Review on GM’s Ignition Switch Case Study
Corporate social responsibility is integral to any brand’s success. It is unfortunate that a brand like General Motors (GM), would fail in ensuring that the consumers are protected as they guard their business. The GM’s Ignition Switch scandal, is one that will remain in the minds of the consumers and policy makers for quite some time. It is a costly ethical mistake, which should not have happened. As Alexander (4) observes, ethical failures can be expensive. This paper examines the case study including the action taken, costs and benefits, aftermath of the incident, lessons for other corporations and lastly, recommendations for the problem.
1.0 Action taken by GM on the failed Ignition Switch
To begin with, the GM ignition switch failures started before 2013, when the company reacted to the problem. As EEC stated that customers had reported problems with their vehicles stalling as early as March 2005 (1). The GM’s engineering department sat down and came up with the cost of changing the ignition switch, which was to reach around $400000. This information was relayed to the staff in the company and the stakeholders. Owing to the high cost, they could not stage a recall by then, so they decided not to do anything about the mess, they had created in Cobalts and Chevrolets.
The motor company only took action in 2013, after more people reported on the below-standard performance of the ignition. Besides, the National Highway Traffic Safety Administration (NHTSA) had already started their investigation on the company. This was after an accident involving teenagers (E.C.C, 1). E.C.C. “A subsequent investigation by a Wisconsin State Trooper revealed that the vehicle’s ignition switch was in the “accessory” position” (1).
2.0 Cost and Benefits Analysis of the GM’s Ignition Switch
GM admitted later that there was a problem with the ignition switch of the models mentioned earlier created in 2007 and previous years. They said that the ignition could stop running and influence the functioning of the steer and airbags among other frontier safety accessories. How did the failure that was created by a single engineer affect the stakeholders? Consumers are integral to the running of any company (Alexander 233). GM did offend their customers and even if they later recalled over 600000 cars of both models, the response was delayed. As E.C.C states before the recall, there were already over 20 fatalities.
The loss was not only to the consumers alone but also on the company. They had to bear the cost of the recalled motors. They also lost about $35 million to the Department of Transportation in the U.S.A. If they addressed the problem earlier may be they could not have lost this huge amount of money. The company failed to see the long-term costs of their silence. Of course, they benefited for sometime but the mistake has damaged their reputation (Alexander, 233).
3.0 Aftermath of the Incident
Over 13 fatalities were reported in the US alone (E.C.C, 1). There were also those who suffered injuries because of the failure of the ignition switch. The scandal led to hefty fining by the government authorities and the company lost money as the Cobalts were recalled back. They had to replace the non functional ignition switches, not to mention the earlier penalties levied by the transport department. Furthermore, their untainted reputation was left shaken (Alexander 234).
4.0 Lessons for Future and for other Companies
What can other corporations learn from the case study of GM? The motor company failed in addressing the problem in the urgency, it called for. This led to its magnification, which increased the costs and the risks. Other companies should solve problems earlier as they are noted (EEC 3). This will eliminate high costs and at the same time protect the brand. Any development of a product should be thoroughly tested before it gets to the consumer. The ignition switch was product of one engineer, which is the cause of the major scandal (Alexander 233).
5.0 Recommendations for the GM’S CEO
It is recommendable that GM CEO, to ensure all the stakeholders is involved in the development of various motor parts. The products should be tested well, to ensure that they are of standard before they reach the final consumer. If this was done, the management could have known there were problems with the ignition switch early enough and perform the necessary changes.
Alexander, Paula. Corporate Social Irresponsibility. New York:Taylor and Francis Ltd. 2015 Web. 14 Oct 2015<https://books.google.co.ke/books?id=IMqgBgAAQBAJ&lpg=PA233&ots=LbE3rfMwyJ&dq=GM%20Ignition%20switch%20in%20corporate%20social%20irresponsibility%20by%20Paula%20Alexander&pg=PA235#v=onepage&q=GM%20Ignition%20switch%20in%20corporate%20social%20irresponsibility%20by%20Paula%20Alexander&f=false>
Energy and Commerce Committee (E.C.C.). “Staff Report on the GM Ignition Switch Recall: Review of NHTSA”.16 Sept. 2014 Web. 14 Oct 2015<http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/Hearings/OI/20140915GMFootnotes/NHTSAreportfinal.pdf>