Big Corporations, Big Lawsuits Essay Example for Free

titanic Corporations, Big Lawsuits EssayIntroductionThe lawsuit over the defective design of Firestone tires put on Ford Explorers was peradventure the most publicised event when a association was sued for defective produce. This defect also resulted in a large number of accidents causation over 200 deaths and 700 injuries in the US alone, in addition to accidents in Venezuela, Columbia, Ecuador, the Arab Gulf Coast, and East Asia. The massive tire recall by Ford and Firestone on August 9, 2000, direct ripples through the American public and added fuel to the legal fire, causing both manu featureurers and the public to rethink many a(prenominal) issues. Summary of the LawsuitOn August 9, 2000, Ford Motor Company and Bridgestone/Firestone jointly announced a recall in the United States of approximately 6.5 million ATX, ATXII and Wilderness AT tires made in Decatur, Illinois because of move separation problems (Eto, 2006). This recall came after the increased incidence of dr iver deaths in accidents in which Ford Exlorers rolled over triggered widespread public concern. At the time, the company was already hardinessd with multimillion lawsuits. For instance, the lawyers for Edelio and Norma Herrera who died in May 2000 overturning in their Ford Explorer on the manner from Disneyland demanded $1 billion from Firestone (BBC).The lawsuits filed, for instance, by the law firm Lieff Cabraser Heimann Bernstein, LLP, were establish on the claim that Firestone and Ford were guilty because it had failed to cover the concerns in the testing process. Thus, on June 15, 1989, the auto overlords engineers prepared a report to the company management in which they recommended eight design changes to address the rollover problem and improve the safety of the Explorer (Lieff Cabraser Heimann Bernstein, LLP, 2006). However, the management refused to make the major improvements recommended by engineers, willing to nab the design by the previously announced deadline .Impact on the Corporate WorldThe lawsuit triggered a nation-wide discussion about the liability of auto manufacturers, headache ethics, the need to produce quality products, and the regulation of the industry. The fact that Fords management had accelerated production at the expense of safety concerns only to face billions of dollars in lawsuits and a major blow to their reputation later on was a lesson to many managers.The way Firestone and Ford were heaping blame on each other was also an important lesson of how companies should not handle a scandal. To demonstrate commitment to improvement, Ford, for instance, ended its relationship with the tyre-maker (BBC, 2001). The scandal affected one of the largest US auto manufacturers, causing the resignation of its Chief Executive Officers, Jacques Nasser.Impact on RegulationsThe lawsuits thrust also alerted the American public and regulators at the National Highway Traffic Safety Administration (NHTSA) that new, tougher laws on safety standards have to be adopted. In 2000, US Congress adopted new legislature that aimed to raise safety standards. However, it was clear that such laws should have been adopted long ago when the danger of rollover crashes in SUVs became apparent. The law required tire makers to submit to the regulators utmost more information about their produce than before.Impact on the CompaniesThe lawsuits that have been partially successful and partially settled out of court cost both companies, especially Firestone a lot. Thus, the tyre manufacturer shew itself spending over $1.6 billion in 2001 due to the recall and litigation costs (Online Lawyer Source, 2004). The company spent $149 million to settle 30 class-action suits all over the US. In 2001, Ford warned its shareholders that it could face up to $10bn in lawsuits arising from the Ford Explorer deaths (BBC, 2001). The result was disastrous advancement for both companies. Firestone in particular took a long time to recover. As of 2004, i t was spending several times more on recovering publicity than in the year before (Online Lawyer Source, 2004).ConclusionThus, the scandal resulted in massive financial losses for the two companies involved and blows to their corporate images. It also made the public pay closer attention to manufacturers honourable decision-making. On the government level, safety standards had been strengthened resulting in increased requirements for manufacturers.ReferencesEto, G.C. (2006). Firestone Tire Recall. Retrieved April, 1, 2006, from http//www.garyeto.com/firestone-tire-recall.shtmlBBC. (2001, June 17). Firestone faces $1bn lawsuit. Retrieved April, 1, 2006, from http//news.bbc.co.uk/1/hi/business/1393055.stmLieff Cabraser Heimann Bernstein, LLP. (2006). Ford Explorer Rollover Danger 2006 Update. Retrieved April, 1, 2006, from http//www.vehicle-injuries.com/ford-explorer-lawsuits.htmOnline Lawyer Source. (2004). Firestone Recall Information. Retrieved April, 1, 2006, from http//www.on linelawyersource.com/firestone/information.html