Reference no: EM131570670

Ford Motor Company and the Firestone Tire and Rubber Company had a close business relationship for well over a century. This relationship, which dated to the founders of the companies, was put under considerable stress during 2000 and 2001. The popular Ford SUV, the Explorer, had several reports of rollover which resulted in over 200 deaths. The two companies had long known that the coupling of the Explorer with the particular standard Firestone tire was unstable. Both Ford and Firestone were tracking warranty claims and both companies claimed that the central fault within the unstable vehicle was primarily the result of the other's contribution. Thus, Firestone argued that the Explorer had too narrow a wheelbase for safe operation, while Ford argued that the ATX, ATX II, and Wilderness tires were too light and possessed a design flaw that caused cracking in the treads. The central issue was determined to be the design flaw of the Explorer itself, and Firestone walked away from a contract and relationship that supplied it with nearly 40% of its worldwide profits, because it argued that trust had been broken and without that trust a continuing business relationship was impossible. 

1. Why might Ford have decided to continue with the production of the Explorer SUV despite its own studies showing that the vehicle was unstable?
2. How might Firestone have learned from the Ford/Goodyear schism of four years previously?