The first option gives Whirlpool Corporation’s customers the choice to modify or repair

their faulty electrical appliances. Clearly, Whirlpool gains in two ways if customers adopt this
choice. One, the corporation is saved the significant expenses it would have incurred if it
undertook a full recall of the faulty appliances. Secondly, there is the tendency that Whirlpool
gets to retain its customers since they would in effect still be using the corporation’s appliances
after they must have been fixed.

However, the option to modify or repair the faulty appliances comes with the risk of
Whirlpool suffering damage to its brand equity if the corporation’s customers are not fully
assured that the initial technical problems with their faulty appliances had been fully resolved.
In actual fact, if the appliances continued to significantly pose a fire risk, Whirlpool’s customers
could resort to litigation.

Thus, the first option seems not to be the best option for Whirlpool Corporation.

For the second option, Whirlpool Corporation will do a press release, do a full recall and
fully reimburse customers who show up with faulty appliances. This option has Whirlpool taking
full responsibility for the faulty appliances as is right to do and will help in keeping the
corporation top-of-mind in the hearts of the consuming public. Also, Whirlpool’s customers will
suffer no financial loss and thus are more likely to remain loyal to the brand.

Nevertheless, the financial loss Whirlpool Corporation would suffer if it implements a full
recall of the faulty appliances makes it a not-so-desirous proposition. In addition, the logistics of
recalling so many appliances—as much as 550,000 units—makes this second option not
appealing.

The third option Whirlpool Corporation has—the announcement of a recall with the
option of either a free repair or free replacement of faulty appliances—tries to create a balance
between the first two options. For one, Whirlpool Corporation is demonstrating to its customers
and also to the general public its willingness to take responsibility for the faulty appliances and
also to provide customers with the freedom to choose which course of remedial action best
strikes a chord with them, considering the circumstance.

Although Whirlpool Corporation will still incur significant cost if it goes through with this
option, the loss will not be as great as that of a potential full recall and replacement of the
faulty appliances.
What course of action is best?

The option to recall and repair or replace seems to be the best because it addresses the
issue of the faulty, fire-prone appliances. Also, customers get the flexibility to choose any one of
the two remedial actions in respect of their faulty appliances. Adverse customer reactions
would be minimal and brand loyalty will increase; especially if the technical fix to the problem is
effective. Whirlpool Corporation’s brand equity will suffer minimal damage from the incident.

What consequences would result from the course of action recommended?

Consequences:

- Financial: The cost of the recall, repair, or replacement, as well as potential legal fees and
compensation, could have a significant impact on the company's finances in the short term.

- Reputational: While the chosen course of action aims to minimize reputational damage, there
may still be some negative publicity and loss of consumer confidence, especially in the short
term. However, a transparent and proactive approach to addressing the issue can help rebuild
trust over time.

- Operational: Managing the recall, repair, or replacement process efficiently and effectively will
require careful coordination and resources, potentially impacting other areas of the company's
operations.

- Regulatory: Depending on the jurisdiction, Whirlwind may face regulatory scrutiny and
potential fines for the safety issues with its products, emphasizing the importance of thorough
compliance and cooperation with authorities.