Defects Can Be Costly

DEFECTS CAN BE COSTLY

American Intercontinental University

Tony K. Edwards

4/26/2012

Product defects do occur. How companies deal with these after the discovery is what determines how ethical a company is. Doing the right thing upon discovery can cost much less than ignoring the problem. An example of a company doing the wrong thing and recommendations follow.

Scenario: An upcoming meeting with your new company’s chief executive officer (CEO) and other executives is a great opportunity for you to share your knowledge of potentially defective products being sold to customers. You are not sure if others are aware of this issue, and the defective products could possibly lead to serious injuries. To complicate matters, you are uncertain about your organization’s ethical guidelines because none have been communicated.

Question 1: How would you effectively present the issue of potentially defective products to the CEO, directors, and managers?

In this meeting, even though I am not familiar with how ethical this company is, I would have to be truthful and let all parties involved know that the product is potentially unsafe and could cause serious injury. If I failed to disclose the information on this defect to the CEO, directors and managers, I would be acting in an unethical manner. Even if the other executives failed to take action on the defect and issue a recall they would not be able to truthfully say they had no knowledge of the defect. I would be comfortable presenting this knowledge to the executives because I am aware of the whistleblower provision on the Consumer Product Safety Act of 2008. This law protects employees from retaliation from employers when reporting defective or hazardous products (Free Advice Staff, n.d.). So even if the company proves to be unethical, I could still act within my rights to urge the company to make the right decision without fear of losing my job. I would inform these executives that failing to disclose information on this defect could end up costing the company much more money in lawsuits and settlements than what it would cost to stop production on the product until the defect has been remedied and recall products already sold. These previously purchased products should either be repaired or the product should be replaced.

I would remind them of the Ford Pinto disaster of the 1970’s. Ford executive learned through an internal memo in 1973 that the Ford Pinto had design issues with the vehicle’s gas tank. The Pinto was liable to explode in low speed rear-end collisions. Ford estimated that repairing the problem would cost $11.00 per vehicle. In a benefits and costs analysis

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