TPE in practice: Product recalls

Picture of toy cars crashing
By Lauren O'Brien, Lecturer

16 October 2017

Are you familiar with how to analyse business issues and what you should look out for in terms of skills practice? 

This level of the CA qualification is very different from Test of Professional Skills and Test of Competence; you will be presented with business issues and expected to analyse them using your common sense and business awareness, just as much as your accounting technical knowledge.  

A good example of a possible TPE topic could be a product recall - indeed, this has featured in a relatively recent TPE exam.

Two very different articles on product safety highlighted product recall in practice: the continuation of the well-known Samsung Galaxy Note 7 saga and the, perhaps less well-known, issues involving Sophie the Giraffe

As you prepare for TPE, keep your eye on the press for stories such as these, and use them to hone your skills!


Samsung

The Samsung Galaxy Note 7 recall experienced some difficulty in recalling the thousands of faulty devices in homes and businesses. 

Samsung tried very hard to retrieve all of the devices, which were known to sometimes burst into flames due to manufacturing errors in the battery, and limited calls on the devices to emergency only. It was hoped this would reduce the risks associated with this particular device model. 

Sophie

Sophie the Giraffe is a popular children’s toy, specifically aimed at babies and young children. In early 2017, there were reports of mould found inside some of the toys. There was no product recall for affected toys. 


TPE students will find it useful to assess the situation for each of these companies to develop business acumen and technical knowledge. As a TPE tutor, I always approach such problems with straightforward questions in mind to set the scene:

  • What is the problem?
  • How big an impact could this have on the business?
  • What are the immediate steps the business needs to take?
  • What are the long-term steps that are required?

Try answering these questions from the perspective of each company. 

There is, of course, no right answer! However, I would expect TPE students to particularly note that, in the Samsung case, liability for any future fires is a huge risk, along with the resultant negative publicity.

For Sophie the Giraffe, on the other hand, the target market makes this a particularly sensitive issue. The toy is marketed to babies, young children, and their purchasers (their parents), so there is a potential issue of child safety. 

As you prepare for TPE, keep your eye on the press for stories such as these, and use them to hone your skills!

Topics

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