Expensive Recalls

Over the last few years, product recalls have dominated news
cycles. Whether it was faulty car parts or contaminated
peanut butter, recalls have affected consumers and businesses
everywhere. Given that many companies that have
undergone a recall are large entities, the full financial impact
of recalls may be unclear. Let’s take a look at some of the most
prominent product recalls of the past decade and their
massive financial ramifications.

Samsung – 2016

After 35 reported incidents of their Galaxy Note 7
smartphones catching fire, Samsung decided to recall every
single Galaxy Note 7 it had manufactured. Despite the recall,
more than 50 additional reports have been filed in the United
States regarding the phone’s exploding batteries. According
to an article by the Wall Street Journal, analysts speculate that
the recall might cost Samsung over $4 billion in recall
expenses and lost sales. Samsung boasted approximately $22
billion operating profit in 2014, with total current assets of
nearly $110 billion.

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