THE CASE AT A GLANCE3
LEVELS OF CONTEXT6
THE FORD-FIRESTONE CRISIS FACTS8
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LIST OF ILLUSTRATIONS
Figure 1. Network Setting of Ford-Firestone Crisis5
Figure 2. Levels of Context7
Equation 1. Primitive Form of Constitutive Rule6
Equation 2. Primitive Form of a Regulative Rule7
In the late 1990’s and early 2000’s several accidents were reported of Ford Explorers equipped with Firestone tires rolling over as a consequence of tires’ failures. By the end of 2000 the death toll was estimated at more than 250, and some 3,000 incidents had been associated with “defective” Firestone tires mounted on Ford Explorers. These problems were frequently encountered in Saudi Arabia and Venezuela but also occurred in mid-western US. The US reports triggered a crisis for the two companies.
The magnitude and complexity of the problem was such that neither Ford nor
Firestone could provide an acceptable explanation. Both companies denied responsibility and did not react as customers might have expected but instead chose to blame each other. The approach taken by Ford and Firestone to the management of the crisis not only severely damaged their century-old relationship but also enabled other parties to exploit this opportunity for commercial gain. Consequences included destroying both companies’ bottom-line and, of course, damage to brand reputation.
Biggemann and Buttle analyzed the episode using Rules Theory. This models the episode and the companies’ interactions as if the parties were applying sets of rules. There are two types of rule account for their interaction, rules of meaning and rules of action. Rules of meaning enable each party to make sense of the other’s acts and rules of action guide each company’s response based on the meaning given to the other’s previous act, as well as on previous experiences and future expectations. Rules Theory recognizes that both Ford and Firestone are embedded in extended networks, which both influence and are influenced by this episode.
In this report with the assistance of the study of the Ford–Firestone crisis by Biggemann and Buttle, the business-to-business dyadic relationship before the rollover incidents is portrayed first. Then the network setting by identifying additional parties that became involved is represented, and finally the parties’ acts as if rules of meaning and action were guiding interaction throughout the evolution of the episode are analyzed. THE FORD - FIRESTONE TIRE CRISIS
Companies in business-to-business markets interact with one another. The outcome of such interaction is inter-company relationships, relationships that are deemed crucial for business success.
Each time a company acts, it potentially affects those with which it has relationships. From a network perspective it goes even further, such acts are thought to have effect even on those companies not directly linked because of the involvement that characterizes the extended networks in which companies operate. Continuous exchanges of acts over time serve as learning devices through which companies develop shared understanding of what is permitted and what is not. Norms, develop ties that keep the parties connected. Bonds, build up the belief that the other has the capabilities to perform the task while looking after the interests of both parties. Trust, whilst increasing the parties’ desire to keep working together in a manner such that both contribute to and benefit from the relationship commitment. These features of relationships are potentially changed for better or worse each time either party performs an act. Likewise changes in...