These are frequently the largest costs of all. Companies have gone into bankruptcy as a result of failures that have reached the customer. Even when science is on your side as with Dow Corning and the breast implant issue, the fact that the implant
failed (leaked) was enough to force the company into bankruptcy.
More recently the problems Firestone is facing with tire failures, show what can happen with products fail at the customer. Would you include the decrease in sales of other Firestone tires as part of the failure cost?
We havenít the data, but strongly suspect that there will be residual fall out and people will not buy other types of Firestone tires because of these recent experiences, recalls and non-favorable publicity.
A good example of an external failure was when Ford Motors missed the market with the Ford Edsel. This car met all of the physical requirements of its time, yet it failed to meet the changing taste of the consuming public.
How do you measure external failures for the project you are considering?
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