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Whirlwind Corporation Case Study

Evaluation of each course of action

Option one gives Whirlpool’s customers the choice to modify or repair their faulty
appliances. Whirlpool is saved the significant expenses it would have incurred if it undertook a
full recall of the faulty appliances plus it gets to retain more of its customers since they would
still be using Whirlpool appliances after the fix.

However, Whirlpool will suffer damage to its brand equity; for example, if customers
doubt that the initial technical problem with their appliances had been resolved. Customers
could litigate if the appliances continued to pose a fire risk.

In option two, Whirlpool will do a press release, fully recall, and fully reimburse
customers with faulty appliances. Here, Whirlpool is taking full responsibility for the faulty
appliances. This will keep the Whirlpool brand top-of-mind in the hearts of the consuming
public. Also, Whirlpool’s customers are likely to remain loyal to the brand.

Nevertheless, Whirlpool would suffer significant financial loss. Also, the logistics
required in recalling 550,000 units of appliances is massive and adds more cost.

Finally, option three has Whirlpool announcing a recall with the choice of either a free
repair or free replacement of the faulty appliances. This is a balance between the first two
options. Here, Whirlpool is taking full responsibility for the faulty appliances in addition to
providing customers with a choice of whichever remedial course of action they deem fit.

Granted that Whirlpool will still incur significant cost if it goes through with this option,
the loss will not be as much as that of a full recall and replacement of the faulty appliances.

Best course of action

Option three is the best because it addresses the issue of the faulty appliances. Also,
customers get to choose any of two remedial actions. Adverse customer reactions would be
minimal and brand loyalty will increase if the technical fix to the problem is effective.
Whirlpool’s brand equity will suffer minimal damage from the incident.
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Consequences

1. Whirlpool’s finances will suffer in the short term.

2. The significant logistics required will impact Whirlpool’s operations as staff take on
additional work.
3. Whirlpool will have some short-term damage to its brand equity—negative press and
loss of consumer trust—as it deals with the crisis.
4. Whirlpool will face increased regulatory oversight as the authorities will seek to ensure
its products are safe for public use.