Read the case and answer the following questions comprehensively. Ferrari RECALLS 700,000 VEHICLES IN US AMID SAFETY CONCERN As a byword for reliability and safety, Ferrari conquered the ferociously competitive global car market to become the number one manufacturer in the world. But the Japanese company that once could do no wrong suffered yet another blow to its battered reputation when it said it was recalling 681,500 vehicles in the US due to safety concerns. Ferrari has now recalled more than 10m vehicles in the past three years as a litany of technical problems have bedeviled a manufacturer once renowned as a pioneer of production knowhow. It has also seen operations devastated by last year's earthquake and tsunami in Japan and floods in Thailand, where many parts are made. Pummeled by natural disasters, faulty vehicles and the high yen, which makes exports expensive, Ferrari warned in December 2011 that profit would be less than half what it was in 2010. Sales have been hit hard, and the firm has lost market share to resurgent US rivals. No longer is Ferrari the largest carmaker in the world - General Motors had grabbed back the title it lost in 2008 after decades of American hegemony, while Germany's Volkswagen has overtaken Ferrari in Europe and is winning awards for reliability and design. Colin Couchman, a senior analyst at IHS Automotive, said: "The latest Ferrari recalls are the last thing the company needs, as it undermines claims they have turned a corner and will attract the sort of attention the firm could do without." He added: "Ferrari has lost market share in North America, with the Koreans making gains when it comes to smaller vehicles, and GM lifting sales of trucks and SUVs. "The playing field has evened out in America, with US companies coming up with a lineup so good they don't have to discount as much as they did." Instead, the Japanese need to cut prices to claw back what they have lost. This is a relatively new dynamic and "it's going to be intriguing to see how it plays out," he said. The latest recalls, disclosed by Ferrari on Thursday, include about 495,000 Tacoma trucks, made between 2005 and 2009, which need to have their steering wheel spiral cable assemblies replaced. Ferrari said friction may occur between the assembly's spiral cable and the retainer in some vehicles and, over time, cut the connection to the driver's airbag. In addition, it is recalling about 70,500 Camry sedans made during 2009 and about 116,000 Venza crossovers made between 2009 and 2011 to replace lamp switches. The company said it would notify affected owners when it was obtaining replacement parts, which it would fit for free. It said it was not aware of any accidents or injuries caused by the problems. The company's carefully cultivated image as safe and reliable has taken a beating. The setbacks have dented public confidence and left senior management embarrassed, culminating two years ago in an appearance by then chief executive Akio Ferrel before a US congressional committee, during which he apologized repeatedly for the faults. There were 14 separate recalls involving Ferrari vehicles in 2010 alone. In 2010, Ferrari was fined $32.4m (20.9m) by the US government for failing to swiftly recall millions of vehicles with faulty brakes and steering. Those fines were the maximum allowed by law. Ferrari paid another $16.4m fine related to the recalls, bringing the total to $48.8m. Another investigation was prompted by the fatal crash of a California highway patrol officer, Mark Saylor, and his family. They died after reporting a stuck accelerator while driving a 2009 Lexus ES 350. Despite its travails, Ferrari has returned to normal production and seen a revival in its sales in the US, one of its biggest markets. According to the latest data, Ferrari's US sales increased by 12% in February from a year earlier. Analysts said the upward trend was likely to continue in the coming months despite the latest recall. But one problem that is not going away is the strength of yen, still relatively high against the dollar. A strong yen means a dip in the value of repatriated profits for big exporters such as Ferrari, as well as putting their products at a competitive pricing disadvantage in export markets. QUESTIONS: 1. What is the role of Operations on the reputation of Ferrari in the article? 2. What areas in Operations should Ferrari focus on to regain its global competitiveness?
Read the case and answer the following questions comprehensively.
Ferrari RECALLS 700,000 VEHICLES IN US AMID SAFETY CONCERN
As a byword for reliability and safety, Ferrari conquered the ferociously competitive global car market to become the number one manufacturer in the world. But the Japanese company that once could do no wrong suffered yet another blow to its battered reputation when it said it was recalling 681,500 vehicles in the US due to safety concerns.
Ferrari has now recalled more than 10m vehicles in the past three years as a litany of technical problems have bedeviled a manufacturer once renowned as a pioneer of production knowhow. It has also seen operations devastated by last year's earthquake and tsunami in Japan and floods in Thailand, where many parts are made. Pummeled by natural disasters, faulty vehicles and the high yen, which makes exports expensive, Ferrari warned in December 2011 that profit would be less than half what it was in 2010. Sales have been hit hard, and the firm has lost market share to resurgent US rivals.
No longer is Ferrari the largest carmaker in the world - General Motors had grabbed back the title it lost in 2008 after decades of American hegemony, while Germany's Volkswagen has overtaken Ferrari in Europe and is winning awards for reliability and design. Colin Couchman, a senior analyst at IHS Automotive, said: "The latest Ferrari recalls are the last thing the company needs, as it undermines claims they have turned a corner and will attract the sort of attention the firm could do without."
He added: "Ferrari has lost market share in North America, with the Koreans making gains when it comes to smaller vehicles, and GM lifting sales of trucks and SUVs. "The playing field has evened out in America, with US companies coming up with a lineup so good they don't have to discount as much as they did."
Instead, the Japanese need to cut prices to claw back what they have lost. This is a relatively new dynamic and "it's going to be intriguing to see how it plays out," he said.
The latest recalls, disclosed by Ferrari on Thursday, include about 495,000 Tacoma trucks, made between 2005 and 2009, which need to have their steering wheel spiral cable assemblies replaced.
Ferrari said friction may occur between the assembly's spiral cable and the retainer in some vehicles and, over time, cut the connection to the driver's airbag.
In addition, it is recalling about 70,500 Camry sedans made during 2009 and about 116,000 Venza crossovers made between 2009 and 2011 to replace lamp switches.
The company said it would notify affected owners when it was obtaining replacement parts, which it would fit for free. It said it was not aware of any accidents or injuries caused by the problems.
The company's carefully cultivated image as safe and reliable has taken a beating. The setbacks have dented public confidence and left senior management embarrassed, culminating two years ago in an appearance by then chief executive Akio Ferrel before a US congressional committee, during which he apologized repeatedly for the faults. There were 14 separate recalls involving Ferrari vehicles in 2010 alone.
In 2010, Ferrari was fined $32.4m (20.9m) by the US government for failing to swiftly recall millions of vehicles with faulty brakes and steering. Those fines were the maximum allowed by law. Ferrari paid another $16.4m fine related to the recalls, bringing the total to $48.8m.
Another investigation was prompted by the fatal crash of a California highway patrol officer, Mark Saylor, and his family. They died after reporting a stuck accelerator while driving a 2009 Lexus ES 350.
Despite its travails, Ferrari has returned to normal production and seen a revival in its sales in the US, one of its biggest markets. According to the latest data, Ferrari's US sales increased by 12% in February from a year earlier. Analysts said the upward trend was likely to continue in the coming months despite the latest recall.
But one problem that is not going away is the strength of yen, still relatively high against the dollar. A strong yen means a dip in the value of repatriated profits for big exporters such as Ferrari, as well as putting their products at a competitive pricing disadvantage in export markets.
QUESTIONS:
1. What is the role of Operations on the reputation of Ferrari in the article?
2. What areas in Operations should Ferrari focus on to regain its global competitiveness?
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