Case 2.1 – The Ford Pinto

Case 2.1 – The Ford Pinto 1 Case 2.1 – The Ford Pinto DATE: 09-10-2020 Business Ethics Case 2.1 – The Ford Pinto 2 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). Case 2.1 – The Ford Pinto 3 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, Case 2.1 – The Ford Pinto 4 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 Case 2.1 – The Ford Pinto 5 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. Case 2.1 – The Ford Pinto 6 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. 