Case Analysis : Ford Pinto Incident

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In this paper, I will be dissecting and analyzing different viewpoints and theories related to the Ford Pinto incident in the 1970’s. First, I will validate why the stakeholder theory is the best theory to use when making business decisions, and why the liability should fall on the people regulating the market interactions, not the producer of the products. Second, I will come from a different angle and analyze the objections that some people may have about the Stakeholder theory. Last, I will analyze the ethics and consequences of taking a different course of action as the CEO of Ford. By the end of this paper, you should have an in depth understanding of why the decision to go ahead with the original Ford design was correct, and why the…show more content…
As a result, the CEO of Ford made a business decision that was within the societal “side-constraints”. There was no fraud committed and there was no infringement to the free market.

Economist Milton Friedman was a huge advocate of the stockholder approach. One of the points Friedman made in support of the stockholder theory was that social issues should be left up to the people who are qualified to address social issues, these people are civil servants and it is their job to regulate markets like these. Trying to act on social issues as a CEO would result in a tax being imposed on either the consumer or the stakeholders, which should not be the responsibility of a CEO. This theory goes against Freeman’s beliefs that business and ethics should be integrated. Freeman’s idea stated that businesses not only have an obligation to their stakeholders but also to their shareholders- e.g. consumers and employees. This idea replaces profit with value which is measured in more ways than one, unlike profit which is purely measured by financial gains. Supporters of Freeman’s views would find it very cynical to view peoples lives as figures in the Pinto case and find it wrong to put a car on the market that has imperfections. I can see why some people would be angered by Ford’s decision in the 1970’s, however, it is common practice in business because it is how markets function. In order to have a

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