Cost Benefit Analysis : The Ford Pinto Case

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CHEN 4090 Senior Seminar The Ford Pinto Case Naif Alotaibi Mohammed Alkhoraimi April 18, 2016 Cost Benefit Analysis 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…show more content…
High percentages of error in the estimation process should have signaled red lights about the model validity, but surprisingly it did not to the people in charge. Monetizing intangible situations will eventually yield uncertainties and estimation errors since there is no clear money value that is equivalent to these situations. Unitizing the unit of measurement is vital to the CBA model to work properly, but its uncanny to force a certain unit on something that has no unit of measurement especially when it should. These weaknesses affiliated with the model enabled Ford to use it unethically along with different companies dealing with different situations. The CBA itself did not force Ford to act unethically, their greed and their sole priority to avoid extra cost even if it meant the loss of a human life drove them to an unethical decision. Ford faced a simple problem, do they fix the Pinto or do they kill innocent people. Sadly, they preferred the money saving option, which was to ignore the defect and to pay compensates to effected families and loved ones. The company defended their decision using the CBA model as if they were legally exonerated from any penalties due to their actions. Fortunately, the jury did not see it as if their decision was justifiable even if the method to evaluate the decision

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