The Case Study – Firestone Recall Essay Example
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Business Ethics is the key to understanding when the personal rights of a person are bypassing the collective societal rights. While a lot of product standards are governed by law, business ethics goes beyond what the law governs. Business ethics is establishing a framework, where a positive work culture and environment is developed by incorporating all stakeholders – management, employees, suppliers, consumers. In developing and establishing the business ethics, Code of Ethics and Total Responsibility Management play an extremely important role.
Total Responsibility Management – Similar to Total Quality Management (TQM), Total Responsibility Management (TRM) is the inclusion of all the responsibilities that the organization has towards its stakeholders. The term was coined by Charles Bodwell and Sandra Waddock (2007) and was described as the clear terms which would define the acceptable conduct of the company and its employees towards ensuring the fulfillment of the needs and demands of its stakeholders.
In the case study presented for examination, it is evident that both the companies, Firestone and Ford, did not adhere to their ethical standards, thereby endangering their stakeholders. From the very beginning, Firestone was extremely slow in responding to the crisis and even shirked from taking the responsibility at all. Instead, they decided to blame the consumers themselves and Ford for all the accidents and under-performance of the firestone tyres. This only confused and aggravated the stakeholders involved, starting from the consumers, suppliers, employees and the partners. Firestone’s CEO, Masatoshi Ono did not even once make an appearance to apologize to the public. Here, however, cultural differences had a role to play. In Japan, the CEOs do not come out in public; rather it is the lower-level executives who interact with the public. However, this did not work with the American consumer and further tarnished the problematic image of Firestone.
In the case-study, it is increasingly noticed how the companies involved, specifically Firestone, flouted their ethical standards all throughout the ordeal. The problems began with their Decatur plant. From the very beginning, Firestone compromised on the quality of the machinery, the rubber, even failing to maintain the right structural temperatures required to preserve the quality of the raw materials required in making the tyres. To make matters worse, when the engineers and staff in charge of making these tyres rebelled against the working conditions, the company went ahead and hired a new set of labor, which was not skilled enough to make the kind of product required. Thus, the tyres manufactured would not have proper adhesiveness and would face tread-separations when under pressure. These tyres were manufactured especially for Ford’s Explorer SUV. Most of the accidents that happened, therefore, involved Ford’s Explorer and Firestone’s tyres and happened because of tread-separation.
Ford and Firestone were facing similar problems overseas and hence were already in process of recalling tyres from overseas. However, they decided to keep it a secret from the American consumers (Andrews, 2009). All these instances greatly impoverished Firestone’s image and the company could never recover from it. It was only later when the crisis became over-blown that Ford and Firestone decided to recall close to 14.5 billion tyres (highest recall in the history of America).
Despite Firestone delving into marketing strategies to get their negative image right, it came as too little too late. Even in their revamped marketing campaign, “Making it Right”, never once did the company apologize for the accidents. It focused on telling the consumers how to maintain the firestone tyres and their pressures so as to avoid tread-related problems. However, the consumers were not ready to buy this approach and the company lost their market extensively. Their supporting partners such as Ford (amounting to 38 percent of the total market share of tyres) and Honda, selling partners like Sears all terminated their relationship with Firestone in the wake of the crisis.
Business Ethics and FirestoneThe fact is that if Firestone had employed a certain ethical system to its functions, the crisis would have never emerged in the first place. As Cecily Raiborn and Dinah Pyne (1990) explain, the Code of Ethics should be based on four major principles – integrity, justice, competence and utility. Had Firestone adhered to these principles, the company could have thwarted the crisis at their Decatur plant and hence save a number of lives lost due to their carelessness. Firestone alone, however, cannot be said to take the blame of the entire crisis. Ford too is equally a partner in crime. Ford too violated the stipulations of a SUV as set out by their engineers just so they could save on the machine costing (Greenwald, 2001). Both the companies lacked in their ethical formulations and hence suffered the consequences.
Application of relevant research, theories, and models: A key theory that could have helped Firestone is that of Total Responsibility Management (TRM). Within this, there is a process defined which inspires the formation of the ethical ideology of the company. This process includes four steps:
Vision setting and leadership commitment
Stakeholder engagement processes
Had the companies formulated in accordance to the above explained pointers, the crisis could have been avoided. By setting their vision and assuring leadership commitment to the ethical vision, the company would be better equipped to resolve ethical dilemmas. Secondly, the stakeholders need to be aware of the company’s ethical vision and the values the company would strive for. Thirdly, involving the employees and the other stakeholders in the task of building the values, restructuring them over-time would ensure their loyalty towards maintaining these values. Lastly, by conveying to the stakeholders that unless the job is done in accordance to these set of values, the relationship could not continue – the company would ensure that all standards are well maintained.
Andrews, A. (2009). The Ford-Firestone Probe: An Ethical Stand. Retrieved from http://www.slideshare.net/WhisperAndy/the-ford-firestone-probe
Bodwell, C. & Waddock, S. (2007). Total Responsibility Management. UK: Greenleaf Publishing.
Greenwald, J. (2001, May 29). Inside the Ford/Firestone Fight. Time. Retrieved from http://content.time.com/time/business/article/0,8599,128198,00.html
Raiborn, C. & Pyne, D. (1990). Corporate codes of Conduct: A Collective Conscience and Continuum. Journal of Business Ethics, 9, 879-889.
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