Managing in Troubled Times Case Study

Sony’s Battery Recall: Troubled Times at Sony

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Abstract:

In August 2006, Dell Inc. and Apple Computer Inc. announced the recall of about 6 million lithium-ion batteries fitted in their laptop computers and sold throughout the world. The companies said that the faulty batteries made by Sony Corporation could overheat and, in rare cases, catch fire. Sony acknowledged the problem and offered to assist the companies by sharing a part of the recall costs. Later, other notebook manufacturers also recalled Sony-made batteries taking the count to around 9.6 million batteries. Analysts expected that the recall would cost Sony approximately $500 million. They also opined that the recall came at a time when Sony was busy turning around its loss-making consumer electronics division. While the investors were panicked by the cost burden, analysts raised questions about Sony’s product quality.

The case deals with how Sony responded and handled the massive battery recall. It also highlights the corrective measures taken by Sony to overcome the problems and save its reputation.

Pedagogical Objectives:

• To get an idea of the global rechargeable battery market as well as Sony’s battery business
• To understand what triggered the massive battery recall and its implications on Sony
• To assess the steps taken by Sony to manage the entire recall process
• To debate whether Sony would be able to overcome the problem and save its reputation.

Keywords : Sony battery recall; Lithium-ion battery; Global battery market; Global battery manufacturers; Managing in Troubled Times Case Study; US battery supply and demand; Demand for secondary battery; Market share of notebook vendors; Financial implications on Sony; Battery overheating; Recall cost; Sony consumer electronics; Playstation3; Global voluntary replacement programme

Contents:

• A Brief Note on Sony's Battery Business
• The Global Battery Market
• The Great Battery Recall: 'It's a Sony'
• Sony's Countermoves