7 billion Operating Profit(2007)- $13.74 billion Among Top 5 Best Global Brand in 2007 40% of Global Market Share Estimated Brand Value- $33.69 billion

3. Nokia India Operations Market Entry- 1995 Market Share(2006)- 76% Customer Care Centres - 500+ Nokia Priority Dealers- 600+ R&D Centres - 3 Manufacturing Unit in Chennai

4. Case Basics: Key People Involved: Managing Director, Nokia India: D. Shivakumar Director, Communications: Poonam Kaul Scenario: Company to release an advisory regarding replacement against a batch of defective batteries Customers would have to log on to Nokias website to check if their product was affected Concerns of Communications Director: People wont differentiate between advisory and recall Customers would not go online to check their if their poducts are affected

5. Problems with BL-5C BL-5C is a Li-ion battery used in Nokia mobiles More than 300 million units produced 100 units of BL-5C reported for over-heating globally Units limited to batch produced by Matsushita between Dec 05 and Nov 06 46 million batteries in batch Batteries over-heating while charging due to short circuit Nokia issues advisory for free replacement of faulty units

6. Timeline of BL-5C Controversy

7. Events of August 14, 2007

8. Causes of Controversy

9. Where Nokia went wrong….. Inability to understand Indian Market and sentiments Did not consider Socio-Cultural and Literacy factors P rojection of Global idea on India was wrong Disregarding intuition of Communications Director They should have started SMS service along with online advisory Did not create a Toll-Free Helpline for customers Did not keep Customer Care Centres open for longer duration and also did not stock extra batteries Could not control media Contingency plans were missing (Had to control crisis by forming a crisis team which wasted precious time)

10. Crisis Response by Nokia MD returns to India Crisis Team formed Team conceptualizes ads for next day Keep tabs on news reports Telephones lines active and ready to take calls New way to check status of product through sms service Questions remain unanswered: How to prevent false rumours ? How to handle irate customers? How to control damage and save brand image? How to manage logistics? What will cost implications be?

11. Solutions to the Crisis Create additional team for logistics management Use SMS services for replacement procedure: Create an SMS service so that customers could send their battery number Make SMS service free of cost Send SMS in local languages If battery was defective ask customers to send their addresses Send batteries to Priority Dealers and Customer Care Centers to directly serve customers Start a Toll F ree Number for helping customers Hire temporary workers to handle extra work load

12. Solutions to the Crisis ( contd ) Tie up with a courier company to deliver products directly to the customers Make a provision so that customer can return the defective product in the same package (to check if defective product exists and for safe disposal) Create a system to record outgoing and incoming batteries System should help avoid duplicate queries and also keep tab on batteries replaced Setup a deadline for replacement operations (about 4 months)

13. Conclusions Concerns of customers can be dealt with directly Customers will have choices for replacement ( through Customer C are Centres , online or SMS) Environment Concerns taken care of as battery returned to company for safe disposal Replacement operations should end in 4 months Brand image should remain intact Nokia should learn from mistakes and follow some simple steps in the future: It should try to understand its market and its customers sentiments Should prepare for the worst even if the matter is small It should create contingencies for failure of its plans