Findings

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.

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 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 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.

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 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.

Discussion

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).

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 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.

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 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.

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 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.

Antonakis, J. and House, R.J., 2014. Instrumental leadership: Measurement and extension of transformational–transactional leadership theory. The Leadership Quarterly, 25(4), pp.746-771.

Chan, L., 2018. Positive Organizational Leadership: Some Recent Findings in Positive Organizational Scholarship.

Dinh, J.E., Lord, R.G., Gardner, W.L., Meuser, J.D., Liden, R.C. and Hu, J., 2014. Leadership theory and research in the new millennium: Current theoretical trends and changing perspectives. The Leadership Quarterly, 25(1), pp.36-62.

Erickson, S.L., Stone, M., Hanson, T.A., Tolifson, A., Ngongoni, N. and Kalthoff, J., 2017. SHAREHOLDER VALUE AND CRISIS COMMUNICATION PATTERNS: AN ANANLYSIS OF THE FORD AND FIRESTONE TIRE RECALL. Academy of Strategic Management Journal, 16(1), pp.32-53.

Gibson, A.M., 2017. Ethical Dilemmas and Challenges.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Govindaraj, S., Jaggi, B. and Lin, B., 2004. Market overreaction to product recall revisited—The case of Firestone Tires and the Ford Explorer. Review of Quantitative Finance and Accounting, 23(1), pp.31-54.

Karvinen-Niinikoski, S., 2016. Social work supervision: Contributing to innovative knowledge production and open expertise. In Social work, critical reflection and the learning organization (pp. 33-50). Routledge.

Litano, M.L. and Major, D.A., 2016. Facilitating a whole-life approach to career development: The role of organizational leadership. Journal of Career Development, 43(1), pp.52-65.

Meuser, J.D., Gardner, W.L., Dinh, J.E., Hu, J., Liden, R.C. and Lord, R.G., 2016. A network analysis of leadership theory: The infancy of integration. Journal of Management, 42(5), pp.1374-1403.

Reijers, H.A., Mendling, J. and Recker, J., 2015. Business process quality management. In Handbook on Business Process Management 1 (pp. 167-185). Springer, Berlin, Heidelberg.

Siva, V., Gremyr, I., Bergquist, B., Garvare, R., Zobel, T. and Isaksson, R., 2016. The support of Quality Management to sustainable development: a literature review. Journal of Cleaner Production, 138, pp.148-157.

Thompson, J.D., 2017. Organizations in action: Social science bases of administrative theory. Routledge.

Tourish, D., 2014. Leadership, more or less? A processual, communication perspective on the role of agency in leadership theory. Leadership, 10(1), pp.79-98.

Warwick, B.A., 2002. Reinventing the Wheel: Firestone and the Role of Ethics in the Corporation. Ala. L. Rev., 54, p.1455.

Zeng, J., Phan, C.A. and Matsui, Y., 2015. The impact of hard and soft quality management on quality and innovation performance: An empirical study. International journal of production economics, 162, pp.216-226.