Study And Analysis Of Ford And Bridgestone Finance Essay

Ford Motor Company was established on June 1903 with primary concern as car shaper. They have all equipment and work force to plan and bring forth automobile merchandise chiefly autos and landrovers. They are celebrated auto shaper in America and good known by neighbouring states. Ford manufactured new SUV and released to the market with the name of Ford Explorer. The internal expertness such as the design applied scientists tested the theoretical account and recommended for alterations and they found it likely to turn over over at high velocity due to hapless suspension design. Ford changed several component of the SUV but maintained the same suspension and tyre force per unit area. The crash trial of the SUV was sensible whereas the public presentation of the front bumper and rear bumper was hapless and yet the cabin safety was acceptable as it was build with strong structural coop.

This had consequence the SUV to be released to the market although the warning dismay of axial rotation over alterations was high. This concludes in clear that the merchandise was released to the market although it is non to the full fine-tuned for driver or rider safety. The merchandise hit the market and was exported widely to other states including hot conditions states such as Malaysia, Thailand and Venezuela.

1.2 Bridgestone/Firestone – the tyre maker

Firestone began their production in 1900 while Bridgestone started their operation in 1931. They both are tyre makers. In 1990, they merged their operation and they are good known for the both trade name name which are Firestone and Bridgestone. Their primary concern became tire fabrication as it contributes about 75 % of their solid gross. They provide about 8000 types of tyres and do hold contract with several big car shapers. One of them is the Ford Motor Company. Firestone finally supplied the tyres for Ford Explorer SUV. Firestone had a recommended air force per unit area for the tyre which is 36psi. Ford on the other manus required 26psi for their SUV and so the tyre air force per unit area was lowered to Ford ‘s demand. Firestone does cognizant of the hazard in term of the user safety if the tyre force per unit area was lowered to that degree. Firestone knows about the tread separation in tyres fitted for Ford Explorer SUVs. They did non halt Ford Motor Company from let go ofing the SUV. This proves that Firestone was interested in retaining their provider relationship with Ford Motor Company by supplying the tyre at their needed tyre force per unit area. Both parties were moving in their ain involvement and took the hazard let go ofing the insecure SUV to the market.

2.0 PROBLEM OCCURRED

2.1 Lost of Innocent Lifes

The Ford Explorer failed on high velocity and axial rotation over as the both parties expected. The production was non stopped and nil was taken to better this state of affairs. This had cause immense loss to the society. Firestone was blamed for is tire failure in hot conditions states such as Malaysia and Thailand which was more seeable. On the other manus, when this tyre pace separated, it will do the SUV to lost control and acquire into accident. This Ford Explorer SUV had killed about 250 guiltless worlds who were non informed sing the danger of the SUV at high velocity. It is besides recorded that around 3000 serious hurts happened due to these accidents. Beside the tyres, the SUV cabin safety was besides questioned as it was reported that the seat belt ripped out during the accident impact puting the riders in direct danger. This means the SUV itself lack in term of safety although it is claimed to be safe by the maker.

2.2 Environment Pollution

Not merely seting the Sport utility proprietors into hazard but Ford and Firestone are both responsible for puting the whole society in danger through pollution. When a SUV axial rotation over due to pall failure, it can do existent fire accident. These fire accidents seting the neighbours into the hazard air pollution. The gas produced from a combustion tyre is among the most risky gas. Besides it is besides let go ofing toxin to the air. At the same clip, hydrocarbons and black fume from this fire destroys ozone bed. The whole society placed to confront this hazard.

2.3 Financial Burden

The vehicle that is damaged in accident is merchandise bought for his cost. The proprietor lost his money merely because the merchandise that he bought is faulty. This burdens the proprietor. On the other manus, insurance companies are besides apt for the accidents that happen as they had insured the vehicle. The insurance companies paid the loss. Even the job of this SUV and tyre was learned from insurance company ‘s information survey and analyzes by authorities research worker. The insurance money is poll money from all the premium purchasers and it is unjust for the Ford or Firestone to be ground for blowing these insurance canvass money.

3.0 SOLUTIONS EXECUTED TO SOLVE THE PROBLEM

3.1 Tire callbacks

Tire was blamed chiefly over the incidents. By external forces from the authorities, insurance companies and the populace, Firestone had announced callback of their tyre universe broad. The tyre serious that caused the most job was ATX, ATX II and Wilderness AT which higher failure rates. Harmonizing to Firestone records, they have produced above 14 1000000s tyres of these three series. They voluntarily recalled tyres due to alleged tread separation jobs associated with tyres on Ford Explorers. Learning from the mistakes, they wanted to halt this from continuously go oning and they agreed to replace those tyres with other series of tyres. Further to this, they besides agreed to replace the tyre with their rival ‘s tyres when it is required. Noteworthy that this callback does non merely go on for Ford SUV but besides for some other auto theoretical accounts which are Ford Ranger visible radiation trucks, Ford F150 visible radiation trucks, Mercury Mountaineers, Mazda Navajo, and Mazda B series visible radiation trucks.

3.2 Close down works

Firestone closed down the Decatur works which was reported as chief works which produces those tyres series. They admit that it was faulty and stopped the production. Lead to shut of the works. This works was blamed the most and shutting it down lead to better back somewhat populace ‘s trust on the house. Besides, some research surveies remarked that the works has history of labour issues as good.

3.

3.3 End of provider relationship and merchandise redesigned

Firestone had terminated their provider relationship with Ford Motors Company in 2001. This is to guarantee the house is safe from any kind of blamed that co-incurred with the hapless Ford vehicle design. This ended the 100 old ages relationship between the two houses and Firestone announced that they will non be providing any tyres to Ford Motors.

Furthermore, in 2002, Ford Motors Company had revised its Ford Explorer design and announced new design which they claim to be the safest SUV. Several trial and analysis shows that their claim was true and the vehicle axial rotation over job reduced highly. On another survey, Goodyear tires failure to be at least 600 times less than the Firestone tyres which was fitted for the Ford Explorers antecedently,

3.4 Compensation

Firestone completed the callback and pall replacing with the overall cost of about 350 Millions US Dollars. At the same clip, Ford had absorbed about 500 Millions US Dollars cost of the callback. The authorities research workers were reimbursed by Firestone for approximately 78 Million US Dollars. The Decatur works close down cost around 210 Million US Dollars. Further to all these, Firestone and Ford faced legion cases against them and the colony and compensation all recorded at cost of 750 Millions US Dollars. On the other manus when the provider contract terminated by Firestone, Ford Motors Company had one time once more remember all the Firestone tyres in any of their merchandise. This callback was executed although the Firestone tyres may non be faulty or faulty. This unneeded callback cost was about 3 Billion US Dollars.

4.0 ETHICAL PRACTICE ANALYSIS

Several ethic theories are used to analyse the ethical quandary and how it was handled or over looked. It is the existent fact that no company be for society wealth and all of them playing their function for net income. Ethic patterns linked with good will and repute of the house and it is really of import for all houses.

4

4.1 Utilitarianism theory

Utilitarianism is the theory which weights the state of affairs with cost and benefit analysis. Utilitarianism is all about using the benefit over the cost. If the cost is lowered and benefit is maximized, so it is ethical to follow the determination or pattern. Bringing Ford ‘s determination to let go of the SUV although they were cognizant of the high axial rotation over alterations, the benefit is high net income to the house whereas they can salvage a batch without disbursement over the redesign. The cost on the other manus is roll over of the vehicle and several guiltless people ‘s life which will merely go on at high velocity. Obviously clear that Ford is following profit-maximization in their disposal and direction because they did non burden the good will and repute cost that would incur when the incident happen. Utilitarianism is besides in favour of the society or societal whereas it considers the societal benefit from the act. The SUV was non a inexpensive merchandise and therefore we do non see any benefit to the society by let go ofing the merchandise to the market seting guiltless people ‘s life as cost. Therefore under utilitarianism theory, Ford had acted ethically because they saved immense sum of money by avoiding the redesign and the gross revenues had profited them good. On the manus, when we tend to use ‘rule utilitarianism ‘ , Ford failed to be ethical because regulation utilitarianism includes the after-act benefits and cost. After the act, the house had loss 1000000s of dollars for the callback and to reconstruct their repute. This means the cost is higher than the benefit and therefore it was unethical.

For Firestone, under utilitarianism, they provided the tyres although cognizing it ‘s unsafe for the low air force per unit area merely because to safe their provider relationship. The benefit here is the net income they earn and retain the relationship. The cost here is several tyres to neglect and blow out. What they did is ethical. On the other manus, regulation utilitarianism tends to neglect their action because due to the determination of providing the high hazard tyres, they had spoilt their repute every bit good as spend high sum in the tyre callback and replacing. Besides they besides ended the provider relationship contract. Therefore the after-act cost is higher than the benefit and they are unethical when regulation utilitarianism pattern applied.

5

4.2 Rights and responsibilities

The inquiry arise here is ‘was the merchandise released follow the rights and responsibilities? ‘ The reply is weighted through several different rights. First of all is the human rights. Each and every one of us does hold our human rights to cognize what the degree of hazard we are taking. Let go ofing the vehicle is high hazard is what the maker prefer but they should hold warned the user about the hazard of driving it at high velocity or at hot conditions. In this instance, both Ford and Firestone did non unwrap their merchandise hazard until it was discovered by the authorities research worker and here is where they proved that had gone unethical.

On the other manus, all concern activity is tied up with contractual right whereas the purchaser and marketer are contractual to each other. They both have the contractual rights and it is of import for both parties to non conceal fact of a merchandise or misdirect the fact of a merchandise. In this instance, Ford had misled that their Ford Explorer SUV is safe which deliberately misrepresent the facts. Because Ford is good cognizant of the hazard in the merchandise and claiming it to be safe is bogus statement. They are unethical in confronting contractual rights.

In term of legal rights, both Ford and Firestone were ethical because they paid most of the case filed over them and all the legal rights of the person were respected in a sense.

To analyse the moral rights, we can follow the axiom theory to look into the Ford and Firestone action. Harmonizing to axiom theory, it is ethical if another individual would make the same act and the act can be universalized. Ford and Firestone released the imperfect merchandise to the market to derive net income by put on the lining people ‘s life. Will Toyota and Honda do the same? The reply would likely yes because in general all house tidal bore for net income and there is no such thing as societal focussed house unless non-profit organisation. Can this act be universalized? If this act is universalized so the full car industry participant would bring forth imperfect auto and seting the life of full society in high hazard. Therefore it can non be universalized and it is perfect duty to non put to death the action. As decision, maxim theory clarified that what Ford and Firestone did was against the moral rights and unethical.

6

4.3 Justice and Fairness

Justice and fairness consent on how things were distributed and how just it was handled. In term of distributive justness and compensatory justness, it is of import to handle all equal. From the instance, we could understand that Ford and Firestone failed to follow or set about distributive justness because the compensation was non paid in same order or same distribution. The victims who filed case was compensated with different sum and they were handled otherwise whereas some was settled outside the tribunal and some case failed. Under the equity, all of the victim must hold been compensated in same and equal sum.

4.4 Ethical motives of attention

The moralss of attention is different attack to the ethic rules. The chief motivation in moralss of attention is to care for each other as every parties relationship ever interlinked with one another. For illustration the purchaser of the Ford autos and Ford Motors Company has buyer-seller relationship. Therefore it is an ethic pattern for the Ford Motors to care for their purchasers although no duty between them in term of attention. This means the house do non necessitate to care about the purchaser but moralss of attention brings in that peculiar pattern and hence Ford Motors should care for their purchasers. From the instance itself, we extracted that the Ford Motors released such a hazardous merchandise to the market and this instantly proved that Ford Motors do non pattern any moralss of attention in their organisation. My personal sentiment is that practising moralss of attention can take to constructing a good will and repute in the position of populace or the community. And it is an of import moral principle that big organisation should pattern.

4.5 Virtue moralss

Virtue moralss focuses on making things morally with character. We can simplify this as good character. Make Ford and Firestone have good character? That answered the inquiry either both Ford and Firestone following virtuousness moralss. Virtue moralss do non see on regulations or effects. But it is strictly on making good things. If an action is good to make so it is ethical. That ‘s why the virtuousness ethic married with character. We all know it is non good to let go of an imperfect merchandise that would danger the users, but Ford and Firestone

7

yet did it. Thus we may reason that Ford and Firestone did non follow or set about virtuousness moralss pattern. Beside virtuousness moralss is traditional ethic pattern. In my sentiment, following virtuousness moralss is simply non possible for organisation because as mentioned earlier, house should be carry oning the concern for net income alternatively of well-fare in any sense and as a consequence of it, it is impossible to ever make the good thing and earn net income.

4.6 Business ‘ Duties to Consumer

Earlier I had discussed the rights and responsibilities, now conveying the focal point into the responsibility of a concern toward their purchasers and consumers. Business is responsible to supply sensible merchandise that meet four primary facets which are dependability, service life, maintainability and safety. In a sense, Ford had made the consumer believe that their merchandise is safe. Therefore the Ford Explorer should non be selling to consumers because that is in direct struggle with what the consumer ‘s believed. One of the concern responsibility is besides to guarantee the consumer is educated about the hazard of the merchandise that they are about to purchase. Ford and Firestone conceal the fact about the merchandise danger and sold the merchandise. Therefore the both companies failed their responsibilities to consumer.

4.7 The due attention theory

The due attention theory is in topographic point because the maker ever have advantage over their merchandise because they have superior cognition about the merchandise including how it was manufactured. The consumers are non educated on how the merchandise is manufactured and they would be educated on how to utilize or manage the merchandise merely. Therefore, due attention theory drama its function such as the moralss of attention which emphasize that the maker is solidly responsible to exert due attention in their design, production and information. In the instance, Ford failed to exert due attention in the design. They designed unsafe merchandise that deficiency in term of suspension and in-cabin safety. Firestone on the other terminal, failed to exert due attention in their production of tyre. The tyres produced at Decatur works found to be holding highest figure of defect. Furthermore, both parties did non supply the information of how hazardous and unsafe their merchandise is. Alternatively they hide these critical information and wholly failed to exert due attention.

8

4.8 Strict liability

Strict liability theory emphasize that regardless of a maker cognizant or non about the hurts that the merchandise is about to do, he is still apt over the merchandise failure or defects. Associating this theory to the instance, it is duty of the Ford and Firestone to be apt over their merchandise if it failed. This is why firestone recalls their faulty tyres and replaces it because they have the rigorous liability over the merchandise or services. Equally good as Ford is apt for all the Ford suspension or handling failure. They had later revamped the design with good safety characteristics. Somehow, this rigorous liability is in direct struggle over the compensatory justness theory because compensatory justness mentioned that one does non necessitate to counterbalance if they did non calculate the job is traveling happen or the merchandise is traveling to neglect. But rigorous liability mentioned you are apt under all fortunes every bit long as the merchandise failed.

5.0 Decision

It is obvious that running from a moral duty or non following appropriate moral pattern in concern would take to many failure and differences. Ford and Firestone is best illustration for the statement as they produced the Ford Explorer disregarding the warning dismay that it is unsafe to the consumer and at the terminal of it, the both parties lost 1000000s and one million millions on rectifying their error. Avoiding a moral duty would non take to anything else than problem because we puting the concern repute and good will in a high hazard. It is seeable that Firestone gone unethical merely to procure their provider relationship with Ford Motors but yet at the terminal they still terminated their contract and ended the relationship every bit good. The good will and repute of a house is the most of import facet when an ethic inquiry arises. And puting the precedence of the society ‘s wealth without losing the house ‘s involvement of net income would be the right ethical action to put to death.

9