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FORD and Firestone Business Ethics Case

OVERVIEW
Introduction &Case Study Background by Issue at Hand I Issue at Hand II Case Analysis I Case Analysis II Conclusion

Background

Amruta Pawar,

27

CASE STUDY BACKGROUND


Firestone Tire and Rubber Company and the Ford Motor Company
Harvey Firestone and Henry Ford
The Millionaire Club

Partnership formed in 1906

The Tire Industry


Plagued by recalls to include
Tread separation Improper inflation and installation Bead flaw Exposed belt wire

CASE STUDY BACKGROUND


Attention on Firestone
Turbulent times Tread separation leads to death In 1978, largest tire recall in history

In 2001, the Partnership Ends


http://www.youtube.com/watch?v=wdxiglfVpKQ OR http://www.youtube.com/watch?v=BhFTw5QvyvY

The Case Study


Firestone tires Ford Explorer

VS

Issues At Hand

Abhishek Bhagat,

06

ISSUE AT HAND
Whos at Fault ?
Firestone Ford

With Their faulty tires

With Their unstable car

Civil Lawsuits
Who pays the damages ?

What is the appropriate punishment ?

ISSUE AT HAND
REGULATIONS AND LAWS INVOLVED

Tort Law
Intentional

Negligent

Negligent Torts
Duty of Care Unreasonable Behavior Breach of Duty

Further Issues

Divya Doshi,

90

Does the company owe a duty to its customers


Supply quality automobiles that are safe Manufacturing processes meet standards

Did the company violate the duty


Failed to verify their suppliers products (i.e. Firestone) are safe

Did the violation cause harm


Blowouts caused around 250 reported deaths

Was the harm foreseeable


Industry records verify that tread belt separations

ISSUE AT HAND

Does the company owe a duty to its customers


Supply a quality tire that is safe Manufacturing processes meet standards Duty to bring up issues that are in violation

Did the company violate the duty


Covered up tire quality issues Decatur Plant Covered up tire tests

Did the violation cause harm


Rollovers played a role in the reported deaths

Was the harm foreseeable


Ford had data that indicated, little to no margin for safety in top-speed driving at 26 psi.

ISSUE AT HAND

Case Analysis

Priyank Indulkar,

13

CASE ANALYSIS
To what extent do companies need to make a proactive effort to evaluate safety concerns ? What mistakes did Ford, Firestone, and NHTSA each make early on in the crises ? What possible ethical implications when accepting responsibility versus blaming others ? Suggest measures that Firestone could take to improve tire quality in the future ?

CASE ANALYSIS
Do what extent do companies need to make a proactive effort to evaluate safety concerns?

In 1972, the US enacted the Consumer Product Safety Act


Power to issue recalls and develop safety laws

Companies should not only meet the standards


Consulting companies that specialize in quality assurance

Every company owes a duty

CASE ANALYSIS
What mistakes did Ford, Firestone, and NHTSA each make early on in the crises?

All three failed to adhere to warning signs


Issues with tires, tire pressure, and customer complaints

Firestone has the majority of the responsibility


Faulty manufacturing plants Analysis that identified problems Employees who brought up issues

Ethical Implications & Suggested Measures


Ritika Murarka,

24

CASE ANALYSIS
What possible ethical implications when accepting responsibility versus blaming others?

Unethical decisions can cause negative impacts


Company loses creditability and maybe their customer base Public opinion Legal issues

Ethical decisions will have less of an impact


Public opinion Strong customer base Attractive company to those looking for work

CASE ANALYSIS
Suggest measures that Firestone could take to improve tire quality in the future Three step approach 1) Reinvest in manufacturing plants
Retrofit their plants with state of the art equipment

2) Product testing
Responsible to perform extensive testing

3) Quality assurance department


Coordinate with the product testing department

Culture change
Educate employees the importance of quality, regulations, and empower them to point out problems

In Conclusion

Nikhil Kuchroo,

19

Ethical Responsibility

Legal Responsibility

Economic Responsibility

Ethical Responsibility

Legal Responsibility

Economic Responsibility

Legal Responsibility

Economic Responsibility

The Damage
Century-long relationship, between Ford and Firestone conceived in 1908, ended in 2001 More than 270 traffic deaths & more than 700 injuries in the US alone over Ford-Explorer Firestone-Tire issue Firestone tire recall alone cost ~$350 million Adding fines and compensation charges the amount adds up to ~$1 billion

Legal Responsibility

Economic Responsibility

Bottom Line
Business ethics comes down to one thing Distinguishing between right and wrong and opting to do what is right

Ford faces hundreds of lawsuits seeking damages totaling more than $590 million Tire failure report from the National Highway Traffic Safety Administration (NHTSA) Investigation in Florida, which lead the inquiry on behalf of all 50 states

Legal Responsibility

Time Lines Profits

Customer Value

Wealth (Artha) becomes evil only when it is misused on account of lack of wisdom