Case Study: Management of Firestone Company Ethical Dilemmas

This case study analyzes the Firestone tire recall, focusing on the ethical dilemmas and leadership failures that led to the recall of 6 million defective tires. The report examines the background of the case, including the manufacturing defects, the company's knowledge of the issues, and the relationship between Firestone and Ford. It identifies key issues such as ineffective quality control, management ignorance, and poor coordination. The discussion highlights the ethical conflicts between production demands and public safety, emphasizing the importance of quality maintenance and ethical leadership. The study explores the implications of the issues, including the company's loss of image and financial setbacks, and recommends improvements in leadership, quality maintenance, communication, and decision-making. The analysis emphasizes the need for proactive measures to prevent future ethical breaches and ensure organizational success. The case highlights the importance of ethical leadership in managing crises and protecting public safety.

Running head: CASE STUDY: MANAGEMENT OF FIRESTONE COMPANY
CASE STUDY: MANAGEMENT OF FIRESTONE COMPANY
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Executive Summary
The report has focused towards analyzing a case concerning the recall of 6 million tires produced
by the Firestone Company. The various ethical dilemmas that often lead to the loss of quality and
subsequent losses for organizations have been essentially discussed. The analysis of the events
that led to the disastrous effects caused by the production of faulty tires by the company has been
done. The role of the leadership of the company in the issues and the ideal roles of leadership
during ethical dilemmas have been analyzed. The study has recommended the changes that are
required and their effective implementations at an organizational level. The implications have
pointed towards the requirement for optimal management of the organizational operation for
avoiding similar situations in the future.

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Table of Contents
Introduction......................................................................................................................................3
Findings...........................................................................................................................................3
Background of the Case...............................................................................................................3
Identified issues...........................................................................................................................4
Discussion........................................................................................................................................5
Implications.....................................................................................................................................6
Recommendations............................................................................................................................7
Implementation................................................................................................................................8
Conclusion.......................................................................................................................................9
Bibliography..................................................................................................................................10

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Introduction
The report focuses on the various organizational issues that can necessitate the
requirement for effective management across the diverse corporate sectors. Essentially the
ethical dilemmas that may rise in the course of organizational management from time to time
have been considered for the study. The company in focus is the US based tire company named
Firestone. The company was engaged in a serious issue concerning the manufacture and supply
of defective tires. The implications of the issue was that the company had to recall around 6
million defective tires due to public safety concerns as they resulted in the malfunction of sports
utility vehicles. Considering the case the study is aimed towards analyzing how leadership
management can tackle the serious ethical dilemmas that at times make operational realities and
consumer demand confront with public safety requirements. The case study analysis is
evaluating and analyzing the roles and strategies that organizations implement and can
implement towards generating positive outcomes out of crucial ethical dilemmas.
Findings
Background of the Case
The Firestone Company is one of the most established tire companies of the United
States. The company was founded by Harvey Firestone in 1900 in Ohio. Later on Firestone
established long standing relationship with Ford Motors. The company faced significant financial
issues moving forwards that made them merge with Bridgestone. The organization has had long
standing issues concerning the production of defective tires. The worst issue faced by the
company resulted in the recall of 14 and a half million tires in 1978 (Erickson et al. 2017). It was
due to this disaster that the company faced significant losses and had to merge with Bridgestone

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USA. The issue being considered for the essential analysis of the case study is the recall of
Firestone tires in 2006, after many accidents resulted due to tire malfunctions. The company had
to provide affected customers with refund along with spare tires of the same kind as those that
were affected. The issues with the tires in 2000 were deep rooted in the manufacturing process of
the tires of the company that happened in the mid to late 90s (Erickson et al. 2017). The fact that
the company knew about the identified defects of the tires was more troubling to understand in
the light of the serious disaster that happed due to the same. There were significant issues with
the production process that went on in the factory at Decatur (Govindaraj, Jaggi and Lin 2004).
The company had employed low skilled employees in the factory in 1994 and 1995 in order to
replace the previous employees that were on strike at the time. Separation of tire tread supplied
by Firestone to Ford vehicles were found to be faulty. This resulted in a number of accidents and
Firestone later admitted to have known that many batches of tires were affected due to the
manufacturing defects (Warwick 2002).
Identified issues
There are significant identifiable issues within the case. Primarily it can be said that the
company had employed very ineffective quality control mechanisms within its factory
framework. This resulted in the significant loss of quality with regards to the produced tires.
Moreover, the tires produced came out to be significant threat to public and consumer safety
(Gibson 2017). Many of the tires exported to the other countries resulted in deaths due to
accidents. The other significant issue that is identified is the apparent ignorance of the
management of the known issues within the manufactured tires. In the court sessions, managers
accepted that the tires were faulty to a certain extent but they though that production of a large
number of tires would lower their failure rates as they assumed only few of the manufactured

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tires could actually cause serious problems for the buyers. This assumption was based on the fact
that the company did not deem the problem to be big enough to be causing major issues related
to public safety. Another crucial issue that was identified was related to the relation between
Ford and Firestone. The two companies did not show effective coordination between each other
to solve the identified problems. This was despite the fact that both of the companies were aware
of the issues with the tires. Ford had secretly recalled many of their tires as they received
complaints from their customers. Despite Firestone being the bigger culprit, Ford could have
easily brought the issue to notice much before the problems increased.
Discussion
The case is a genuine example of ethical dilemmas that organizations have faced
historically and increasingly face in the current corporate environments. At times there can arise
serious conflicts between production and demand that lead to organizations taking decisions that
can potentially harm their operations in the long run. The identified defects with the tires of
Firestone fall under similar category of ethical problems (Gibson 2017). It is important to
understand that demand requirements can never be excuses for supplying faulty end products to
the customers. This can cause even greater problems in case of the tire producing firms as the
faulty tires can result in serious safety issues of the users. Moreover, vehicle malfunctions can
also endanger public security on the roads. Hence, quality is of utmost importance in this
industry.
According to Govindaraj, Jaggi and Lin (2004) the market losses that are sometimes
incurred by producers due to issues concerning faulty end products are many times only a bit
greater or almost equal to the direct and indirect expenses that are pre estimated by the
organizations. This causes a significant ethical dilemma and can make way for unethical

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practices that can endanger an organizations long term business prospects (Litano and Major
2016). Since the expected expenses are almost similar to the loss that a firm can or has endured,
companies can easily decide to take unethical risks in order to increase their productivity for
greater profitability. The problems if not handled correctly can result in huge losses for the
company. An example of this can be essentially found through the losses that were incurred by
the Firestone Company forcing it to enter into merger with Bridgestone. In these situations where
the production demands and profitability functions of organizations conflict with the requirement
to maintain ethical standards, it becomes very important that the company adheres to strict
quality maintenance policies (Warwick 2002). This is much required because on the one hand
the lives of the customers are at stake in some circumstances. Additionally, the company’s long
term development can get crucially hampered due to this.
According to the views of Warwick (2002) it is the directors that are to be held
responsible first and foremost in any issue that results in the breach of public safety. Thus,
naturally leadership becomes the most important factor when discussing the significant of quality
maintenance and tackling various ethical dimensions related to organizational behavior. The
problems that often affect an organization are mostly caused or aggravated due to improper
leadership. It is important that effective leadership roles guide the frameworks for productivity
across various enterprises. Organizational progress is dependent on effective leadership. Leaders
should thus, make it an important habit to tackle issues that can result in organizational failure in
the first instance (Meuser et al. 2017).
Implications
The implications of the issues were severe as several law suits were filed against
Firestone that caused the company to lose much of its public image. The most important

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implications of the issues were in regards to the role of the leadership and the statements that
were issued in court and public by the managers of the company. It was clear that the case
occurred largely due to the mismanagement of the identified problems with the production
process by the leadership. The company incurred huge losses because of the tires being called
back (Warwick 2002). More importantly it caused a great deal of loss of image for the company.
It is evident from the issue that the company was not able to effectively handle production
situations and made way for make shift efforts towards tackling the problems that affected its
factories. The factory in Decatur was a main point of concern as it experienced a major strike in
the mid-90s (Warwick 2002). The leadership without trying to resolve the issues with the
existing skilled employees tried hiring lesser skilled replacements. This resulted in a serious loss
of expertise and a serious failure in producing tires that lived up to the quality standards.
Moreover, the problems continued till 2006, when some of the tires that could not be gathered
through the recall process caused many accidents, especially concerning older vehicles
(Govindaraj, Jaggi and Lin 2004). The company was also responsible for the troubles endured by
their partners, Ford. In all, the implications point towards severe consequences for all the parties
involved.
Recommendations
It needs to be kept in mind that the major problems faced by organizations are due to the
ignorance of the leadership in regards to issues that can transpire if even the smallest of the
quality requirements are overlooked. Hence, the recommendations are focused towards better
management and effective leadership.
Firstly, it is very important to considered historic issues that have affected the production
of any organization. In this case, Firestone did not pay any attention to their tire quality issues

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that have made them incur huge losses in the past. Effective leadership requires the better
analysis of past issues for developing better future products. Secondly, the management should
keep quality maintenance at the top of its business goals. Large companies function on the basis
of their quality production. Without maintaining essential quality standards or failing to live up
to the quality standard requirement can result in issues that may threaten the company’s long run
survival. Thirdly, it is important to consider closing the factories that are facing disputes rather
than look for replacement of the skilled workers. Moreover, it becomes extremely important for
the leadership to judiciously consider the demands of the skilled workers as they contribute
significantly towards the maintenance of production quality in an organization. Fourthly, it is
very important to maintain effective communication with long term partners. The leadership
should focus on creating a platform that can ensure optimal levels of cooperation between the
leadership of the partner companies (Goetsch and Davis 2014). In this case the lack of effective
communication between Firestone and Ford hampered the process of improving the quality after
mutual consultation. Fifthly, the leadership should not implement decisions that can risk the
company’s quality requirements. It is important to consider quality with utmost sincerity. There
should be effective quality maintenance at all levels of the production process. It becomes the
crucial responsibility of the organization that it provides equal importance to quality maintenance
and profitability.
Implementation
The implementation of frameworks that will integrate better quality maintenance is the
essential requirement at the given point in time. It becomes much important that strong
leadership is used to coordinate the complete production process of the organization (Chan
2018). The leadership should consider long term implications of an ethical dilemma. One of the

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crucial aspect that led to the downfall of productivity of Firestone was the management’s
decision to ignore issues related to the crucial quality problems of the tires. In Firestone, there is
an immediate requirement for changing the existing ethical principles of the organization. It is
important that better long term progress goals are created (Tourish 2014). The company has to
implement better training mechanisms for the leadership across the organizational levels.
Negative approaches have to be completely scrapped. For example- reduction of failure rates
through the excessive increase in production was a negative way for tackling demand oriented
challenges (Chan 2018). The company has to provide strict guidelines to the leadership across
the organizational levels discouraging such practices. Better hierarchies can ensure a more
centralized decision making system in the organization. It is important that equipment are
regularly changes and obsolete systems are replaced by newer better performing systems.
Conclusion
The case study pointed out the serious limitations that can be caused in regards to the
progressive functions of organizations if the identified problems are not effectively tackled by
the leadership. It is important that even minor discrepancy concerning the production process is
brought to the notice of the organization. The failure of Firestone to tackle issues related to
quality maintenance in the first instance caused a great problem for the long run developmental
aspects for the company. It can be said that the progress path of an organization can only be
determined by the quality and effectiveness of its leadership.

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