SENE ELL Co. recently recalled 6 million cars due to faulty third-party ignition switches that were linked to 13 deaths. For more than a decade, the company decided against a very inexpensive switch upgrade and continued to use the vendor’s ignition switches even though they did not meet the company’s performance specifications. A growing number of lawsuits ensued and company’s stock sank due to heavy media attention, congressional inquiries, and a Department of Justice criminal investigation. The most significant risk management lesson to date from the company recall is: -choices: An organization that ignores or mistreats its external stakeholders does so at its own peril. None of the choices Reliance upon third-party vendors results in unacceptable levels of residual risk. Cost-benefit analysis is an ineffective decision-making technique, as demonstrated in rejecting a 57-cent fix for the ignition switches. The Company failed to develop an ethical organizational culture that guided its strategic planning and daily operations.
SENE ELL Co. recently recalled 6 million cars due to faulty third-party ignition switches that were linked to 13 deaths. For more than a decade, the company decided against a very inexpensive switch upgrade and continued to use the vendor’s ignition switches even though they did not meet the company’s performance specifications. A growing number of lawsuits ensued and company’s stock sank due to heavy media attention, congressional inquiries, and a Department of Justice criminal investigation. The most significant risk management lesson to date from the company recall is: -choices: An organization that ignores or mistreats its external stakeholders does so at its own peril. None of the choices Reliance upon third-party vendors results in unacceptable levels of residual risk. Cost-benefit analysis is an ineffective decision-making technique, as demonstrated in rejecting a 57-cent fix for the ignition switches. The Company failed to develop an ethical organizational culture that guided its strategic planning and daily operations.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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SENE ELL Co. recently recalled 6 million cars due to faulty third-party ignition switches that were linked to 13 deaths. For more than a decade, the company decided against a very inexpensive switch upgrade and continued to use the vendor’s ignition switches even though they did not meet the company’s performance specifications. A growing number of lawsuits ensued and company’s stock sank due to heavy media attention, congressional inquiries, and a Department of Justice criminal investigation. The most significant risk management lesson to date from the company recall is:
-choices:
An organization that ignores or mistreats its external stakeholders does so at its own peril.
None of the choices
Reliance upon third-party vendors results in unacceptable levels of residual risk.
Cost-benefit analysis is an ineffective decision-making technique, as demonstrated in rejecting a 57-cent fix for the ignition switches.
The Company failed to develop an ethical organizational culture that guided its strategic planning and daily operations.
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