What approach should a company take when experiencing high external failure costs?

When a company is facing high external failure costs, enhancing quality checks and customer service is an effective approach because it directly addresses the root cause of the problems leading to those costs. High external failure costs typically arise from defects found by customers after the product has been delivered, which can include returns, repairs, warranty claims, and damage to the company's reputation.

By improving quality checks, the company can identify and rectify defects before products reach the market, significantly reducing the likelihood of customer complaints and returns. Additionally, by investing in customer service, the company can better address any issues that do arise, which not only helps resolve problems more efficiently but also builds customer trust and loyalty. Engaging with customers after a purchase and providing exemplary service can mitigate the negative impacts of external failures, leading to a decrease in overall associated costs.

Other options like ignoring customer feedback or increasing production volume would likely exacerbate the situation, as ignoring feedback can lead to ongoing issues with products and customer dissatisfaction, while increasing production without addressing quality could lead to even more defects and failures in the market. Limiting warranty periods is a short-term fix that does not resolve underlying quality issues, and it can further alienate customers who may perceive the company as not standing behind its products. Therefore, enhancing