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