Ford-Firestone Case

In: Business and Management

Submitted By lilibethchan
Words 489
Pages 2
I. Synthesis
FORD MOTOR COMPANY:
• Founded by Henry Ford in 1903.
• Ford Explorer – launched 1990, became the most popular SUV vehicle in America o From 1990-2000, Explorer proved to be the among the safest SUV
 Fatality rate is 27% lower than passenger cars overall and 17% lower than other SUVs
 SUV rollover > Sedan rollover because of higher center of gravity o Profit at $8,000 o Same truck frame used on Ranger pickup – “Twin I-Beam” o Also same with Bronco II SUV which had 800 lawsuits and 43 fatalities o 600 pounds heavier than Ranger, however it did not upgrade the suspension and tires to carry the bigger load. o 1988 test reports showed the Explorer had an even greater tendency than the Bronco II to lift two wheels off the ground
 Engineer recommendations: Mounting the wheels 2 inches apart; lowering the engine; replacing the Twin I-Beam suspension; lowering the tire pressure; stiffening the springs o By not optimizing the vehicle’s center of gravity, tire selection would become an important factor.
FIRESTONE TIRE & RUBBER COMPANY
• Founded by Harvey Firestone
• Tire manufacturer since 1900
• In 1990 it was acquired by Bridgestone USA Inc. for $2.6 Billion
• Developed ATX tire (and ATX II) for Ford Explorer – also used on the Ranger. o Recommended pressure was 30 to 35 psi.
• On March 1993, Firestone’s day-to-day operations were put in the hands of John Lampe.
• July 1994, 4,000 United Rubber Workers union members went on strike on 5 Firestone plants including its plant in Decatur, Illinois. o After 7 months, Firestone hired non-union workers (unskilled and untrained) to replace striking workers.

II. POINT OF VIEW
DESIGN FLAWS
FORD FIRESTONE
1. Ford Explorer is more than 600 pounds heavier than the Ranger; but suspension and tires are not suited to carry a bigger load. 1. Firestone agreed to reduce tire weight to…...

Similar Documents

Ford Case

...market share leadership is a function of marketing strategy they choose to embrace, Honda and Taurus made a run at being number one during that period, both have many similarities concerning their size, price and demands, though each company has its own individual strengths that have allowed it to succeed in the current economic climate and also specific weaknesses that have affected their abilities to grow as vigorously as it should. Together these two companies will continue to be at the forefront of the introduction on new vehicles into their respective markets by capitalizing on the innovation that is inherent in their organizations. Honda Motor Company, a Japanese company, has its largest customer base is in the U.S., alternatively Ford Motor Company, an American company, has its largest customer base is in Asia. The Japanese have been particularly hurt due to economic variables impacting their country, the valuation of the yen was high and gave the American automobile manufactures more time to catch up in terms of product innovation, the Japanese also suffered from inappropriate product and investment strategies which were motivated by overly optimistic growth and market share forecast. In 1989 a battle between Honda and Taurus started for gaining the number one selling car in the United States resulted in Taurus winning in 1993 and became the bestselling car in the United States, a title it would retain for as long as this generation was sold. When production......

Words: 2055 - Pages: 9

Firestone and Ford

...Pre-Analysis: A. Perspective: 1. Describe the perspective of the author(s) of the case study and the possible biases that might result from that perspective: The author, Archie B. Carroll is professor at University of Georgia. He may neither work for any company nor be a significant decision-maker in a company. Therefore, he analysis and perspective may different from perspective of important decision-makers. Since he is a professor, he may not know much about car and tire and the difference impact of different tires on different car. He may be a loyal customer of Ford, so he may bias toward Ford and give favorable information and perspective for Ford. 2. My perspective as the analyst: Ford is one of my favorite brands because of its bold image. Therefore, I may be more interested in favorable facts and deny negative numbers of Ford. I don’t know much about automobiles, so I may not understand the consequences of tire tread separation when driving. B. State what you are bracketing: They would do bad things to lower the costs of tire which led to tire tread separation. They would have blamed each other and their customers for their own fault. They would keep all customers’ complaint and lawsuit private from public. They would continue to use low quality tires. II. The Situation : A. List the facts relevant to the issue(s) identified: • The first lawsuit against Firestone was in 1991. • Lori Lazarus was trapped in her car and rescued......

Words: 389 - Pages: 2

Ford Case

...Ford is one of the leading auto-manufactures based in the United States, and competes with other top manufactures on a global stage. However, given its leading market position, it has accumulated a large sum of cash and has not been utilizing it efficiently. I found evidence of this by comparing its Cash Turnover Ratio with that of its two closest competitors: GM and Chrysler (Exhibit 1). The analysis shows that Ford’s Cash turnover ratio is lower than its two competitors, suggesting that not only does Ford have excess cash, but it has not been utilizing it effectively. Ford believes that the excess cash has undervalued its stock as well as descentivizing employees whom otherwise would not feel motivated with its given level of cash. In response to this, Ford has developed a VEP plan which contains the features of a stock-split as well as share repurchase, offering to exchange existing shares on a one-for-one basis and receiving $20, or receiving additional new Ford common shares; a stock split. This will essentially decrease the stock price while increasing the number of shares, with the drop in price being offset by the additional $20. On paper, this provides value, flexibility, and liquidity for shareholders, because unlike returning cash through Dividends, the VEP is designed to return cash as taxed as capital gains, generating value for its shareholders. The repurchase aspect also sends a distinct signal to the market that they believe the stock is undervalued. It......

Words: 643 - Pages: 3

Firestone Case Study

...Firestone Case Study Robert Workman Jessica Jurkowski Michael Wilding Webster University Firestone Case Study BACKGROUND In 1900 Harvey S. Firestone established The Firestone Tire and Rubber Company, the company started with 12 employees. They started out by supplying rubber tires for wagons and buggies. In the 1908 Henry Ford and Harvey Firestone formed a partnership with firestone supplying tires for the new model T this was a natural relationship because they had mutual friends. (Noggle and Palmer, 2005) Today Firestone is known as Bridgestone/Firestone after the two companies merged in 1990 for $2.6 billion. Today the company markets 8,000 different types and sizes of tires along with other products. Firestone has had a substantial history of scandals relating to tire safety In 1978 Firestone recalled 14.5 million tires—the largest tire recall at the time—after excess application of the adhesives binding the rubber and steel resulted in 500 tread separations and blowouts. The company was also fined $500,000 for concealing safety problems. ("e-businessethics.com") However in the late 90’s Firestone would be put into serious jeopardy and be threatened with going bankrupt. The Ford Motor Company was started by Henry Ford in 1903 in Dearborn, Michigan producing only a few cars a day. Ford was the first company to use assembly line production and has grown into one of the largest family run organizations in the world In 1999 Ford had a staff of 360,000......

Words: 3655 - Pages: 15

Ford Firestone Controversy

...Ford and Firestone Controversy Centuries ago Ford Motor Company and Firestone Company developed the perfect collaboration and built a strong and wealthy business relationship in which Firestone manufactured tires to be used on Ford’s motor vehicles. Unfortunately, this relationship came to a screeching end after a fatal crisis began around 1999 in which Ford Explorers equipped with Firestone’s Wilderness AT, radial ATX, and ATX II tires caused a series of serious fatal accidents. When the treads of these wheels peeled off the casings vehicles going at highway speeds would enter into ghastly rollover crashes. Although the root cause of the crisis that occurred remains an overall mystery, Ford Motor Company and Firestone Tire Company both act as examples of two organizations in violation of business ethics and further illustrate how ones disregard to act in compliance with ethical and lawful actions, especially in the business setting, is simply not acceptable and could lead to catastrophic consequences in the end. Ethics, which deal with personal moral principles and values, and Law, which deal with societies values and standards that are enforceable in the courts, are leading factors that play huge roles in the day-to-day business environment. According to the Ethical/Legal quadrant provided in the Marketing textbook by Kerin, both Ford and Firestone clearly fall within the unethical/illegal section, due to the fact that both displayed in their actions a blatant......

Words: 834 - Pages: 4

Ford vs Firestone Reaction Paper

...Firestone vs. Ford: An Epic Public Relations Battle In every business, maintaining good public relations with the consumer is crucial. What is public relation? Public relation is the business of inducing the public to have understanding for the goodwill toward a person, firm, or institution and also the degree of understanding and achieved. According to some entrepreneur, public relation is the opposite of advertising wherein advertising, you will have to bring out a large amount of money from your wallet in order to endorse whatever product you wanted to be known to the public using Television, radio, billboards and the like. In public relation, you may say that it is better because publicity is remembered longer by the consumers more than an advertisement. Another one is because it is more cost-effective than advertising because even though you would have some expenses, it would not be as big as advertising because you would only use phone calls and mailings to the media most of the time. Based In the article of Firestone and Ford, you can easily say that both companies have established a good relationship with each other and gets along very well in their alliance in the past decades. Firestone is supplying the tires of the Ford’s vehicles for almost a century until the unexpected controversy broke out, deciding who it is to blame for those several car accidents. After the investigations resulted that the tread of the tires peeled off, Firestone immediately recalled......

Words: 978 - Pages: 4

Ford Pinto Case

...Ethics 368 22 June 2014 The Ford Pinto Case from a Utilitarian Perspective “Utilitarianism adopts a teleological approach to ethics and claims that actions are to be judged by their consequences” (DeGeorge 44). When looking at an decision from this view, we are to be impartial that decisions are not right or wrong by themselves, but also that we must analyze the results to determine if actions are good or bad. We know that Ford became more completive in the subcompact market from the Pinto sold in 1971 thru 1978. Ford also captured their fair share of the market for subcompact. There are several things about utilitarianism that make it appealing as a standard for moral decisions in business. One of them being “act utilitarian”, which holds individual actions to a test. “A theory developed by Jeremy Bentham and introduced to the world in his book An Introduction to the Principles of Morals and Legislation, released in back in the 17th century” (Bentham, Jeremy). There are many ways to determine the outcome of an action. Our reactions to pain and pleasure is a measure. The good that an action provides for the majority of those involved or the greatest number of people is another. Ford had a product to deliver and consumers wanted it. In determining whether this action produces more pain or pleasure for the majority, hedonistic calculus can be used. It is easier to be impartial, when using this calculus on an ethical decision. The calculus weighs all the factors......

Words: 1296 - Pages: 6

Ford Case

...R D E F E N S E A NA LYS E S Ford Motor Company’s Investment Efficiency Initiative: A Case Study James L. Nevins Robert I. Winner Danny L. Reed, Task Leader April 1999 Approved for public release; distribution unlimited. IDA Paper P-3311 (Revised) Log: H 99-001057 This work was conducted under contract DASW01 98 C 0067, Task AD-1-950, for the Office of the Deputy Director, Systems Engineering, Office of the Director, Test, Systems Engineering and Evaluation, Office of the Under Secretary of Defense (Acquisition and Technology). The publication of this IDA document does not indicate endorsement by the Department of Defense, nor should the contents be construed as reflecting the official position of that Agency. © 1999 Institute for Defense Analyses, 1801 N. Beauregard Street, Alexandria, Virginia 22311-1772 • (703) 845-2000. This material may be reproduced by or for the U.S. Government pursuant to the copyright license under the clause at DFARS 252.227-7013 (NOV 95). Preface This document was prepared for the Office of the Principal Deputy Under Secretary of Defense (Acquisition and Technology) under the task order Defense Manufacturing Strategy, and addresses a task objective, to provide a case study on integrated product/process development implementation. This case study will be used for acquisition and technology training purposes by the sponsor. Many of the incentives, strategies, and implementation approaches at Ford have parallels in and......

Words: 15990 - Pages: 64

Ford Case

...2014 Subject: Ford’s Shareholder Value Enhancement Plan (VEP) Evaluation Ford Motor Company Ford Motor Company is an American automaker, it is the world's fifth largest automaker based on worldwide vehicle sales. Its headquarters are based in Dearborn, Michigan, which is a suburb in Detroit. Henry Ford founded Ford Motor Company on June 16, 1903 and it became one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. Ford Company is the largest family-controlled company in the world; it has been in continuous family power for over 110 years. Ford now incorporates two brands: Ford and Lincoln. Ford once owned 5 other luxury brands which where were Volvo, Land Rover, Jaguar, Aston Martin and Mercury. But over time those brands were sold to other companies and Mercury was discontinued. Nasser was CEO of Ford Motor Company from 1998 to 2001. Todays CEO is Alan Mulally. Brief Summary of the Article The article talks about how in April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to recapitalize the company’s ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. For each share currently held, the plan would give stockholders one new share in addition to choosing either $20 in cash or additional new Ford common shares. Shareholders that would choose to receive cash would......

Words: 2124 - Pages: 9

The Ford Case

...THE FORD CASE Executive Summary After carefully analyzing Ford’s existing supply chain I immediately became aware of its highly complex nature. This high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future. Ford’s major difficulty in their present system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly. Realizing an urgent need to modify their supply chain in order to make it more cost effective and more profitable, and after careful analysis of the whole situation, I have recommended the partial implementation and execution of the virtual integration direct business model that has been used by Dell. Through this model, Ford will use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with their suppliers and end users. Furthermore, Ford can boost its sales by providing better customer service and by having faster communication between suppliers, manufacturers, and customers in the value chain. This proposed system will have to run concurrently with the existing supply chain so that Ford will cover both market segments at the same time...

Words: 1474 - Pages: 6

Ford Case Study

...Case Study of Ford Motor Co. Executive Summary Ford Motor Co. was second largest automobile company in the word, with revenue $.144 billion and more than 370,000 employee (in 1996), with extended operations to 200 countries. Ford dealing with a huge number (thousands) of suppliers and dealers in daily basis, which create high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future if they didn't find a proper solution . the main issues with their current system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly. Ford realized that they should modify their supply chain in order to make it more cost effective and more profitable, in order to solve this issue for launched a full organization re-structures business process plan called (FORD 2000), by segmenting their market to 5 Vehicles Centers (VCs) for product development activates, each (VC) was responsible about for developing of vehicles in a particular customer market, By partly adapting the virtual integration direct business model of Dell Co., Ford can use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with......

Words: 1853 - Pages: 8

Ford-Firestone Case

...Synthesis FORD MOTOR COMPANY: • Founded by Henry Ford in 1903. • Ford Explorer – launched 1990, became the most popular SUV vehicle in America o From 1990-2000, Explorer proved to be the among the safest SUV  Fatality rate is 27% lower than passenger cars overall and 17% lower than other SUVs  SUV rollover > Sedan rollover because of higher center of gravity o Profit at $8,000 o Same truck frame used on Ranger pickup – “Twin I-Beam” o Also same with Bronco II SUV which had 800 lawsuits and 43 fatalities o 600 pounds heavier than Ranger, however it did not upgrade the suspension and tires to carry the bigger load. o 1988 test reports showed the Explorer had an even greater tendency than the Bronco II to lift two wheels off the ground  Engineer recommendations: Mounting the wheels 2 inches apart; lowering the engine; replacing the Twin I-Beam suspension; lowering the tire pressure; stiffening the springs o By not optimizing the vehicle’s center of gravity, tire selection would become an important factor. FIRESTONE TIRE & RUBBER COMPANY • Founded by Harvey Firestone • Tire manufacturer since 1900 • In 1990 it was acquired by Bridgestone USA Inc. for $2.6 Billion • Developed ATX tire (and ATX II) for Ford Explorer – also used on the Ranger. o Recommended pressure was 30 to 35 psi. • On March 1993, Firestone’s day-to-day operations were put in the hands of John Lampe. • July 1994, 4,000 United Rubber Workers union members went on strike on 5 Firestone......

Words: 489 - Pages: 2

Ford Case

...EXECUTIVE SUMMARY Ford Motor Company started in Michigan in 1903. They have focused on designing and manufacturing that had been successful, however with increasing competition globally and increase capacity it needs to look at ways to improve profitability. Ford Challenge is to continue to research ways to be viable in the market and industry conditions. Dell Computers had been very successful with their virtual integration. However, since Dell and Ford are different types of industries, computer manufacturing and auto industry respectively, it does not seem right for Ford to implement exactly what Dell has which is “virtual integration model”. Realizing an urgent need to change their supply chain in order to make it more cost effective and more profitable, what I am thinking is Ford can partially implement and execute the virtual integration direct business model that has been used by Dell should be applied to Ford’s supplier base, distribution system and dealership. Through this model, Ford will use the emerging information technologies as well as new ideas from new technologies of other industries in order to transact with their dealers, suppliers, affiliates and customer. Ford can also boost its sales by providing better customer service and faster communication between dealers, suppliers, affiliates and customers in value chain. By measuring the performance of this model, Ford should schedule periodical review and evaluation meetings. All improvements along......

Words: 287 - Pages: 2

Case Analysis Ford and Firestone

...Case Analysis Report In August 2000, Ford Motor Company and Firestone Tire Company recalled 6.5 Million ATX and AT tires that had been installed on Ford’s Explorer model SUV. At the time, it appeared as though Ford and Firestone were doing the right thing. They had found out that the tread separated on Ford Explorers in states with intense heat, such as Florida and Texas. However, it later came to light that both Ford and Firestone had known about these problems earlier than 2000 and that Ford had even had a similar recall in 9 countries the previous year. Firestone however had disagreed with the recalls prior to 2000. Many of these countries were in the Middle East where temperatures are frequently in excess of 100° Fahrenheit. The Stakeholders There are numerous stakeholders in this case some, such as Ford and Firestone by not being forthright with the consumer had a lot to gain and others such as the consumers had a lot to lose. Ford Motor Company Ford Motor Company is one of the largest stakeholders in this case. They had the most to gain from selling the Explorers and not publicizing the potential problems with Firestone tires. By issuing a recall, they would lose both money and customers if the public thought their SUVs were unsafe. My problem with Ford is that they knew that there was a problem with the Ford Explorer before it went into production. Ford engineers recognized that by using the larger P235 tire, there was a potential for more......

Words: 3611 - Pages: 15

Ford and Firestone

...Ford and Firestone Case Study Safety issues involving Firestone tire tread separations specifically on Ford Explorer SUV’s and resulting vehicle rollovers were brought into the public’s view in early 1998 as a result of several tragic accidents. Tire tread separation photo, Associated Press, 2000 One accident involved a junior high school girl named Jessica LeAnn Taylor from Mexia, Texas.   Jessica was a passenger in a Ford Explorer with Firestone tires, during the accident the tire peeled off and forced the vehicle to lose control and proceed to roll. This young girl died from complications caused during this accident.   Another accident involved a Ford Explorer driven by Victor Rodriguez from Laredo, Texas.   The Firestone tire shredded off while Victor was driving.   His car flipped and Mr. Rodriguez’s 10 year old son Mark Anthony died at the crash site. On February 7, 2000, Anne Werner, a reporter at KHOU-TV, in Houston, TX, introduced Cynthia Jackson, who described how her husband of a year and a half had died and how her own legs were amputated above the knee because their Ford Explorer fitted with the original Firestone Radial ATX tires flipped after the front tire came apart1. Firestone later reprimanded Robert W. Dechrd, CEO of A.H. Bello Corporation (owners of KHOU) and Peter Diaz, President and General Manager of KHOU, for airing the story which, according to them, “contained falsehoods and misrepresentations that improperly disparage Firestone and...

Words: 862 - Pages: 4