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Ford Pinto Case

Ford Pinto Case. Bus 303 Group N. Agenda. Summary Cost Benefit Analysis Ethical Issues Change Alternatives Recommendation. Summary. 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

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Ford Pinto Case

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  1. Ford Pinto Case Bus 303 Group N

  2. Agenda • Summary • Cost Benefit Analysis • Ethical Issues • Change • Alternatives • Recommendation

  3. Summary • 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

  4. Summary • 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

  5. Cost Benefit Analysis

  6. Ethical Issues • Ford employees • Lee Iacocca • Henry Ford II

  7. Ford Employees • 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

  8. Lee Iacocca Safety? What safety. • 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?

  9. Henry Ford II • 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

  10. Change • 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

  11. Alternative Solutions • Pay the $11 per vehicle • Explore different safety features • Restart the project from the planning process • Continue with production of the Pinto

  12. Add $11 Safety Addition Pros Cons • Repairs the safety defect • Saves Ford from potential lawsuits • Protects Ford’s reputation • High cost • Slight delay before launch

  13. Explore Other Safety Measures Pros 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

  14. Return to the Planning Stage Pros Cons • Design can be more focused on safety • Improve Ford’s reputation • Significant delay of launch • Most costly alternative

  15. Continue with Production Pros 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

  16. Recommendation 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

  17. What Happened • 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

  18. Thank you! Questions?

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