The Ford Pinto Case Study PDF

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Case 2.1 – The Ford Pinto

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Case 2.1 – The Ford Pinto Abdul Azeez Thil University of Potomac DATE: 09-10-2020 Professor Name: Dr. Michael Piellusch Term 2020 – 10 A Course BUS570 Business Ethics

Case 2.1 – The Ford Pinto

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ABSTRACT & INTRODUCTION

In 1971, the Ford Motor Company manufactured their new sedan, The “Pinto.” The only problem with the design of the vehicle was the placement of the fuel tank in the rear of the car behind the axle. The tank became an explosion hazard for the occupants. During Ford’s testing the company discovered that when the tank was punctured by shrouds of material at speeds of 20 MPH or greater the tank would explode. The ethical dilemma for this case is the Ford Motor company chose not to recall and change the placement of the fuel tank as this would have increased the cost of production. Part of the reason that Ford made that decision was the lack of standards that govern where a fuel tank can safely be installed did not exist until 1976. In addition, Ford made the decision not to install a part that cost $6.65 per unit that would have greatly reduced the percentage of the fuel tank exploding. In 1977, the National Highway Traffic and Safety Administration claimed that a safety defect that existed in Pintos manufactured from 1971 to 1976. In 1978, Ford ordered a recall of nearly 2 million vehicles. During the span of seven years’ owners of the Ford Pinto brought about 50 lawsuits against the Ford Motor Company (Ladenson, R 1995).

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Ford Pinto Case Analysis Ford’s decision to not implement a mass recall and fix the Pinto’s defect was an unethical choice by the top leadership for this company. The company had options that could have prevented future problems including stopping production of the Pinto and assembling a team of experts to analyze the data and come up with a new design that would ensure that the Ford Pinto was indeed safe. In addition, the Ford Company should have issued a mass recall to fix the design that has been proven to be unsafe (Kubasek, Browne, Herron, Dhooge, & Barkacs, 2016). These two steps would have ethically proven to the employees and the public that the Ford Motor Company was fixing their mistakes and doing everything in its power to fix things and make them right. Ford should have never compromised the lives of their consumers. In taking an ethical stand in the case of Ford, Ford concluded that a cost benefit analysis needed to be done to make a decision. Once this was performed a policy was established permitting a certain number of consumer death or injuries before any preventative measures would even be taken. When using cost-benefit analyses to make ethical decisions companies forget that there is a story behind every sale, there is a family behind every customer, so it appears unethical when a company concludes that individuals have to die or sustain serious injuries before they fix a problem just because it will cost a lot of money to prevent it. Secondly, the cost-benefit analysis does not take into account the negative image the company will take on as a result of the poor ethical practices. This decision by the Ford Company was reckless, and takes on the perception that the company has no regard for human life, and has place a dollar sign on every person’s head that purchased one of these cars.

This case should be studied by all that are in the car selling business, and should be viewed as an example of unethical behavior. This case indicates that there is a certain belief that is held by many members of the public that the way Ford was conducting business was immoral. In addition,

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the company though it had the power to think they could decide on things that may possibly sacrifice the existence of one of its clients even profits are a risk. The fact in the case of the Ford Pinto was the car was dangerous and posed a level risk when driving it at speeds over 20 mph. The fuel tank would blow up if struck, possibly killing its occupants. The Company was well aware and chose not to do anything about it. They had an obligation to the country to fix this problem and chose not to. The Ford Company let a great opportunity slip through their hand. They could have set the safety standards for the 21st century and they let it go. Conclusions So in order to explain the moral issues within Pinto case, I think Pinto case raised some serious issue of abusing human rights and not behaving ethically in the world of business. Any business/service should never ever put a value on human life and not take consideration of a known deadly danger. Ford had an option as well as the solution to design the car in a way that prevented cars from exploding; however, they refused to implement it. They thought that it was cost effective not to fix dangerous condition than to spend the money to save people in spite of the fact that the only added cost was $ 11 per vehicle. The moral principles which I think they would invoke; I think Ford officials would invoke the principles of utilitarianism. They claimed that they used cost benefit strictly based on data provided by National Highway Traffic Safety Administration (NHSTA). Moreover, Ford also quantified a human life as a commodity at cost of approximately $ 200,000. As per their analysis, the $49.5 million benefits and $137.5 million cost suggested that Ford implementation of safety improvements would totally outweighed their benefits. Therefore, I don’t think Ford gave an equal consideration to the interest of each affect party. The case has clearly mentioned that during the preproduction crash test, engineers had already figured out the potential danger of ruptured fuel tank. However, they decided to stick with the original design and rushed Pinto into production without upgrading Pinto’s fuel tank. In the world of business, Cost-benefit analysis is a legitimate tool in order to decide which decision it should take. Like Friedman stated that the main purpose of operating any kind of business is to make money and cost –benefit analysis is very useful tool in figuring out how to do so. However, in this case it is not a legitimate tool as morals and ethics are involved unless and until one believes in utilitarianism. While making business decisions, decision maker should not be asking “what do I gain or lose” when trying to figure out the best possible alternative. They should be actually

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concerned about “what’s the right thing to do.” Use of cost-benefit analysis in Pinto Case is depravity of morality. There are some moral decisions that must be made regardless of what financial impact may be or what risk/benefit relationship dictates. When it comes to making decisions that is heavily affected by moral and ethics, cost-benefit analysis cannot be improved at any instance. According to that, I think placing a monetary value on a human is life is not morally illegitimate but also very insulting. Even though some might argue that valuations and determination are part of everyday public policy both in the case of economic and non-economic entities, I don’t personally think that life of human being can be weighed on monetary value. We cannot buy back life of a dead personal by paying certain price so it does not make much logic of placing monetary value on human life. And in order to explain the responsibilities to its customers I think Ford had as followings: -The company has responsibilities to offer safety and error free cars to its customers -The company should not compromise on quality of the vehicles when it’s sold to its customers -The company should guarantee life safety, when their vehicles driven by their customers -The company have should have inform their clients about the gas tank leakage problem to its customers at the time of purchase. - the company should have recall all vehicles sold and fixed the gas tank leakage issue immediately. - the court has the rights and evidence to rule unfavorable to the FORD company. - All client whom purchased PINTO Cars has the right to claim all losses from Ford. - employees of Ford can file a case against the company if their professional career effected. - Dealers of Ford also can claim all losses from Ford. Finally, I don’t think it would have made any kind of moral difference even if the savings resulting from the improvement the Pinto gas tank had been passed on to Ford’s customer. Some people might argue with the point that reduction of $ 11 per car price will not make any kind of difference; however, I think regardless of whether saving was for $11 or $ 1100, it does not really matter as it ‘s related with life of an individual. For me, human life is priceless and cannot be weighted and gauged on monetary value.

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A rational customer would never ever choose to save a few dollars by risking their lives. If Ford had told potential customer about its decision, I think they would opt to pay $11 extra to update the design of the car or rather buy some other car that guarantees safety first. References

Hester, P. T., & Adams, K. M. (2017). Ford Pinto Case Study. Systemic Decision Making, 351-384. doi:10.1007/978-3-319-54672-8_17 Kolb, R. W., & Sage Publications. (2008). Encyclopedia of business ethics and society. Thousand Oaks: Sage Publications. Schwartz, M. S. (2010). Ford Pinto. Encyclopedia of Business Ethics and Society. doi:10.4135/9781412956260.n348 Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (3rd ed.). New York, NY: McGraw-Hill Education. Ladenson, R (1995). Ford Pinto Case Retrieve from. http://ethics.iit.edu/eelibrary/node/8358 INSTITUTE OF MANAGEMENT ACCOUNTANTS – LEADERSHIP, STRATEGIES & ETHICS https://www.imanet.org/-/media/803216f8e82248f0bd0cb5a2070ec6cd.ashx

JOHNSON & JOHNSON - TYLENOL https://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson%20&%20Johnson.htm

FORD MOTOR CO. - PINTO https://philosophia.uncg.edu/phi361-metivier/

FORD MOTOR CO. - PINTO http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html...