CASE STUDY
FIRESTONE’S TIRE RECALL
MNGT 5910
7 MAY 2012
PRESENTED BY
Cody Lewis
Josh Palmer
Brian Riley
OVERVIEW
 Case Study Background
 Regulations and Laws Involved
 Issue at Hand
 Case Analysis
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
REGULATIONS AND LAWS INVOLVED
 Tort Case
 Definition: A civil wrong other than a breach of contract
 Criminally liable for negligence
 Damages
 Settlements for those injured
ISSUE AT HAND
 Who’s at Fault
 Firestone with their tires?
 Ford with their Explorers?
 Both?
 Civil Lawsuits
 Who pays damages
 What is the appropriate punishment
ISSUE AT HAND
 Who’s at Fault

Question 1: Does the company owe a duty to it’s customer?
Firestone
 Ford


Question 2: Did the company violate that duty?
Firestone
 Ford


Question 3: Did that violation cause harm to the customer?
Firestone
 Ford


Question 4: Was the harm foreseeable?
Firestone
 Ford

ISSUE AT HAND
 Firestone

Does the company owe a duty to it’s 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


Blowouts caused around 250 reported deaths
Was the harm foreseeable

Industry records verify that tread belt separations
ISSUE AT HAND
 Ford
 Does the company owe a duty to it’s customers
Supply quality automobiles that are safe
 Manufacturing processes meet standards


Did the company violate the duty


Did the violation cause harm


Failed to verify their suppliers products (i.e. Firestone) are safe
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.”
CASE ANALYSIS
 Do 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


Companies should not only meet the standards


Power to issue recalls and develop safety laws
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

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