Case Study: Ford Pinto

You have to consider the Ford Motor Company’s reputation after they made the decision to not recall the Ford Pinto to

6. What responsibilities to its customers do you think Ford had? What are the most important moral rights, if any, operating in the Pinto case?

The customers (drivers of Ford) are the number one stakeholders that lost the most. They might not have lost much money or reputations, but they lost the one thing that you can never get back, their life.

This paper explores how ethical issues of Pinto case have affected the Ford Motor Company business environment. A number of factors suggest that Ford Motor Company was negligent and violated its code of ethics. In this paper, we will review the corporate culture mindset which prioritizes profit over the value of human life for the purpose financial gain.

1. The observable artifacts associated with the Chrysler culture was that the CEO was located in a penthouse office of the building which Mr. Marchionne moved to the middle of the engineering department; he streamlined senior leadership, and to the remaining 15 members he gave them added responsibility feeling that the more decisions they had to make the faster they would work to meet the deadlines; he also gave them the opportunity to take full authority to take risks without worrying about bureaucrats barriers and they were allowed to make smart decisions and to be held accountable for them (Lueneburger, 2014).

Ford Motor Company, American automotive corporation founded in 1903 by Henry Ford and 11 associate investors. (htt28) It is the multinational corporation and the world's third largest automaker based on worldwide vehicle sales. The Company operates in two segments: Automotive and Financial Services. Automotive includes Ford North America, Ford South America, Ford Europe, and Ford Asia Pacific Africa region. Financial services include Ford Motor Credit Company and Other Financial Service. The Company manufactures or distributes automobiles across six continents. Its automotive brands include Ford and Lincoln. Other Financial Services includes a range of businesses, including holding companies and real

There are a few concerns about harmful behavior of the FMC that should be discussed. A behavior is harmful when it wrongfully sets back the interest of others and has a high risk of harm. Obviously, the gravity of harm in this case is very high being that it is life threatening. Once a consumer has purchased the Pinto and drives it off the lot he is at risk to getting rear ended, and burned to death by a car fire or explosion. Since the weight of this harm is very severe, the low probability of the consumer having an accident doesn’t discount Ford’s unethical behavior. Indeed, driving a Ford Pinto would place a consumer’s life at risk. Also at stake are the interests of Pinto passengers and drivers of other vehicles who certainly are not willing to risk their lives so Ford can make an extra buck. Everyone has an interest in not getting injured or killed. Setting back the interest of consumers isn’t the only thing Ford Motor Company was responsible for.

Ford executives were under a great deal of pressure to produce a smaller, more gas efficient automobile. Japanese and German automobile sales were rapidly increasing. These competitive forces drove Ford’s executive team to respond by rushing the design process of the Ford Pinto. By 1973, the Pinto was well into production when engineers discovered a flaw in the gas tank, which was located just under the rear bumper. They discovered that if the vehicle suffered a rear-end collision over 20 mph, the gas tank could break and spill gasoline into the passenger compartment, potentially resulting in a fire. The remedy for the flaw was a part that cost $11.00 per vehicle. Executives at Ford knew the company had followed all safety standards and regulations. At that time, automobile safety standards only needed gas tanks to withstand a collision under 20 mph. An internal cost-benefit analysis revealed the costs would be substantially higher to fix the design flaw that the costs associated with any potential damages due to collisions and loss of life. The public remained unaware until Mother Jones journalist, Mark Dowie broke the story in 1977. Fueled by the media, what followed was a frenzy of public outcry and court trials.

Ford has argued for over three decades that The Ford Motor Company is not at fault, but rather the other motorists who happened to rear end the Pinto drivers. Many accuse Ford of rushing the Pinto into production without proper testing leaving a faulty

Henry Ford was critical of anybody’s viewpoints that went against his own. Ford was proud of the Model T, but he did not want to change it, and this failing resulted in Ford taking a back seat to his competitors and suffering a declining market share. “Being open-minded means you’re ‘open’ to actively listening and thinking about an idea or solution (BCEE, 2017d, p. 4). Ford often stifled and undermined his leaders, to include his own son who had been given the presidency of the company. However, one of the best example to illustrate Ford’s lack of open-mindedness comes from author John Maxwell who writes, “One day when a group of his designers surprised him by presenting him with the prototype of an improved model, Ford ripped its doors off the hinges and proceeded to destroy the car with his bare hands (1991, p. 122). This example shows how Ford failed to adhere to the critical thinking characteristic of open mindedness by shutting down new ideas on how to improve the Model T. These traits directly contributed to the Ford Motor Company almost filing

The means were limited design time and reducing costs. By cutting costs, Ford knowingly created a product which could prove dangerous and fatal to its consumers. Does Ford’s ends justify its means? Ford did create a sub-compact that sold extremely well and competed fiercely with foreign imports. The goal of the Ford Pinto was met. The costs of this win were substantial however. The money that Ford tried to save by not recalling the vehicle was spent when Ford recalled the Pinto, and extra was spent in compensatory and punitive damages in lawsuits. So the costs that Ford tried to avoid were incurred anyway along with extra.

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.

Ford was not in violation of the law in any way and had to make the decision whether to incur a cost to fix the obvious problem internally. There were several options for the fuel system redesign. The option most seriously considered would have cost Ford an additional $11 per vehicle. Under the strict $2000 budget restriction, even this nominal cost seemed large. In addition, Ford had earlier based an advertising campaign on safety, which failed miserably. Therefore, there was a corporate belief, attributed to Lee Iacocca himself, of “safety doesn’t sell”. (2)

There was strong competition for Ford in the American small-car market from Volkswagen and several Japanese companies in the 1960’s. To fight the competition, Ford rushed its newest car the Pinto into production in much less time than is usually required to develop a car. The regular time to produce an automobile is 43 months but Ford took 25 months only (Satchi, L., 2005). Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, which would have cost $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths. The company defended itself on the grounds that

The Cost benefit analysis is a financial model where companies or government establishments implement on their decision making. The model simply evaluates costs and benefits of a certain decision which enables the organization to choose the “right” option. (O’Farrell, R.,n.d.) The beauty of the CBA model lies in its simplicity, the chosen option is easily justifiable, when the costs are higher than the benefits then there is no compelling reason to make that decision. (O’Farrell, R. ,n.d.) In addition to its simplicity, the model is applicable to various types of decisions, it enable