Response to case study scenario 1

I will not ignore the issue in hand. Mainly supported by my ethical beliefs, I feel that ignoring the problem will be an overall greater cost than to leave the order as it is.

The main detail we are dealing with is the risk of a potential fire hazard as reported in the test results. Fire hazards would prove to be a lot more than just a faulty piece of equipment to the customer. It would be a risk of their personal safety, and this consideration should be taken a very high priority of the company. Our company should not be responsible for injury to the customer; it is damaging to our reputation and will be very costly in legal fees to cover the injury if a claim was put forward. Future customers will not want to buy from a company who has had previous serious injury claims. I will not let this disregard for safety affect a customer's life.

I understand that it would be more efficient for the company to not recall the order if such a small percentage (1.5%) of all products released were faulty. If the fire risk wasn't a relative factor here, I would be more reluctant to leave the order as it stands. It would be cheaper for the company to resend a few faulty items rather than recall the large order that has already gone out. To replace the items would be costly initially, but I feel that over time this decision will benefit the company. This is evident in the case of Mitsubishi in 2004; A young boy died in a car incident where a seat belt defect caused the belt to break when the car rolled over. Liability of the incident was put on the manufacturer of the car, which was mitsubishi. The verdict of the case was $11 Million. If the seat belt had been tested correctly and recalled/not sold, then the boy may still have his life and the company would not have been liable for such a large payment.

There is also a risk taken in practically guessing whether the order will remain the same as the tests. There is a chance that less than 1.5% of the overall batch would be faulty, although there could also be a larger percentage, which will cause a larger outcry from our consumers, and lower our company's chance of another order. Even though it is a low risk, this batch is considered to be a Class B Hazard in the CPSC (Consumer Product Safety Commission). This is where there is a relatively low risk of a serious injury/damage occurring.

Overall, the risks to leave the order as it stands are far too high to stick to. The products have a low chance of being faulty, although if even one incident goes reported, the company can be heavily affected, both in reputation and cost. The important client is more likely to understand the situation and thank the company if the batch is recalled and replaced. They will be more likely to stick with our company in the future, so therefore profits over time will be increased. Injury, death and damage to property cost billions ($700 billion in America annually). These incidents can easily be stopped by eliminating the risks taken. Therefore I will do all I can to prevent the risk to our consumer.

I believe that the company should therefore recall the product as soon as possible. The company needs to report the matter immediately to the CPSC, even if there is only a slight chance of incidents occurring. On a visit to the site at; www.cpsc.gov , details about the product and possible failures will need to be mentioned. The CPSC will investigate the batch to see if a recall is necessary, if the company is not sure whether to recall.

References:

http://www.cooperlighting.com/home/quickLinks/ProductSafetyNotice.pdf
- Fact about injury costs in America/Recall notice from a safety company.

http://www.cpsc.gov/businfo/8002.html
- Recall act

http://injurylaw.labovick.com/2008/02/articles/product-liability/mitsubishi-product-liability-case-receives-11-million-verdict/
Mitsubishi product liability case