Module 11: Purpose of the Corporation: Stakeholder Focus -- Customers and Dangerous Products Ann: So, this is the standard remote for the TF-300. Mark: So what’s the problem? Ann: It's the reverse button. All of our models except the TF-300 have a button right on top of
the fan itself that allows for the fan to be set to spin either clockwise or
counterclockwise. Some people like to set the fan to blow air downward in the
summertime to make it feel cooler in a room, and then reverse the fan's motion in the
winter to draw air upwards and make it feel warmer. It’s on the remote for the TF-300
because our design team didn't want our customers with high ceilings to have to drag a
ladder out twice a year in order to use the feature. Mark: Uh, huh. Ann: high The problem is that with the old design, the fan had to be stopped for an owner to
reach up and flip the switch. But the remote allows for the reverse feature to be
engaged while the fan is still spinning. If the blades are turning, especially on a
setting, and the reverse button is hit, it causes problems. Mark: What kind of problems? Ann: Well at first, they just make a clicking sound, but after many times, the fans become very
unstable. Mark: So how many times would you have to do it before you got a problem
beyond the noises? Ann: Fifty, maybe a hundred or more. Mark: It’s no problem. Nobody's going to do it that many times. Ann: What if somebody's kid gets a hold of it and they want to make a game of it? Mark: All right. What if some kid decides to make a game of it? Then what? Ann: Well, if a kid decides to make a game of it…Look, what we did was we tested fifty of
these TF-300s, okay? Forty-five of them just ceased to operate. Three of them,
they emitted sparks but they didn’t start a fire. One of them started a fire. And
one threw out a half-inch piece of metal from the inner casing with considerable
velocity. well,
the last
Mark: Wow. Define “considerable velocity.” Ann:
Mark: Well, not lethal velocity. But it was certainly fast enough to put an eye out. I mean, I
was there. I saw it. It hit the wall really hard.
And the one that started a fire, it was a big fire? Ann: Not at the time that we extinguished it, but it would have spread, yes. Mark: This is terrible timing. You know we’re gunning hard for the Rooms-to-Go contract. It
could double our business. Ann: I know. Mark: Ernie, are you out on the floor? Ernie: Right here, boss. Mark: Could you come in here please? What do you think we should do with this? Ann: Well the first thing has already been done. I talked with our designers to redesign our
future models to automatically kill the power anytime the reverse button is engaged.
Mark: Okay, so that’s good. Ann:
mechanical As far as the TF-300s, they're just, they’re not safe. We probably ought to recall them,
but because of the way they're put together, there’s no cheap fix for the
problem. We probably should just replace it. Mark: Probably. Mark: Ernie, are you up to speed on this TF-300 thing? Ernie: Yes, I am. Hey, Ann. Mark: And what's your take? Ernie:
government. Well, we've sold about 50,000 TF-300s to date. We’ve had no reports of any
malfunctions, or fires from any of the customers, retailers, or from the
Zero. Mark: Yeah. And how many jobs can we add if we get this Rooms-to-Go contract? Ernie: Seventy-five. Give-or-take. Mark: When do we expect that contract to go through? Ernie: Six weeks. Maybe less. Mark: Have you talked to Lawyer Dave about this thing? Ernie: Lawyer Dave estimates legal costs at about $20,000 to $200,000 per incident if
somebody gets hurt by one of the TF-300s. And no upper limit on a worst-case scenario
if someone gets killed in a fire or is disabled by flying debris. He told me, manufacturers
usually get hammered in those kinds of cases no matter what happens. Mark: So, we’re talking maybe a million, million-and-a-half for a recall? Ernie: That's about right. Mark: Just talking dollars and cents, I mean, it would take a lot of lawsuits to add up to the cost
of one recall. Ann: Unless somebody is killed in a fire, then all bets are off. Mark: The timing on this is just terrible. You know, this Rooms-to-Go contract could set us up
for years. Ernie: I know. Mark: What does your gut tell you?

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