Hong Kong must have the highest concentration of Maclaren baby strollers in the world. Everywhere I go, Maclaren easily outnumbers the competition 4 to 1.
Should a defect be discovered in the models sold in Hong Kong someday, I wonder if the company would initate a product recall based on the cost-benefit analysis depicted in Fight Club?
If a new car built by my company leaves Chicago traveling west at 60 miles per hour, and the rear differential locks up, and the car crashes and burns with everyone trapped inside, does my company initiate a recall? You take the population of vehicles in the field (A) and multiply it by the probable rate of failure (B), then multiply the result by the average cost of an out-of-court settlement (C).
A times B times C equals X. This is what it will cost if we don’t initiate a recall.
If X is greater than the cost of a recall, we recall the cars and no one gets hurt.
If X is less than the cost of a recall, then we don’t recall.
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