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Lecture

Firestone Ford Tire Recall Analysis.pdf


Department
Management (MGS)
Course Code
MGSC14H3
Professor
Peter P Constantinou

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Firestone Ford Tire Recall
Reported incidences of tire failure on Ford explorers with Firestone tires accidents,
deaths
o Tread separation
Firestone had tire recalls in the past
As early as 1992, there were signs that something was wrong no recalls or
investigation
o Warranty claims
Ford asked Firestone to investigate in 1999 Firestone reported no problems
Around 1999 , Ford recalled Firestone tires in Saudi Arabia, Venezuela, other foreign
countries before tire recalls in North America
Delay in recall in North America was due to fear of legal consequences + costs
Problem with tires due to inexperienced workers + lack of inspection
Nylon cap or safety layer between steel belts and tread could have prevented tread
separation wasn’t used because of cost (cost $1 per tire)
Ethical Dilemma: Whether or not it was ethical for Ford/Firestone to delay
investigating and recalling defective tires
Arguments for not ethical:
A delay in recalling defective tires very likely results in more car accidents,
injuries, and death is a violation of stakeholder (consumers) rights to life, health
and safety
Violation of justice, hypernorm of fairness, stakeholder (consumers) rights to fair
treatment Ford recalled unsafe tires in foreign countries where there was not
such a high risk of legal consequences before recalling unsafe tires in North
America
Using the comprehensive approach to EDM considering well-offness
delaying recall of tires results in more costs than benefits
o Loss of reputation decreased sales
o Large cost of opportunities lost
Alternatives: adding the Nylon cap or safety layer between steel belts and tread
the extra cost of $1 more for each tire actually cost less than recalling all those
defective tires
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