A product recall is done by a company when it finds a faulty product / production batch being released in the market. The same product is called back, the defect removed and then the product has to be replaced or a completely new unit given to the customer. A major Reason for timely product recalls is to limit the damage which might be caused to the brand, product or company image.
Besides damage to intangible assets of the company, the company is also liable to face legal actions if its products are found faulty. These legal actions may be done from the government against the company or may also be done by a consumer or industrial buyer under the consumer protection act. The bottomline is that a discovery of faulty product demands an immediate product recall. Thus many companies make it a point to recall a faulty product themselves to avoid any penalties – legal or otherwise.
