Professional Documents
Culture Documents
Submitted by:
Group 5
Eliel Daang
Maui Rillon
Saddy Rillorta
Dianne Seril
Pete Tan
Ren Tangco
Submitted on:
October 9, 2008
IV. Consequences
Long-Term Versus Short-Term Consequences.
1) As a short-term effect, the recall definitely affected the stocks and sales performance of Ford
and Firestone. In the long-term, this would cause the loss of confidence of the consumers and
potential investors. Ford and Firestone would find this loss of consumer confidence more
difficult to handle because sales projections and production forecasts (strategic planning) all
depend on the basic assumption that their products will be bought. But if they lose the
confidence of their potential consumers, how would they be able to make such assumption
and how would they go about with their planning?
2) Both Ford and Firestone are liable and they should be strict in implementing designs that
would ensure finished products would be based on the highest standards of quality. This
would avoid finger-pointing when/if problems arise. Initially this would entail additional
development/design costs and will definitely affect product launch timelines. However, in the
long-run, this would improve product performance thus maintaining and enhancing consumer
confidence, which would translate to greater market share.
3) Ford and Firestones decision to keep the recalls and tire replacements within the confines of
the company resulted to more accidents, insurance claims and lawsuits. With this, the two
companies incurred greater losses in terms of settlement costs.
Symbolic Consequences.
The main symbolic consequence here points towards consumer confidence. If neither
Firestone nor Ford do something to gain back the confidence in their products, they might end up
closing their companies down or being taken over by another company (with total brand, product,
design, and management revamp).
Consequences of Secrecy.
Ford was clearly aware of the problems with their design and Firestone already experienced
problems with their tires, as well. Despite this knowledge, the two companies still tried to hide the
issue from the public in order to protect their profits and to save on product recall costs. This
secrecy caused widespread accidents, even several deaths, which eventually caused the companies to
incur more costs in lawsuit settlements, insurance claims, and product replacements.
V. Obligations
1) Ford
Being the producer of the Explorer, Ford should have the primary responsibility of making
sure that their product passes the highest safety standards without any loopholes in the design. Under
the social costs view which was what Ford did, Ford still paid all the costs of injuries that were
sustained because of any of the defects of the product even though Ford believed that it has already
exercised all due care in the design and manufacture of the product. True to the theory, Ford under the
strict liability principle, paid for the cost of the injuries sustained by its consumers. If Ford followed
the theory of due care, it should have tested its product under extreme conditions. The main problem
was that the tires were not able to cope with the hot climate conditions. Ford should have instructed
Firestone to make tires which were tested under extreme heat to know how much heat the tire can
tolerate before it deflates or before it separates from its tread. On this regard, it was the duty of Ford
to make sure that the tires of Firestone passed the highest quality standards so that they can warn their
consumers, beforehand, of the risks involving their product.
2) Firestone
Being the manufacturer of the tires under a contract with Ford, Firestone was remiss in its
obligation to make sure that the tires were compatible with the SUV being produced by Ford. Just like
Ford, under the social costs, Firestone spent millions of dollars in recalling and paying legal
settlements because of the injuries sustained by the consumers of the Explorer. If we look from the
angle of Firestone being the seller and Ford being the consumer of the tires, under the contract view,
Firestone should have complied with the terms of the sales contract, and it should have disclosed the
nature of the product particularly in conditions wherein it would not be advisable to use ATX, ATX II
and Wilderness AT tires.
VI. Character Integrity
Both Ford and Firestone have a fault on this issue. Ford, knowing that the designed SUV is
un-safe still pushed with the manufacturing of the cars just meet their launch timelines and maintain
their profit margin.
On the other hand, Firestones manufactured unstable tires because of the recent union strike
which lowered its product quality.
Both companies had passed experiences on product quality problems. Ford on its Bronco II
design problem which had a tendency to rollover at high speeds and Firestone on its Firestone 500
radial tires which separated from the tread causing several vehicle accidents. Both companies also had
experienced product recalls and settlement issues but they still did not learn from these passed issues.
VII. Potential Actions
1) Initially, Ford should have heeded to the proposal of its engineers to re-design the Explorer in
order to make the vehicle more stable.
2) The two companies should have immediately communicated the rollover issue to the
consumers and NHTSA to prevent future accidents from happening.
3) Upon hearing of the complaints of rollovers and tread separations, Ford and Firestone should
have conducted investigations in order to find the true cause of these problems. If this was
done, Firestone would have found out that the Decatur Plant was the main cause of their tire
quality issue. Thus, Firestone should have closed the plant and transferred the production of
ATX tires to another plant.
4) Firestone should also re-design their ATX and Wilderness tires in such a way that these would
last in extreme climate conditions.
5) Upon implementing the recalls, Ford and Firestone should have put a Contingency Plan in
place in order to address all the needs of its consumers (i.e. enough inventory of replacement
tires, customer service hotlines where consumers can inquire)
6) The most important action that the two companies should have taken was Full Disclosure of
the issue their stakeholders and the public. By acknowledging the existence of the problem,
Ford may save its reputation as long as measures are taken to halt the spread of the design
problem. Awareness among the customers will pave the way for vigilance which in return
may help prevent anymore incidents.
VII. Gut
Ford and Firestone suffered severe consequences for violating the consumers' rights. The
consumers have the right to safety, the right to be informed, the right to choose, the right to be heard,
and the right to privacy. These two companies violated two of these rights. They violated the
consumer's right to safety by selling cars and tires that were not safe and poorly designed. They also
violated the consumers' right to be informed by hiding the issue from the public.
It seemed then that Ford and Firestone failed to meet its ethical obligations. That is, they
didn't report safety-related defect information to government agencies and they also concealed
important information related to vehicle safety from the public. As a result, the consumers suffered
the consequences of their unethical conduct. Many people died because of the defect in these tires. In
fact, these accidents would have not occurred if both companies have solved the problem
immediately.
The right to be informed is one of the most basic of human rights. Ford and Firestone,
violated this right when it decided to keep the situation under wraps. By keeping its customers in the
dark, it deprived them of the right to choose whether to continue to patronize its product or not.
Safety is a paramount consideration in buying a car. And this cardinal rule was violated by
Ford and Firestone when it continued to market the vehicle despite the defects already discovered. It
duped the customers into believing that their lives and the lives of those that matters to them are safe
whenever they buy a Ford car. It is a great departure from the image of Ford as a vehicle for every
American family.
By keeping silent, Ford and Firestone grossly violated its ethical obligation to be transparent
for anything that may cause harm to the greater number who patronizes their product. In the end, they
see the issue as merely a cost-benefit situation and reduced everything to what can be gained or saved
from the situation at hand. Such blatant disregard to the preservation of the human life in favor of
profit poses as big question mark on the ethical values of both companies.
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