Ethics

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					  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 hot-
       climate 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
•   The group should be made aware of the causes and
    consequences of group think.
•   The leader should be neutral when assigning a decision-
    making 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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