Pinto
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Transcript of Pinto
Bus 303
Group N
SummaryCost Benefit AnalysisEthical IssuesChangeAlternativesRecommendation
The Ford Pinto – a small car to compete with foreign car company competitors
Pinto – weighed 2000 lbs and cost $2000
Rushed project led by Lee Iacocca
Planning took 25 months compared to the industry norm 43 months
Testing found several safety defects@ 25mph+ the gas tank would rupture in an
accident
@ 30mph+ rear endings would cause the gas tank to leak and the rear of the car to be folded up into the back seats
@ 40mph+ the car doors would jam
With Current Gas Tank With Safety Alteration
180 burn deaths Cost = $11 per vehicle
180 serious burns Total = $137 million
2100 Pintos burned
Costs = $200 000 per death
$67 000 per serious injury Second alternative = Rubber Bladder
$700 per car Cost = $5.08 per vehicle
Total = $49.5 million Total ~= $64 million
Ford employees
Lee Iacocca
Henry Ford II
Were they morally responsible to refuse to produce a car they knew would hurt the customer?
Should they have put more effort into convincing Iacocca that this car was unsafe?
Should they follow Iacocca’s commands regardless of their opinions since he is their superior in the company
Is Iacocca responsible for the safety of his customers?
Should he maximize profits for the company at any costs?
If safety defects are found after production, does he have a moral obligation to inform all his customers?
Should Iacocca have established a working environment where his employees did not feel that they would lose their jobs for disagreeing with him?
Safety? What
safety.
Should Ford have trained his managers and presidents in safety?
Does Ford have a responsibility to design a culture that encourages employees to bring up safety defects?
Does Ford need to have a new policy that puts the has safety of their products more important than maximizing profits?
Does Ford have a moral responsibility to do what is best for his shareholders
Young and ambitious new president
Foreign competitors entering N.A. market
No small car to compete with VW Beetle and others
The demand for results and profits are the most important aspect of business
1. Pay the $11 per vehicle
2. Explore different safety features
3. Restart the project from the planning process
4. Continue with production of the Pinto
Repairs the safety defect
Saves Ford from potential lawsuits
Protects Ford’s reputation
High cost
Slight delay before launch
Cons
A cheaper alternative could be found
Profit margin could be higher than first alternative
Repairs the safety defect before launch
Pinto release would be delayed indefinitely
Still decreases total profit
Cons
Design can be more focused on safety
Improve Ford’s reputation
Significant delay of launch
Most costly alternative
Cons
Releases the Pinto to the customers immediately
The largest profit margin is obtained from each Pinto sale
Selling unsafe products to customers – could lead to serious injuries and deaths
High chance of lawsuits against the company
If/When injuries occur, loss of reputation
Cons
Explore Other Safety Measures Repair the Pinto so that it is a cheap, safe car
that will please the customers
Act as a responsible company and not expose customers to unknown risks
Implement a more cost effective option than adding the $11 safety addition
Save lives by not releasing unsafe Pintos
Ford workers were afraid to talk to Iacocca about the safety defects
In Feb. 1978, Ford was sued for $128 million – more then 3 times the amount they had predicted
May 1978 – Department of Transportation announces defects with the Ford Pinto – Ford recalls 1.5 million Pintos
Mar. 1980 – Ford was charged with reckless homicide – acquitted of charges, however they stopped all Pinto production