Firestone Tire White Collar Crime Research Paper
- Length: 5 pages
- Sources: 6
- Subject: Business
- Type: Research Paper
- Paper: #47083379
Excerpt from Research Paper :
corporate or white-collar crime. Specifically, it will discuss the Firestone Tire executives that allowed faulty tires to remain on U.S. vehicles. In mid-2000, Bridgestone/Firestone Tires began a recall of some of their tires that would turn into a massive recall and a public relations nightmare. The underlying problem with the recall, besides public opinion and the cost, was the issue that popped to the surface as the recall began to take on momentum. There was surprising evidence that Firestone and Ford had known about the defect since at least 1994, and had even recalled tires in other countries, but allowed them to remain on Ford Explorers in the United States, leading to hundreds of deaths and injuries in their failure to recall the tires.
In August 2000, Bridgestone/Firestone CEO Masatoshi Ono and the Ford Motor Company initiated a recall of millions of Firestone tires produced in a Decatur, Illinois plant. The tires were used on Ford Explorer SUVs around the world, and they were suspected of separating while the Explorers were being driven, causing the Explorers to roll over. Hundreds of people were killed and injured as a result of the tire separating and resulting crashes. Two journalists note, "The maelstrom of controversy over alleged defective tires for SUVs and trucks produced by Firestone during the summer and fall of 2000 illustrates an amazing blunder that resulted from a failure to identify problem signals" (Murnighan & Mowen, 2002, p. 29). Another recall came in October, and the companies' CEO were subpoenaed by Congress to testify about their activities. Both the CEOs of Ford and Firestone began a massive marketing campaign in an attempt to win back American trust, and CEO Ono stepped down in October, leaving behind a situation that began to unravel even further.
As testimony continued, it became apparent that Ford and Firestone knew about the problem with the tires long before they publicly acknowledged it. A reporter notes, "Bridgestone/Firestone was tracking problems with its Firestone ATX tires as long ago as 1994, documents show, and a recently retired Bridgestone/Firestone official swears in a lawsuit deposition that top executives, including the CEO, were discussing the matter at quarterly meetings, at least since 1997" (Healey, 2000). At first, the two companies began finger pointing at each other, with Ford blaming Firestone for the Explorer accidents, and Firestone blaming Ford for faulty engineering (Murnighan & Mowen, 2002, p. 37). Ultimately, the recall cost both companies millions of dollars and damaged the reputation of both companies.
What could have been done to solve the problem? First, society and the business community have to be more concerned with societal problems and less concerned with the bottom line. While a business is ultimately in business to make money, this issue points out when decision-makers have no morals or ethics when it comes to doing the right thing. Evidence points to Ford and Firestone investigating issues with the tires as far back as 1992, and they recalled the same tires in Saudi Arabia in 1998, yet waited to recall tires in the United States. This goes beyond ethics, it is flawed decision-making, and it is based only on money, rather than considering lives could (and were) lost while they held back doing the right thing. Both the companies had evidence there was a problem, but their situational analysis was flawed. They blamed the tire failures on operator error instead of confronting the problem head on. They could have done any number of things to solve the problem, from recalling the tires earlier, to commissioning more studies on the tires to uncover the truth about the tread separation. "The first step in making tough calls is to identify signals of threats and opportunities. They did not accurately assess the treat to their businesses, either. The two authors continue, "Unless threats are identified early, they can compound, sometimes rapidly" (Murnighan & Mowen, 2002, p. 52). This is exactly what happened in the recall case, by the time they actually addressed it, the threat had grown out of control, and continued to snowball until it damaged the reputation of both companies.
The companies were not the only players in this recall, however. The National Highway Traffic Safety Administration (NHTSA) played a role, as well. The companies did not notify the NHTSA of their tire recalls in other countries, but the NHTSA had antiquated tire regulations that pre-dated the bias-ply tires that Firestone produced, and NHTSA had received complaints about the tires but had mishandled them and failed to address them (Mashaw, 2003). Critical analysis could have helped solve the problem, but so could adapting public policy. The NHTSA should have revamped its regulations to match new tire technology, and Congress should have required that. They did adapt the public policy and NHTSA recall standards after the Firestone debacle, but it took a crisis situation for that to occur, and that is poor planning. Transportation experts should have been able to see the regulations needed updating, and public policy experts should have been able to see it, as well.
Organizational analysis could have helped both of these companies early on, as well. When the problem first surfaced, an analysis of the organization, its thought process, and its responsibility toward its customers could have identified what a huge problem the recall could become, and it may have prevented much of the controversy that ensued. The situation cries out for understanding what was going on in the minds of the executives who allowed the situation to develop and continue. Another writer states, "How could these two companies have communicated with one another so poorly? If you have an alliance and the product which it produces is defective, how are blame and liability apportioned? Who should take responsibility? How do alliance partners hedge against the possibility that one may damage the other's brand? (Garten, 2000, p. 106). These are difficult questions, and the people may never know what was going on inside the minds of these men, but Ono stepped down in October 2000, Jacques Nassar, CEO of Ford was ousted in October 2001, and John Lampe, the vice-president who stepped in for Ono at Bridgestone/Firestone retired in 2004. Thus, all of the people involved in the recall stepped down or left the companies, indicating the importance of the issue and how they addressed it. They made several key errors that led to the recall being far worse than it might have been, and they paid for it with their careers.
What prompted the companies to keep this information quiet for so long? Two writers speculate Firestone was overly confident. They write, "The company's management appears to have been overly confident in the design and production of their tires. As a result, early in the process, its managers failed to collect and analyze data that would have identified the problem" (Murnighan & Mowen, 2002, p. 49). This illustrates how they could have used critical analysis to solve the problem, but instead chose to ignore it. They might have been hoping it would simply go away, but that of course, is not the case.
One social theory that could provide an explanation for their actions is functionalism. A functionalist would have studied the problem critically and identified areas that could indicate interconnectivity, and suggested solutions for those problems. For example, Ford Explorers were highly rated in terms of safety, but they were experiencing accidents involving tires. Clearly, there is interconnectivity here between the tire's design and the auto's design, and yet, it was dismissed. Functionalism believes that society is made of up interconnected parts, and that they all have to work together for the entire body to be successful. Ford and Firestone were anything but functional or working together, and that is one of the reasons they experienced such a massive failure. They clearly had an obligation to their customers, and failed to recognize that societal obligation, as well. The repercussions of the recall badly affected both companies' bottom line. Ford stopped producing the Explorer for a time when it was the company's bestseller, and Bridgestone/Firestone ended up recalling millions of tires and replacing them, which cost them millions of dollars. They also gained terrible reputations with their customers. Another writer, speaking of the aftermath writes, "They demonstrate all too clearly the need for consumer watchdogs and for strong, vigilant oversight of the marketplace" (Guest, 2002). Just a bit more recognition of their interconnected role with each other and in society might have given them a better business and moral perspective about the problem.
Part of the problem with big business today, and business leaders, is they fail to see the role they have in society. Not just the public role, but the moral one, as well. This is clearly evidenced by the debacle at AIG, paying out billions in bonuses with taxpayer money. The business leaders are so in touch with the bottom line and profit, aligned with their own greed, that they do not recognize they role they…