Firestone and Ford partnership history

firestone/BRIDGESTONE CASE

I am a consultant for Bridgestone/Firestone and after studying its case carefully, I have come up with some important findings and recommendation which I would like to present here. We shall first start by presenting an overview of the case.

The Firestone/Ford controversy came to limelight in '2000 when in February that year, a media report established the much too obvious link between Firestone tired and increasing number of roll-over accidents in the United States. As a flood of complaints followed the report, National Highway Traffic Safety Administration (NHTSA) ordered an inquiry into the issue. In May 2000, Firestone was asked to voluntarily recall its tires from the market. Three months passed before Firestone responded and since then some 6.5 million tired have been recalled.

While the defective product itself was a serious problem, it was actually the manner in which Firestone responded that caused media frenzy. People started looking at Firestone with greater disfavor after the Congressional testimony than before it since it was felt that Firestone's chief executive in America, Masatoshi Ono, had not been sincere in his apology. The firm was accused of slow response and the public became decidedly unforgiving. It was believed that Firestone's defective tires and slow response have resulted in nearly 200 deaths, numerous injuries and thousands of complaints.

Key Issues of the Case:

Social responsibility: Every American Corporation needs to be fully aware of its responsibilities and obligations towards its external and internal stakeholders and this is the inability to understand this that annoys the public. The public believes that profit maximization is the only goal that corporations have in mind and they tend to ignore consumer's interests. But with more consumer enlightenment and stricter laws against defective products, many large corporations are coming under fire and this is leading to tarnished reputations and loss of consumer trust. Most consumers today would go for a company with better reputation than bigger name and this is the reason good crisis management has become a key to success in today's corporate sector. If you truly want to survive a huge blunder, own up to your fault and quickly do something about it.

Legal Problems:

Even before Joel Rodriguez filed a high-profile case against Firestone in September 2000 consumers knew there was something wrong with the company's tires. But Firestone refused to comment and kept engaging in negotiations that remained hidden from the public eye. The charges against the firm and its defective tires were usually settled outside the court. But things changed in March 2000; with Joel Rodriguez deciding to bring charges against the firm after his wife suffered brain damage and permanent paralysis due to a road accident involving Firestone tires and Ford Explorer.

Joel Rodriguez refused to accept pre-trail settlement offer by Firestone. This was the first time ever that a lawsuit involving Firestone went on trial and this resulted in huge uproar from the public which had heard similar murmured complaints in the past. With consumers now more aware of their rights and with the issue of corporate ethics and moral responsibilities gaining momentum in the country, the case attracted attention in national as well as international arenas. The lawsuit resulted in a massive tire recall by Bridgestone in August 2000 as some 6.5 million AT, ATX II and Wilderness AT tires were withdrawn from the market. Firestone tires are also connected with some 148 deaths and more than 500 injuries. (Grimaldi et al., 2001)

Ethical Dilemma:

The Firestone controversy exposed an important ethical dilemma. What should a firm do when it knows its defective products are causing deaths, injuries and accidents? The problem with your firm has been the consistent denial and finger-pointing that your executive indulged in when the problem first came to the limelight in other parts of the world prior to its exposure in the U.S. There were many instances when your organization could have recalled tires but it insisted on out of the court settlements and hushed the matter. You should have known that this was a serious issue and once it came to the U.S., it would only cause the company to go deeper into troubled waters. There was a time in 1999 when Ford reported 'tread separation' and requested recall. Then it was also found that some Saudi Arabian dealers had lodged complaints against Firestone tires. But your firm insisted on replacing tires on Ford Explorer without bringing the defect to the notice of U.S. safety authorities.

Decision-Making Framework:

When it comes to such controversial situations, the best thing to admit your fault, take immediate steps to stop further damage and then start regaining public's trust. Finger-pointing and blaming each other was absolutely uncalled for. Your firm should have understood that this is not something that public expected of an organization as large as Firestone. We must not forget that similar incidents of defective products have happened to other firms as well including Intel, American Airlines and Johnson & Johnson. But in all these cases, firms tried to build better relation relations with the public by admitting their faults and putting consumer safety ahead of other interests. Johnson and Johnson, manufacturer of Tylenol, had not only halted production of Tylenol in 1982 in the wake of reports of seven deaths but also recalled 31 million bottles of the product from the market. The result: Tylenol is still the leading brand in its category in the U.S. Denying responsibility was the worst thing your firm could have done. In October, 2000, Associated Press reported that "The chief executive of Bridgestone/Firestone Inc. told attorneys during an eight-hour deposition Monday that the company recalled 6.5 million tires in August for safety purposes and that the decision did not mean the company was admitting to any product defect" (October 9, 2000, 1). Imagine the impression it must have had left on the public's minds.

Blaming Ford was just as useless and pointless as refusing to recall the product. It was completely unnecessary, very immature and potentially fatal. The public expects more from large organizations, they want to see people admitting their faults instead of blaming everyone involved. In a report published by Bridgestone/Firestone few months after the debacle, it gave reasons for the tire shredding problem. "the shoulder design of its 15-inch ATX tires, the unique way the rubber was processed at its Decatur plant, and the lower inflation pressure and the higher load limits recommended by Ford for its Explorer sports-utility vehicle" (CbsNews, Jan 2, 2001).

Core Problems:

The main problem with your organization on the individual level has been the inability of Firestone chief executive to accept that their firm had been less than considerate. Ono would have issued a clear statement admitting the firm's fault since he was already aware of numerous other incidents and complaints in connection with company's faulty tires. Instead he insisted on denying responsibility: "However, there are maybe outside causes that had caused the accidents. Then, I wouldn't say we're responsible for those accidents" (Ackman, October 10, 2000).

On the organizational level, the culture of the parent company in Japan is to blame for the slow response of your firm in the U.S. "Firestone has seemed slow and unresponsive, a legacy, perhaps, of its insular parent company in Japan, where consumers have few rights, and product-liability lawsuits hardly exist. Parent Bridgestone's CEO Yoichiro Kaizaki, who gained a tough-guy reputation in shaping the company's American strategy, has been all but invisible. He may be practicing what the Japanese call fugenjikko -- no words, only action -- but silence is deafening here." (Eisenberg, Time, 2000)