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Nokia Corporation (Nokia) has made connectivity truly
ubiquitous. It has emerged as a world leader in mobile
technology and progressively moving towards the company’s vision
of creating a world where everyone is connected.
Albeit the strong strategic growth and transformation, in
mid-2007 Nokia encountered a problem with the malfunctioning of
its handsets due to faulty batteries which might get overheated,
especially the BL-5C batteries which were used in most of
Nokia’s low-end models.
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The Finnish company was sourcing these batteries from
the Matsushita Battery Industrial Co Ltd. (Matsushita) of Japan and
several other suppliers.
On August 13, 2007, Nokia issued a warning over its BL-5C batteries
across the world, stating that these batteries may get overheated while
charging. It said that about hundred such incidents of overheating had
been reported globally but there were no reports of the batteries being
associated with any serious injuries or damage to property.
It also clarified that the problem was limited to 46 million BL-5C
batteries manufactured by Matsushita between December 2005 and November
2006. Nokia also offered to replace the batteries free of cost to the
consumers. "By reacting swiftly and responsibly, and by being fully
transparent, we believe that consumers will continue to view Nokia as a
responsible and trustworthy brand,"1
said Robert Andersson, head of customer and market operations at Nokia.
Some analysts felt that the replacements of the batteries would cost
Nokia as much as US$170 million. The company was working together with
Matsushita to investigate the defect related to the batteries and agree
on who would bear the cost of the product replacements. Analysts said
that generally the supplier bears the cost of such replacements.
However, one of the priorities for Nokia was to handle this crisis well
so that its brand image do not suffer due to the resultant confusion and
panic among its consumers. For instance, shortly after Nokia issued the
warning, millions of Nokia mobile phone users in India panicked. They
checked their Nokia handsets and rushed to the nearest service centre
for clarification and further information.
However to their dismay the panicking customers found that the customer
care centers were not in a position to help them and denied having any
information from the company regarding the malfunction. The police had
to be called in to lend extra security at one Nokia customer centre as
anxious customers gathered there and demanded that their batteries be
replaced.
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