Imagine you work for the Worldwide Tire and Rubber Company as a marketing execut

Question

Imagine you work for the Worldwide Tire and Rubber Company as a marketing executive. You have just been informed that a new tire made by your company has a very slight chance of resulting in a blowout which could cause a serious accident. The Engineering Division assures you that the total number of people that could be hurt by this product defect is at most 5. The problem has been corrected, but there are still 5 million of your tires out there with this slight defect.

The Legal Department asserts that it would be cheaper to do nothing and see what happens. If 5 people are injured, the maximum cost to the company would be approximately $20 million in settlements. The product recall of 5 million tires:

Scenario A: would cost at least $500 million, would generate a huge amount of bad publicity that would hurt future sales, and the effect on the price of the stock would be devastating to shareholders. Certainly, there would be no money for executive bonuses.

would bankrupt the company and 3,000 employees will lose their job.

What are the alternatives? What are your recommendations? Why do you recommend this course of action?

Explanation / Answer

There are two alternatives that are present before the company. The first alternative is to do nothing with the hope and the expectation that no one will get injured in the best case scenario. In the worst case scenario this alternative is based on the expectation that only 5 people will get injured. The second alternative is to recall all the 5 million tires and rectify the product defect.

My recommendation, as a marketing executive, would be to do nothing i.e. do not recall the tires. Although this action will not be deemed to be ethically correct (as the best interest of the consumers will be ignored) it will certainly help in balancing the interest of all the stakeholders. If tires are recalled the extent of damage will be high and large number of people will be affected.

My recommendation is based on the principles of ‘utilitarianism’. According to this principle a decision has to be taken keeping in mind its effects. Good things and good outcome should be maximized and bad and negative things should be minimized. My recommendation (of doing nothing) produces the best consequence in this case (from the point of view of different stakeholders like employees, customers, shareholders etc) and so the company should not recall the tires.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.