Firestone Tire Recall - Busniness Ethics Case

Case Analysis

Company History

Business profile: Tyre and rubber manufacturing

Founded by Harvey Samul in 1900 (116 years ago)

Pursued a joint venture with Ford Motor 6 years later

Company was sold to Japanese Bridgestone 28 years ago (1988)

Business profile: Automobile industry

It owns stakes in Mazda of Japan and Aston Martin of UK

Founded by Henry Ford and incorporated 1903 (113 years ago)

Company business model

http://www.alexandercowan.com/business-model-canvas-templates/#Step_4_of_10_Customer_Relationships

Q1] To what extent do companies need to make a proactive effort to collect and analyse data concerning possible safety issues?

- Receive stakeholder feedback and implement improvement measures (e.g. customers)

- Research and development

- Creativity and innovation

- Instil risk mitigation and management processes

- The company should analyse starting from the raw materials they use in making the tires

- Analyse data on product errors that occur

Q2] The Ethical dilemma - What mistakes did Ford, Firestone and the NHTSA each make in early attempts to handle the crisis?

The Dilemma

There were several cases reported about Firestone’s tire tread failure. Customers complained about the recurrent tread failures to NHTSA.

Radial tires were introduced to the U.S. market by rivals Goodrich and Michelin in the late 1960s, and Firestone lacked their own product line. The first radial tire developed and produced by Firestone was the ill-fated Firestone 500 Radial. Manufacturing of the new tire was performed on equipment designed to manufacture bias-ply tires.

The Firestone 500 steel-belted radials began to show signs of separation of the tread at high speeds. While the cause was never proved, it is believed that the failure of bonding cements, used by Firestone to hold the tread to the tire carcass, may have allowed water to penetrate the tire which in turn may have caused the internal steel wire to corrode.

Firestone had known the risks associated with the tires and ignored the information and even tried to hide the problems.

NHTSA’s response rate was slow. NHTSA placed the case under “preliminary investigation” and approached the parties (Firestone & Ford) to deliberate over the claims.

A least of 1400 complaints, 88 death and 250 injury cases were reported as a result.

Who was to Blame?

Firestone was blamed for the dilapidated status of the facility that promoted the production of poor quality tires. Firestone did not carry out thorough quality assurance and control checks and testing of the tires before commissioning the product to the market.

Ford was blamed for the poor design of the Ford Explorer. Ford was ignorant to the claims and complaints raised by the customers regarding the product.

NHTSA became complacent and ignored the frequent claims and complaints that were raised by customers and from the research administrator for State Farm Insurance regarding the product.

Crisis Management Procedure

6.5 million tires were recalled from the market with a follow up letter to customers about the recalling procedure.

Both companies channelled the broadcast about this issue through the media in form of advertisements and public announcements.

The Bridgestone/Firestone CEO stepped down and the former Executive VP held office. The company also successfully negotiated with union officials to avoid a potentially disruptive strike by the United Steelworkers of America that would have affected production at nine of eleven U.S. plants.

Customers affected by the recall could take their tires to Firestone retailers, Ford dealerships, or other tire retail outlets and expect a similar Firestone tire or equivalent