Monday, October 26, 2015

Journal Number 10 – “CSR”

What is Corporate Social responsibility? According to the video presented in class, it is “good business for good society for today and tomorrow. “ Personally speaking, I completely agree with this definition as it is very simple and it is what I have come to realize after all of the previous class sessions. This is especially the case when we have discussed how SAS was able to sustain double digit growth despite competition and significant events that affected the global markets. They have achieved this feat by investing significantly in their employee’s welfare. They have provided benefits which were unheard of and  other companies would not normally provide like free day care for employee’s children and restaurant quality meals to name a few. This lead to employee job satisfaction that further lead to dollar amounts for the company as employees are more motivated and inspired to work.

What struck me the most during this session is it enlightened me more about what really CSR means. Previously, I view it as something done only by big corporations that has enough means to have such programs in place and because they are required by law. However, after this session I now know that yes companies use this as a tool for marketing but it is not just that as at the same time it encourages others to do the same. In essence, it is a win-win solution for the company as it is being rewarded for doing good to the society.

In addition to the above, I also realize that indeed it pays to appreciate how the company makes money than how they spend it. Here in our country, there are many tycoons who do admirable philanthropic acts through their foundation. People look up to them and praise them as normally people associate CSR with charity. However, if you look a little deeper you will find that they may be committing unethical practices in generating money from their businesses which funds the admirable programs of their respective foundations. I praise them for their charity but I do not agree that they will justify the means because of the end result. I believe that they can still achieve the same results without resorting to what they are currently doing as being a responsible member of the society is proven around the world to pay back dividends in the future. 

Tuesday, October 13, 2015

Journal number 9 - Ford-Firestone Debate

Background of the case:

The Ford-Firestone Case is about a huge business debacle between Ford Motor Company (Ford) and Firestone Tire & Rubber Company (Firestone) that caused hundreds of lives and billions in damages for both companies. This controversy also tore the long-time relationship of the two giants in the automotive industry, which began in 1896 when Henry Ford—the founder of Ford-- asked Harvey Firestone—the founder of Firestone-- to create tires for his experimental vehicles. It was also known for the high number accidents involving Ford Explorers fitted with Firestone tires.

In 1990, Ford launched the Ford Explorer, a Sports Utility Vehicle (SUV) that boomed the sale of SUVs in the United States market. Ford sold 3.6 million units of Explorer, which quickly became the number one selling SUV in the US, booking Ford profits.

In 1998, Sam Boyden of State Farm Insurance received a call from a claims adjuster about a case of Firestone tread separation. Upon his investigation on the inquiry, he discovered several cases of claims pertaining to cases of Firestone tread separation. After seeing the Firestone tire cases filed, he sent an email to the National Highway Traffic Safety Administration (NHTSA)—an agency under the Federal Department of Transportation—to notify the unit.

In May 2000, after recording 90 complaints, including four deaths, NHTSA formally started an investigation. The investigation covered the AT, ATX, and Wilderness tires, totaling 47 million, all made by Firestone from 1990 to 2000. During the succeeding months, the number of complaints as well as the number fatalities was rising. In August 2000, Bridgestone-Firestone, announced a recall of its 15” tires, which included those installed in Ford Explorers (model 1991-2000).

Crux of the case:

The case suggested that both Ford and Firestone were aware of the tread separation incident earlier than when initial complaints were filed against the 2 companies. Even though similar incidents were reported outside USA such as Saudi and Venezuela, Ford held back in rectifying the situation. This is because the company is too much focused on dollar revenue and loss. They took a chance on the possibility of not having similar accidents, therefore avoiding a huge recall cost. Also, as the profit margins on Ford SUVs are significantly higher than other models, they opted to forcefully meet their target release date by implementing workarounds to mitigate safety risks. It shows how the management culture is leaning towards market share dominance and meeting deadlines to ultimately gain more profit.

Furthermore, before shutting down the Firestone’s Decatur plant and laying-off a number of employees due to the aggregate costs of tire replacements and product liability lawsuits to Firestone, union workers at the plant were in a 10 month-old-strike in 1994. The plant was operating with replacement workers and managers. The change in work shift schedule from 8 to 12 hours resulted in a labor strike. Performance and quality of work from the laborers were greatly affected due to extended shift hours and outdated manufacturing equipment. This has led to the reason why most of the incidents received were from tires manufactured in Decatur plant.

Argument:

Firestone may argue that the rollovers are the results of  design flaws on the Explorer as there are evidence that Ford rushed its design. In addition to that, Ford tested the Firestone tires on a mule rather than an actual Explorer as there is none available during the time of testing.

On the other hand, Ford may argue that the main reason for the accidents involving the Explorer are due to the defective and poor quality tires that Firestone produced. This is because when they used other tires such as Michelin there were significantly less occurrences of accidents or there are hardly any.  

Impact of the case:

This does not only lead to the end of a century long partnership between great American companies that are greatly admired by others but it also opened the world's eye to other early warnings that may lead to a catastrophic event. In this case, there were already signs such as those reported accidents in the Middle East but they were ignored as they were not given that much of an importance in America as it happened in a different country.

Conclusion:

In my opinion, Firestone and Ford should have just collaborated with each other to combine their resources and address the needs of their customers whether it be financial for those that were already injured or a recall and replacement for those that were fortunately not yet involved in an accident. By doing this, they could have at least preserved their reputation to the public that may have saved  the customer confidence that they have lost in the following years.

In conjunction to the above, it is clearly seen that both of them have faults. Firestone produced defective and poor quality tires while Ford should have done further testing on the Firestone tires especially when complaints are pilling up. They know something was wrong but because of their long relationship with the other they decided to take their words as it is. 

Most importantly, Ford can not argue the fact that when other tires were used instead of Firestone, there were hardly an accidents. This is because they should have taken full responsibility as people will buy a car because of the brand of the car (in this case Ford) and not because of the brand of the tires.  


Wednesday, October 7, 2015

Journal number 8 – Service Learning Part 1

For our Service Learning our group decided on helping Handog Tungkod Project. Our objective here is to give canes to senior citizens.

Before we decided on the above, we were considering teaching kids financial planning (how to save money). Personally, if given the chance, I will pursue this as it is a personal advocacy of mine. I often think what would have happened if I knew how to save and invest when I was still in school. It’s not that I don’t save; actually I am very disciplined with money. Unfortunately, back then the only way that I knew is to keep my savings in the bank. The problem with this is you save money for the longest time that you can but in a time of need it devaluates because of inflation and most of the time I zeroed it out as it does not grow. The reason we did not pursue this is because we couldn’t get an organization to conduct this seminar.  We thought of schools but since our schedule only allows us to have the event on a weekend, as we are all working full-time this was discounted. Finally, we decided to look for an orphanage but we couldn’t get any confirmation from the orphanages that we reached out to.

Our third option was to conduct a sports event in a community or an organization for children. What we hope to achieve here is to bring them outdoors away from their gadgets like PC, mobile phones, tablets to name a few. We were thinking of naming the event as “No CoC day” or “No Dota day” as children nowadays tend to play more electronic games which is proven to be very unhealthy compared to traditional outdoor games. One of our group mates has already a sponsor institution in the works, however, as with the previous; we were again to have confirmation from the organizations that we reached out to.


Overall the experience was very interesting and enlightening in the sense that we were going different directions at one point but thankfully we have a more concrete direction at the moment. It also made realize that starting my mba is really worth it as I am learning a lot from my group mates. I may not be in their industry but just sharing to them my thoughts and hearing theirs is already a way of learning. Most importantly, while learning, we will also be able to help or give back to the community in the very near future that otherwise will be impossible on my own.

Sunday, October 4, 2015

Journal number 7 – Brian’s Franchise


Background of the case:

Brian is a well-off American who dropped out of college and is now living in Amsterdam. Previously, he owned a large franchise chain of small indoor farms specializing in growing marijuana in the United States. He developed this expertise by participating in research about developing new breeds and indoor farming. Due to the governments effort of eradicating marijuana in the US, he decided to sell his franchise and move to Amsterdam where selling the crop is legal.

Crux of the case:

We all know based on popular knowledge that marijuana is legal in Amsterdam, however, after watching the video that was presented in class; we were surprised to learn that indeed it is legal to sell but it is illegal to grow or produce beyond a certain limit, making it not commercially viable. Initially, it really made no sense to me. I was thinking whether the government was promoting marijuana or not because it seems like it’s contradicting itself. After researching, I found out that the reason behind this is sometime in the 1970s, the government was dealing with widespread use of marijuana, LSD, Speed, and other recreational drugs. The government then determined that this was just a phase in puberty which hopefully will disappear with maturity. Furthermore, the government argues that in the US, sometime in the early 20th century, when they banned consumption of alcohol it lead for more problems as the youth craved alcohol more than before. They wanted to avoid this situation that is why they allowed the use or selling of the marijuana with strict regulation.        

Moving back again to Brian’s case, he was so brilliant that he was able to utilize a computer to grow marijuana indoors at a time when computers are not yet as popular as to day. He could have used that talent of his to improve farming technology around the world but instead he chose to produce marijuana which is only legal in very few places in the world.

Conclusion:

There are now recent studies done that proves marijuana despite of its addictiveness has medicinal values. However, as it remained to be addictive, I believe that for medical purposes it should be made legal but stringent regulation should be put in place first. I also believe that if we make the crop legal, people will later on start looking for something more. My sister’s fiancĂ©e told me that in Canada drinking is normal and it does not give the same amount of adrenaline as smoking pot. This is why I believe that legalizing it for commercial purposes should not be allowed as  it may turn to a better evil in the future.

Thursday, October 1, 2015

Journal 6 – The Ford Motor case – “What’s legal is not always ethical”

Background of the case:

In May of 1968, the Ford Motor Company, based upon a recommendation by then vice-president Lee Iacocca, decided to introduce a subcompact car and produce it domestically.  In an effort to gain a large market share, the automobile was designed and developed on an accelerated schedule.  During the first few years sales of the Pinto were excellent, but there was trouble on the horizon.
Thereafter, there were a lot accidents associated with the Pinto. The reason was a design flaw regarding the location of its fuel tank. Based on several crash tests, when hit from behind at a certain angle at a certain speed there’s a probability that the fuel filler pipe will disconnect that will result to gas spillage that may lead to dangerous fires.


Crux of the case:

Ford already know that there’s a flaw in their design and what’s worse is that internal documents shows that they have already developed a technology that would greatly reduce the probability of a Pinto igniting after a rear-end collision. They have estimated that it will take them about $11 per unit to make the necessary changes or $137m in total. In making the decision, they have used the risk/benefit analysis and determined that the cost of doing nothing is only $49m. In this regard, they opted to do nothing even though they know this may lead to 180 burn deaths, 180 serious burns, and 2,100 burned vehicles.


Argument:

Ford’s argument is that they made the decision based on what the National Highway Traffic Safety Administration (NHTSA) required them to do so. The risk/benefit approach excuses a defendant if the monetary costs of making a production change are greater than the "societal benefit" of that change.It’s really surprising but what Ford did was really legal and in fact it was based on a ruling done in 1947 in the US.

In spite of it being on legal grounds, Ford was judged on several cases to pay damages. This is because the court argues that “human life should be protected no matter what the cost is.” 


Impact of the case:

As a result of this, many American buyers avoided buying Ford cars that lead to America losing a significant portion of the auto industry in the US and around the world. This is despite the fact that American’s are known to be patriotic consumers, however, as they felt that they may die riding a Pinto they bought foreign cars instead. This paved the way for other manufacturer’s such as Japan to have a significant portion of the industry.


Conclusion:


Not all legal things are ethical. We can argue that during the time that the actual case happened, there’s no way probably that we will have the same answer we have today. This may be because that there’s an existing law predicament at that time suggests that it’s perfectly alright to do nothing.  Furthermore, ethics is not really discussed during that time. However, when faced with decisions like this we must always choose to save human lives. Instead of using our heads, we must use our humanity and ask ourselves if we would be happy to be on the receiving end of this decision. Only then can we make a decision that is ethical, moral, and right even if there’s no set benchmark yet.