Ethics February 21st

Report
Ethics
February 21st
Ford/Firestone
background
• Long History
• 1999 14 deaths in Saudi Arabia (not
reported in US)
• 2000 first deaths reported in the US
• Tires recalled
• In December 2000, Firestone blamed Ford
– Firestone tires worked fine on Rangers
problems were limited to Explorers
– SUVs role over easily independent of the tires
• In August 2001, Ford blamed Firestone
– Goodyear tires work fine
• May 21st 2001, Ford and Firestone officially
part ways
Wherein lies the blame?
• Ford
– Ford was alone SUV makers in equipping the Explorer with
Class C tires versus class B tires
• To be a class C tire you have to withstand two hours at 50 mph when
properly inflated and loaded, plus another 90 minutes at speeds up
85 mph. (The standards were set in 1968)
– Class B tires are more heat resistant
• most Explorer death took place in hot Southern States and hotclimate countries
• The Good year tires that were used on the Explorer were class B
– Ford should have been aware of dangers (perhaps not
immediately but certainly after a few years)
• Firestone
– Early investigations linked deadly vehicle accidents to tire
failure, shoddy manufacturing in the Decatur, Illinois plant
– Still GM picked Firestone as its supplier of the year for the
sixth consecutive time in 2001
• Government
– Too slow to investigate deaths or to upgrade standards
• Driver
– Neglected tire pressure, too heavy loading, driving too
fast for extended periods of time.
Consequences
• In may of 2001 Ford announced it would
triple the size of the Firestone recall—a
$2.8 billion prospect, a cost Ford wanted to
shift to Firestone
• At that time Firestone refused to supply the
company with more tires.
• Ford lost market share to foreign rivals, in
July of 2001 it reported its first loss from
operations since 1992
• Ford also faced 200 product liabilities
lawsuits involving Explorer rollovers
• Bridgestone/Firestone faced a more
dangerous situation in 2000 earnings
dropped 80%
• Legal expenses were at $750 million and
were expected to reach billions of dollars
• Some analysts doubted Firestone as a
brand could survive
Firestone Options
• Option #1
– Deemphasize firestone and push business to
the Bridgestone label
• Option #2
– Stop using the firestone brand altogether
• Option #3
– Try to salvage the brand name: “The American
Public is quick to forget.”
Postmortem
• Buyers of Ford Explorers with firestone
tires faced higher risks of deaths and
injuries for years. The New York times
reported that the tire defects were known in
1996. Not till three years later did Ford
replace tires in Saudi Arabia and not till
after television reports on problems did
federal regulators and the two
manufacturers take it seriously
• Ford refused to admit that anything was
wrong with its SUV
• Firestone was slow to clean up defective
manufacturing practices in Decatur, Illinois
and other plants
• Minor ethical abuses became major when
lives were lost. Still the companies delayed
until lawyers were brought in. Then each
company tried to blame the other.
• Throughout this time, saving lives did not
apparently have a very high priority.
Group Think
• The unethical behavior of groups
• The Abilene paradox
Eight Main Symptoms of
Group Think
• Illusion of Invulnerability: Members ignore
obvious danger, take extreme risk, and are overly
optimistic.
• Collective Rationalization: Members discredit
and explain away warning contrary to group
thinking.
• Illusion of Morality: Members believe their
decisions are morally correct, ignoring the ethical
consequences of their decisions.
• Excessive Stereotyping: The group constructs
negative stereotypes of rivals outside the group.
• Pressure for Conformity: Members pressure
any in the group who express arguments against
the group's stereotypes, illusions, or
commitments, viewing such opposition as
disloyalty.
• Self-Censorship: Members withhold their
dissenting views and counter-arguments.
• Illusion of Unanimity: Members perceive falsely
that everyone agrees with the group's decision;
silence is seen as consent.
• Mindguards: Some members appoint
themselves to the role of protecting the group
from adverse information that might threaten
group complacency.
Examples
• The most famous example of Groupthink is
the presidential advisory group who almost
led Kennedy into invading Cuba and
potential nuclear war in the Bay of Pigs
affair.
• The Challenger disaster was another effect
where NASA officials disregarded
engineer’s concerns and decided to launch
the shuttle.
Abilene Paradox
• The Abilene paradox is a paradox in which the
limits of a particular situation force a group of
people to act in a way that is directly the opposite
of their actual preferences. It is a phenomenon
that occurs when groups continue with misguided
activities which no group member desires
because no member is willing to raise objections.
It was observed by management expert Jerry B.
Harvey in his 1988 book The Abilene Paradox
and other Meditations on Management. The
name of the phenomenon comes from an
anecdote in the book which Harvey uses to
elucidate the paradox:
On a hot afternoon visiting in Coleman, Texas, the family is comfortably
playing dominoes on a porch, until the father-in-law suggests that
they take a trip to Abilene (53 miles away) for dinner. The wife says,
"Sounds like a great idea." The husband, despite having
reservations because the drive is long and hot, thinks that his
preferences must be out-of-step with the group and says, "Sounds
good to me. I just hope your mother wants to go." The mother-in-law
then says, "Of course I want to go. I haven't been to Abilene in a
long time."
The drive is hot, dusty, and long. When they arrive at the cafeteria, the
food is as bad. They arrive back home four hours later, exhausted.
One of them dishonestly says, "It was a great trip, wasn't it." The
mother-in-law says that, actually, she would rather have stayed
home, but went along since the other three were so enthusiastic.
The husband says, "I wasn't delighted to be doing what we were
doing. I only went to satisfy the rest of you." The wife says, "I just
went along to keep you happy. I would have had to be crazy to want
to go out in the heat like that." The father-in-law then says that he
only suggested it because he thought the others might be bored.
The group sits back, perplexed that they together decided to take a trip
which none of them wanted. They each would have preferred to sit
comfortably, but did not admit to it when they still had time to enjoy
the afternoon.
Avoiding Group Think
•
•
•
•
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The group should be made aware of the causes and
consequences of group think.
The leader should be neutral when assigning a decisionmaking task to a group, initially withholding all preferences
and expectations. This practice will be especially effective
if the leaders consistently encourages an atmosphere of
open inquiry.
The leader should give high priority to airing objections
and doubts, and be accepting of criticism.
Groups should always consider unpopular alternatives,
assigning the role of devil's advocate to several strong
members of the group.
Sometimes it is useful to divide the group into two separate
deliberative bodies as feasibilities are evaluated.
• Spend a sizable amount of time surveying all
warning signals from rival group and organizations.
• After reaching a preliminary consensus on a
decision, all residual doubts should be expressed
and the matter reconsidered.
• Outside experts should be included in vital decision
making.
• Tentative decisions should be discussed with
trusted colleagues not in the decision-making
group.
• The organization should routinely follow the
administrative practice of establishing several
independent decision-making groups to work on
the same critical issue or policy.
Questions
• Can a firm guarantee complete product
safety?
• Based on the information presented which
company do you think is more to blame for
the deaths and injuries?
• “If an Explorer driver never checks the tire
pressure and drives well above the speed
limit, he has no one to blame but himself in
an accident—not the vehicle and not the
tires.”
• Do you think the government should be
blamed in the Explorer deaths and injuries?
• Have you had any experience with a Ford?
• Have you had any experience with
Firestone tires?
What can be learned
• A firm today must zealously guard against
product liability suits
– Thorough product testing
• Suspicions and complaints about product
safety must be thoroughly investigated
• Health and safety of customers is entirely
compatible with the firm’s well-being
– Lose/lose scenario if customer safety is ignored
– If you don’t do it for ethical or moral reasons do it
because it make good business sense
• Salvage strategy
– Attempt to tough it out, try to combat bad press, deny
culpability, blame someone else, resort to the strongest
legal defense. (this is what Ford did because it blamed
Firestone for everything)
– Shredded tires were obvious and hard to blame on
somebody else
• Conciliatory strategy
– Full admission of problem and removal of risk
– Both strategies can be costly Salvage puts potential costs
in the future, Conciliatory puts costs now
• Where blame is most likely shared, the solution of the
problem lies not in confrontation but in cooperation
• Ford and Firestone today

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