Reputation of a firm among its current and potential customers is extremely important for that firm to earn maximum profit and to beat its competitors.

Recently, GM, the once No.1 automaker in US, has dropped to a rating of 71. This happened due to the fact that GM recalled more than 500,000 vehicles and would stop selling two models lately. These vehicles and models either have existing or potential problems that can possibly cause serious accidents.

What GM has done greatly affected its reputation. According to the article, this recent recall is not the worst one—GM once recalled 2.6 million vehicles after defective ignition switches caused 23 deaths. The company’s multiple recall history creates a sense of distrust among its customers. People will start worrying if the GM vehicle they bought or will buy has similar recall concerns. Therefore, the amount of GM vehicles customers are willing to purchase will experience a drastic decrease and the company will as a result earn less profit. Also, once the car buyers are no longer interested in GM and turn to its competitors, it will take GM lots of effort in the future to try and regain its customer segments.

The most urgent step GM needs to take after fixing the existing problems is try to win its customers back. More advertising is definitely needed, as well as some appropriate promotions.

It is also important in the next step to make sure no further recall situations will happen. The company should pay extra attention to the manufacturing processes and maybe even consider re-examine its production line.

However, although GM has fallen from No.1 to No. 71, it is likely for the company to catch up again and take its place back. In order to achieve such goal, GM must distinguish what are the most urgent and important things to do while leaving less urgent/important ones for later.

Article link: http://www.theglobeandmail.com/globe-drive/news/recalls/gm-to-recall-524384-vehicles-for-latch-and-loose-part-issues/article20908713/