Ford Motor Company: Ethical issues

Ford Motor Company and its ethical issues

In 1903, Henry Ford founded Ford Motor Company (Ford). Since then, Ford has dominated the automobile industry and are today one of the leading automobile manufacturers in the world (Ford Motor Company, 2010).

Over the lifetime of Ford, different technical as well as ethical issues have effected their business environment. Most recently, in 2010, where three of Ford’s models (Ford Fusion, Ford Escape and Mercury Milan) were under scrutiny of the US regulatory authorities for possible acceleration problems. Meaning, a preliminary investigation of the models where conducted. The purpose was to determine the full extent of complaints by consumers having their gas pedals trapped in the floor mats during acceleration (Ford Motor Company, 2010). According to the National Highway Traffic Safety Administration (NHTSA), who were in charge of this investigation, three complaints about Ford Fusion models were received during 2010. These were all verified, which triggered a larger and more comprehensive investigation (Ford Motor Company, 2010).

The stakeholders who were affected the most, by Ford’s acceleration problem, were the casualties, suppliers, and Ford themselves. Firstly, casualties since their lives were at stake. Secondly, suppliers because they had to redesign and adapt their product to new regulations. Lastly, Ford, as an organization, in terms of additional costs in recalls and repairs in order to salvage their safety reputation.

In 1999, Ford faced a similar kind of problem when they made a breach of ethics. At that time, the issue was not acceleration but tires. Ford’s main supplier of tires was Firestone, which were fitted on different models of Ford’s SUV’s (Sport Utility Vehicle) line-ups. Both companies knew about the defect in the tires, which were causing accidents due to degradation of the outer surface and deflation. However, despite the acknowledgment from both companies, they were more occupied by who were accountable for the problems. This mud throwing made it difficult for consumers to know whom to blame (Verschoor, 2000).

Even though Ford’s main priority is customers and their safety, they hesitated and neglected to solve the issue before it escalated. In stead, Ford chose to keep quiet, which led to customers loosing their lives in various accidents. One could classify this as one of the classic blunders made by Ford in regards to ethical issues (Verschoor, 2000).

Ethical Stance

Besides, costing Ford a lot of money Ford’s safety and quality was on the line. Ford had to pay lot of money as compensation to the customers who filed legal action against them. As a counterattack, Ford recalled vehicles of similar model, and replaced their tires free of cost (Verschoor, 2000). After this incident, Ford’s safety, quality and reputation are in question. They lost their customers’ trust, and in an attempt to regain it, they acquired Volvo, known for its safety. Ford was successful in retaining the trust because they used all the safety features from Volvo and fitted it into Ford’s models. ()

Now with the recent issue of acceleration problem Company again breached its ethics, which says safety comes first for its products but because of the error in the production line this problem persisted. This time without bothered about the consequences it may face announced publically about this issue unless like the last time where it initially ignored the issue and ended up pay lot. In regards to Ford’s resent acceleration problem, Ford made sure that each of their employees knew about the issue and worked in teams to rectify the effected models. Dealers were as well informed about the issue, and asked to call the customers, they had sold an effected model to, so the issue could be fixed. Ford increased their production of “redesigned” acceleration pedals and made sure that it reached all dealers on time.

Overall, Ford managed to recall their models and resolve the issue in an ethical manner. Ford’s Executive Chairman, Bill Ford said shortly after “At Ford, we’re not only committed to making great products and building a strong business, we believe in contributing to a better world and doing business in an ethical way” (Emison, 2010) (Kavka, 1983).

This statement is one of the reasons why Ethisphere Institute, which is a leading business ethics think tank, considers Ford as one of the top ethical companies in the world (Anonymous, 2010).

Simultaneous with being ethical, Ford has through the years tryed to implement some green initiatives (Anoumonos, n.d.). However, in 2008 was some disturbance about the alignment of Ford’s startegies and their actions. The three largest auto manufactures in the US automobile industry (GM, Ford and Chrysler) where gathered in Washington to ask for bailouts. Each CEO arrived in their own privat jet, which catched the headtitles of every news paper. There was outrage from the public by the fact they were wasting money even in recession period. The signals that these companies were sending out, was not ethically right in many consumers point of view. Therefore, the second time around, Ford’s CEO, Alan Mullay, arrived to Washington in a green car. He wanted to show the world that the Ford cares for the environment.

After the tire issue in 2000, Ford began to concentrate more on fuel efficient and greener cars because of the increased demand by consumers. According to Hill (2008), Ford has always cared for the environment even though it is recognized for producing big gas guzzling SUV’s. It is simply trying to find ethical ways to save the environment.

Significance of this case

The reason for us to take this case is that, if an organization tries to breach its ethics have to face consequences. If the precautionary steps are not taken into account chances are there that organization can lose its brand value. In this case, Ford when they came to know about the tire problem tired to ignore the issue because that time they were focussed more on profit rather than on ethics. Even thought Ford realised later and did the recalls but it was too late. Ford’s safety was in question and started losing its market share. Until today, Ford is paying the compensations for that issue and many other are still pending. With this ignorance Ford as learnt a lot on ethics. Probably that is one the reason as soon as Ford rectified that they is defect in the acceleration pedal they recalled all the vehicles that are affected. To the customers they tried to convey the message that Ford what to do business with them in ethical way. This also enabled them to built trust among their customers.

Conclusion

Large organizations have a tendency to put profit before quality. Ford is no exception to this. It sometime compromises with safety and quality to make more profit. The acceleration and tyre burst problems are issues that reflect Ford’s deviation from its original objective of customer satisfaction and safety. By studying these problems, it can be concluded that even when the main goal of an organization is customer satisfaction and safety, they may get distracted by focusing only on profit making.

To switch this focus, ethics play a very important role. Ethics is not only doing things legally but also doing it in the right way. In the acceleration and tyre burst problems, Ford did the right thing by compensating the customers, which, in some extent, helped them salvage their safety reputation.