Ford/Firestone Rollover Deaths Essay Example

align="justify">And it kept selling this cash cow, making a profit on each vehicle of about $8,000, with no notice to the government or to owners. Firestone joined this conspiracy of silence with one of its largest customers. Was that criminal behavior? Many on Capitol Hill thought so, resulting in a Senate bill that specified criminal penalties for knowingly marketing a vehicle or equipment that caused death or injury. The civil penalty was also increased from $1 million to $15 million. New tire standards and dynamic rollover information were also required.

The other key provision was a mandate for DOT to develop a comprehensive early warning system on motor vehicle defects based on information the companies will have to regular submit to the agency by make/model/alleged defect. The bill was enacted on November 1, 2000, and called the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act. Breach of warranty is defined as determination that a statement as to title of property, including real property or any goods, is proved to be untrue, whether intended as a falsehood or not.

It can also apply to an assurance of quality of a product or item sold. The part making the warranty is liable to the party to whom the guarantee was made. In modern law the warranty need not be expressed in so many words, but may be implied from the circumstances or surrounding language at the time of sale. Ford committed a breach of warranty because again, they were aware of the suspension problems and underinflated the tires despite warnings by Firestone. Ethical analysis: Summarize the key ethical issues in the situation.

Apply at least three of

the ethical perspectives (theories of ethical thought presented in the course) and for each perspective, give your opinion as to what aspects of the situation (actions by any stakeholder) demonstrate ethically sound behavior and which illustrate unethical behavior. The cornerstone of an ethical corporate culture is an appropriate code of ethics or conduct. Concern for stakeholders like employees, customers, and vendors can be expressed in a values-based statement of management's commitment.

Intangible values like trust are critically important in today's global and technology-oriented environment Philosophers and others disagree about the purpose of a business ethic in society. Some suggest that the principal purpose of a business is to maximize returns to its owners, or in the case of a publicly traded concern, its shareholders. Thus, under this view, only those activities that increase profitability and shareholder value should be encouraged, because any others function as a tax on profits.

Some believe that the only companies that are likely to survive in a competitive marketplace are those that place profit maximization above everything else. However, some point out that self-interest would still require a business to obey the law and adhere to basic moral rules, because the consequences of failing to do so could be very costly in fines, loss of licensure, or company reputation. Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholders, and that these duties consist of more than simply obeying the law.

They believe a business has moral responsibilities to so-called stakeholders. They would say that stakeholders have certain rights with regard to how the business operates, and some would

suggest that this include even rights of governance. At least 88 Americans died before Firestone recalled the tires, which were installed on Ford Explorers and other SUVs. Most troubling from an ethical standpoint is that both companies may have known of the defects in 1993, when an overseas recall began. The decisions in this case provide the latest horrific example of how unethical actions can result in enormous losses.

Adding to or perhaps even causing the tragedy was the choice to cover up problems based on a narrow legal interpretation. In early 1999 the Bridgestone/Firestone legal department was successful in convincing Ford to avoid a broad program to replace defective Firestone tires found abroad. Later evidence of high lawsuit claims and warranty costs was dismissed as "not a safety problem. " If not solved properly, ethical dilemmas always seem to compound. Ethical Theories to be considered are Consequentialist and deonotologial theories.

Consequentialist theories are based on the assumptions that the moral rightness of an action is determined solely by its results. If the consequences are good, then the action is right. If they are bad, then the actions are wrong. Consequentialists determine what is right by weighing the ratio of good to bad that an action is likely to produce. Utilitarianism is a member of the Consequentialist family. One consequential theory, Egoism, was evident with Ford and Firestone. Egoism advocates self-interest first as one of its guiding principle.

In business, this theory cannot be considered a moral theory at all. Anyone who offers advice to other people must represent his or her own interest. It is not objective in its justification for any business decision

as it is always influenced by own individual interest first. Decisions made are not for the good of the entire industry but for the good of the individual or organizational interest. By contrast, nonconsequentialist theories or deonotological theories contend that right and wrong actions are predetermined by more than the likely consequences of an action.

Nonconsequentialist do not necessarily deny that consequences are morally significant, but they believe that other factors are also relevant to the moral assessment of an action. Contributing factors: corporate culture and corporate governance/guidelines. Analyze how the company’s corporate culture that may have either helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior. An ethical culture starts with clear and unequivocal goal setting at the top, spreads throughout the organization, and is reinforced through frequent use in everyday decision making.

It results in improved goal orientation, higher productivity, superior teamwork, openness, and mutual trust. This kind of culture fosters decision making with a long-term perspective that avoids costly blunders like those at Ford and Firestone. There were numerous actions committed by Ford and Firestone that could be considered unethical and socially irresponsible. In June 1989 a Consumer Reports article titled "How Safe Is the Bronco II? " rated the Explorer’s handling as poor in a test that simulated rapid lane changes. The Consumers Union publication advised "prudent buyers" to steer clear of it.

According to an original analysis prepared for TIME by University of Michigan statistician Hans Joksch, an expert in automotive statistics, the Explorer had approximately the same rate of fatal rollovers as the Bronco II. Ford engineers acknowledged in a memo that passing "the Consumers

Union test became an implicit requirement for Explorer due to the potential for adverse publicity. After putting the SUV through the Consumers Union test, engineer Roger Stornant wrote that the results yielded "a high confidence of passing CU with Firestone's P225 tires and less confidence on the P235. " Ford chose the larger P235 anyway.

Marketed first as the ATX and then as the Wilderness AT, the P235 became the tire that Firestone later recalled. Analyze how the company’s corporate governance (overall guidelines, strategic decisions/actions) may have either helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior. There were numerous actions committed by Ford and Firestone that could be considered unethical and socially irresponsible. With the Explorer's 1990 production date approaching, Ford engineers listed four options for improving the stability of the SUV: widening the chassis by 2 in. lowering the engine; or lowering the tire pressure and stiffening the springs. Ford chose the latter two fixes. Ford's decision to increase the stability of the Explorer by lowering the tire pressure soon had unintended consequences. The mushier tires held the road better but worsened fuel economy. When Ford asked Firestone to fix the problem, Firestone reduced the weight of the tire about 3%. By 1995, Ford had finally replaced the Explorer's unloved Twin I-Beam with a short-and-long-arm suspension but didn't act on previous recommendations to lower the engine and widen the chassis.

And since the new suspension weighed less than the Twin I-Beam, the change raised, not lowered, the SUV's center of gravity tread defects. As a result, both the tire and auto manufacturers were held liable for injuries suffered as

a result of tire tread rupture," Ethical decision factors to consider: Based on the ethical perspectives (theories of ethical thought presented in the course), what are the key factors that should be addressed or considered in resolving the legal/ethical issues identified in this case (as outlined above).

List each ethical issue and then for each issue, the factors to be addressed or considered based on the ethical perspectives used above. The importance of business ethics in today's competitive economy cannot be denied. Adherence to moral standards on the job can have positive influences on society by promoting strong ethical behavior in all aspects of life. Any ethics system presents a mixture of moral and economic rules and challenges which every business must follow in order to viewed publicly as a good business organization.

Good ethical practices in business promote the moral and economic existence of free enterprises around the world. An ethical system affects all aspect of a business. It is therefore important to consider business ethics as one of the governing factors in establishing the role of business in the community and to the entire global economy. Therefore, it takes no definite stand against certain outrageous acts like stealing, racial and sexual discrimination, and business fraud which are important business concerns that need to be carefully addressed by any business policies.

Unethical practices related to these issues undermine the good name of a business and the entire industry in general. Stealing can come in the form of business espionage. Business fraud can be in the form of adulteration, misbranding, and short-changing of customers. Consequentialist theories are based on the assumptions that the moral rightness

of an action is determined solely by its results. If the consequences are good, then the action is right. If they are bad, then the actions are wrong. Consequentialists determine what is right by weighing the ratio of good to bad that an action is likely to produce.

Deonotological theories contend that right and wrong actions are predetermined by more than the likely consequences of an action. Nonconsequentialist do not necessarily deny that consequences are morally significant, but they believe that other factors are also relevant to the moral assessment of an action. Discrimination allows the organization to save on costs but they may end up disregarding Another ethical concern which, by principle would likely consider actions as right is when employees or managers adopt practices which senior managers or the strategic leader would consider unethical .

Using questionable methods of persuasion and lying to promote certain products could be considered unethical and would likely spread around given the signal that everyone is doing it, and therefore, it is right. Such actions would always be seen as unethical but for some organizations, they will be at least condoned or even encouraged. It therefore looks more like a self-preservation move than a moral strategic business innovation. Recommended corrective action: Recommend corrective actions for each of the legal/ethical issues outlined above.

Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as “best practices”. Another consequential theory is Utilitarianism. This theory greatly contrasts with the Egoism theory because it takes into account everyone affected by the actions of the organization. However, since Egoism and Utilitarianism are classified as consequential theories, both theories

agree that rightness and wrongness are solely a function of an action's result and consequences. What distinguishes one from the other is their answer to the question of consequences for whom?

Utilitarianism is a moral theory that gained popularity in the early 1800’s and still influences many of our decisions today. On the face of it, it is pretty simple. The catchphrase of Utilitarianism is “Whatever action produces the most pleasure and the least pain for the greatest number of people is the morally right action. ” So the rightness or wrongness of an action is tied to the consequences of the action in question. It is for this reason that Utilitarianism is a member of the family of ethical theories known as consequentialism.

Simply put consequential ethical theories are theories that make use of the ramifications of an action to determine its morality Since Utilitarianism considers everyone affected by certain actions, this theory provides a clear and straightforward foundation for formulating and testing policies for the strategic business direction of the organization. Barry and Shaw said that a business policy is good if it promotes the general welfare more than any other alternative. This theory provides an objective and attractive way of resolving conflicts of self-interest (as opposed to Egoism's inability to resolve conflicts of self-interest).

Individuals within an organization make decisions based on a conformity to the general good of the organization. Actions and decisions made by individuals within the group are recognized as either right or wrong and therefore, different. These differences allow the organization to grow and mature into adapting their decisions to suit the current business situations. This sets the

right environment for formulating realistic and workable decisions and policies which are anchored on a higher level of moral and ethical considerations. It also speaks volumes about where these two archetypes of American industry stand.

Recommend approaches or policies that the company can take to help prevent these issues in the future. Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as “best practices”. In order to ensure that that employees act ethical in making managerial decisions that effect public safety, Ford and Firestone should ensure that it has clear and concise written set of standards for professional behavior. Since the 2002 Sarbanes-Oxley legislation, a publicly held company is required to create its own code of ethics to deter wrongdoing and to promote ethical behavior.

A code of ethics also should outline potential conflicts of interest for company employees and board of directors. A code of ethics also would call for the company to disclose potential conflicts of interest or waivers from the code of ethics. Reference List: minimum of 4 references. References can be used for the following: http://www. ethicsweb. ca/codes/coe2. htm http://www. usautoinjurylaw. com/cases/tires/failure-explorer. htm Kubasek, Brennan and Browne, The Legal Environment of Business, various chapters