1. P RODUCT R ECALL What: Pottery Barn Kids Drop-Side Cribs* Recall Date: July 14, 2010 Why: The cribs' drop-sides can detach when hardware breaks, creating a space into which a young child can become entrapped, which can lead to suffocation. A child can also fall out of the crib. Drop side incidents also occur due to incorrect assembly and with age-related wear and tear. Incidents: CPSC and Pottery Barn Kids have received 36 reports of drop sides that have malfunctioned or detached, resulting in seven minor injuries when children fell out of the cribs or got their legs caught between the mattress and the drop side. One child became entrapped at the head between the drop side and crib mattress but was freed without injury. Number of Units Sold: 82,000 ($300 - $600) [1]. When Sold: January 1999 to March 2010 *Source: US Consumer Product Safety Commission (CSPC) www.cpsc.gov/cpscpub/prerel/prhtml09/09016.html 1

2. M ANAGEMENT ISSUES Recognition of Problem: The cribs that were affected by the recall have been manufactured since January 1999. More than 7 million drop-side cribs from multiple manufacturers have been recalled since 2005. The CSPC has received reports of 153 deaths primarily due to suffocation and strangulation and hundreds of other incidents [3]. Other manufacturers had recalled similar cribs in June 2010 [3]. Pottery Barns has developed a repair kit for the effected cribs which is available to consumers free of charge [2]. Pottery Barn Kids is a subsidiary of Williams-Sonoma Inc. Speed of Response: The response has been slow industry wide. The problems have been occurring over 10 years and because of a recent government investigation many drop-side crib manufacturers have began recalling the defective crib. Responsibility: No article could be found that showed Pottery Barn Kids express any remorse for injuries their product has caused. In fact, the blame seems to shifted to the consumer for not properly assembling and maintaining the cribs [4]. However, the company did provide a method to correct the problem. 2

3. I MPACT O F R ECALL Legal Consequences: As a result of a government investigation on drop-side cribs, the CSPC has banned the use and sale of the drop-side cribs. The CSPC has also introduced more stringent testing for future cribs that will be manufactured [5]. Pottery Barn Kids did not actually take back any cribs and got around the new ban by providing customers with a repair kit that will modify the crib from a drop-side to a fixed-side crib. No lawsuits could be found against Pottery Barn Kids due to the crib defects. Reputation: The incident seems have little or no affect on the reputation of Pottery Barn Kids The parent company, Williams-Sonoma is a well known home design retailer with many subsidiaries. The companies stock (WSM) has declined since July 14, 2010, the day the recall has been announced. This recall was recently publicized and the effect of the recall may not have fully manifested. Sales: Every drop-side crib manufacturer is affected by the new government regulations. The sale of cribs have not been affected, just the style of crib. Williams-Sonoma’s stock price is not indicative of their sales, just stockholders opinion of how the new regulations will affect the company in future along with other factors. Pottery Barns Kids was able to avoid refunds by providing a cheap fix to the consumers. 3

4. R EFERENCES [1] Saiontz, Kirk. (2010). Pottery Barn Crib Recall Issued as CPSC Proposes New Crib Rules. Retrieved from http://www.aboutlawsuits.com/pottery-barn-crib- recall-new-cpsc-regulations-11453. [2] Mays, D. (2010). Pottery Barn Kids recalls drop-side cribs. Retrieved from http://blogs.consumerreports.org/safety/2010/07/pottery-barn-kids-recalls- dropside-cribs.html. [3] Plungis, J. (2010). US to Ban Drop-Side Cribs in Infant Safety Overhaul. Bloomberg Businessweek. Retrieved from http://www.businessweek.com/news/2010-07-14/u-s-to-ban-drop-side-cribs-in- infant-safety-overhaul.html. [4] Juvenile Product Manufacturers Association. (2009). JPMA Responds to Recent Safety Concerns of “Drop Side” Cribs. Mt. Laurel, NJ: Linda Woody. Retrieved from http://www.jpma.org/sites/default/files/JPMA%20Statement%20on%20Drop%20Si de%20Cribs.pdf. [5] US Consumer Product Safety Commission. (2010). CSPC Proposes New Rules for Full-Size and Non-Full-Size Cribs. (CSPC Release No. 10-301). Washington, DC: Office of Information and Public Affairs. 4