GROUP MEMBERS

Ali Yunus (Reg # 7391) Mustafa Ahmed (Reg # 7261) Noor Ali Hussain Ali (Reg # 7290) Muhammad Sadat Khan (Reg # 8894) Vajita Kumar (Reg # 7606) Amna Vajhi (Reg # 7641)

Submitted to: Mr. Balach Jamali

Date of Submission: 22-10-2008

CASE STUDY 2

(Ford Operates In Complex Environment)

Ford/Firestone Case

Q1) Add to your knowledge of the fire stone tire debacle by researching on internet or library. Then prepare a summary on whether or not you believe Ford acted ethically throughout the crises & why?

The Story ……. The Firestone and Ford tire controversy was a period of unusually

high tire failures on some Ford vehicles, resulting in numerous accidents.

 In May 2000, the National Highway Traffic Safety Administration (NHTSA)

Contacted Ford and Firestone about the high incidence of tire failure.

On Ford Explorers, Mercury Mountaineers, and Mazda Navajos. Fitted with Firestone tires. Ford investigated and found that several models of 15" Firestone

tires (ATX, ATX II, and Wilderness AT) had very high failure rates. Especially those made at Firestone's Decatur, Illinois plant.

The Story …… (contd) Joan Claybrook, Administrator of the NHTSA,

stated on September 6, 2000, that, "there was a documented coverup by Ford and Firestone of the 500 defect".

Also Clarence Ditlow; Executive Director for the Centre for Auto Safety in his statement September 20 2000 stated "Emerging Information shows that both Ford and Firestone had early knowledge of tread separation in Firestone Tires fitted to Ford Explorer vehicles but at no point informed the NHTSA of their findings".

The Failure….. The failures all involved tread

separation— The tread peeling off followed often by tire

disintegration. If that happened, and the vehicle was

running at speed, there was a high likelihood of the vehicle leaving the road and rolling over.

Many rollovers cause serious injury and even death; it has been estimated that over 250 deaths and more than 3,000 serious injuries resulted from these failures.

The Initial Blame Game ……

Ford and Firestone have both blamed the other for the failures,

Which has led to the severing of relations between the two companies.

Firestone has claimed that they have found no faults in design nor manufacture, and that failures have been caused by Ford's recommended tire pressure being too low and the Explorer's design.

Ford, meanwhile, point out that Goodyear tires to the same specification have a spotless safety record when installed on the Explorer, although an extra liner was included into the Goodyear design after recommendations to that effect were made to Ford. Firestone included an extra liner in its product and this was then also used to replace tires on Ford Explorers.

What Firestone Accepted… Firestone took responsibility for faulty tires and

apologized to the nation for the company's role in the deadly accidents. "I also come to accept full and personal responsibility on behalf of Bridgestone/Firestone for the events that led to this hearing," Masatoshi Ono, former Bridgestone/Firestone chief executive officer said to Congress last year.

Company officials acknowledged design and manufacturing problems, particularly at the Decatur, Ill., plant. As a result, Firestone stopped some manufacturing at that plant, instituted design changes and broadened the availability of tire warranty and money-back programs. But Firestone still blames Ford for the Explorer's design problems and drivers for improper tire inflation and repairs.

Source: Times files, Ford Motor Co. media releases, Bridgestone/Firestone media releases

What FORD said : Ford has apologized to the American people for its part in the

problem, while insisting that Firestone tires were to blame. "This is a tire issue, not a vehicle issue,“

Jacques Nasser, Ford's chief executive officer said to Congress last year. "If I have one single regret, it's that we did not ask Firestone the right questions sooner.“

Despite that, Ford did agree to make changes. The company pledged to voluntarily tell American consumers of safety problems that happen with Ford products overseas.

Ford also will cover tires under its vehicle warranty program, not a common industry practice and will introduce a tire pressure monitoring system for sport utility vehicles and light trucks. Ford now offers customers a choice of tires brands on its 2002 Explorer.

© St. Petersburg Times, published May 20, 2001

Ford’s Ethical Behavior : The Explorer was a tight turning radius vehicle.

The problem was with the tires, as in tread separation at highway speed from tire temperature.

Ford replaced all the Firestone tires free to the owner but this was considered huge mistake, as Ford was not responsible for the driver error/deaths due to tire failure.

This attitude of Ford in crises reflected the Ethical behavior. Ford spent thousands of dollars to replace the firestone tires.

Source: http://answers.yahoo.com/question/index?qid=20080201191553AA2MFBk

Relationship suffered…

Car and Driver magazine tested a first-generation Explorer with a built-in rollcage and a special device that would flatten the tire at the push of a button. While driven by professionals on a closed track, the Explorer did not flip in any of the numerous tests.

In a 2001 letter to Ford Motor Company Chief Executive at the time Jacques Nassar, then Chairman / CEO of Bridgestone/Firestone announced that Bridgestone/Firestone would no longer enter into new contracts with Ford Motor Company, effectively ending a 100-year supply relationship.

When it’s too late

The first sign of a tread separation usually is a vibration, similar to going over speed bumps. As the tire comes apart, the vehicle will pull toward the side of the separation. You may hear pieces of the tread hitting the underside of the vehicle. A common mistake is to brake or try to correct the steering. Instead, you should hold the steering wheel as tightly as possible and take your foot off the gas pedal. Let the vehicle coast to a stop. The vehicle may become impossible to control if you swerve into traffic, a median or a shoulder.

http://www.fordexplorerrollovers.com/accidents.htm

Q2) Visit the Ford Web site and click on several of the company’s pages dealing with socially responsible initiatives the environment, education, and so forth. Then discuss the role you think these initiatives play in Ford’s overall corporate culture.

FORD as socially responsible organization.

Education: Ford encourages high school students to pursue their education

and build successful careers in business, engineering and technology.

Ford PAS (Ford Partnership for Advanced Studies ) programs are in operation in 21 states and reach more than 10,000 high school students nationwide.

Preparing Students for Workplace Success. Through coordinated, real-world learning opportunities, Ford PAS

provides experiences to help students make decisions about their future education and careers.

In 2007, Ford PAS was awarded the first-ever National Governor's Association Public-Private Partnership Award for innovative educational programs.

Environment: Ford is concerned about the impact of its actions on the environment.

To help reduce its impact, Ford is always looking for new ways to conserve energy and resources.

An industry first, they issued a report addressing the business implications of climate change, carbon dioxide emissions and global security concerns. The report is a snapshot of work they've been doing over the past few years and indicates the direction they're headed.

Specifically, the Ford Report on the Business Impact of Climate Change addresses how concerns about emissions of greenhouse gases, including carbon dioxide, are linked to other factors affecting the business; the steps the company is taking to manage the risks and capture opportunities associated with climate change; and the market, policy, social and technological enablers required to achieve significant changes in the industry's carbon footprint.

Ford Motor Company Fund & Community Services supports a broad range of initiatives to improve the quality of life within our communities.

Car crashes greatly affect Latino children and the Latino population in general. The fatality rate for Latino children ages 5 to 12 involved in vehicle crashes is 72 percent greater than the fatality rate of non-Latino white children. For Latinos ages 35 to 44, vehicle crashes are the third-leading cause of death.

To spread the word about child passenger safety to the Latino community, we support the Corazón de mi vida partnership between the National Highway Traffic Administration (NHTSA) and the National Latino Children's Institute (NLCI).

"Corazón de mi vida" is a Spanish term of affection meaning "you are the center of my life." With this central message, the Corazón de mi vida partnership focuses on child passenger safety.

Promoting Child Car Safety:

Corporate Culture:

The initiatives for CSR improve the corporate image of the company in which Ford is considered to be successful.

Building a reputation as a responsible business sets a company apart. Many consumers prefer to buy from ethical business. Companies often favor suppliers who demonstrate responsible policies as this helps them to minimize the risk of any damage to their own reputation.

Ford Motor Company has long held the view that to be successful it also needs to be environmentally and socially responsible.  This vision of sustainability was further emphasized by Bill Ford, the head of Ford, in 2005. 

Mr. Ford identified that sustainability was going to be a long term strategic priority and there was a clear business case for reducing resource use and developing innovative "green" and safer products and technologies.