Bus 303

Group N
 Summary
 Cost Benefit Analysis
 Ethical Issues
 Change
 Alternatives
 Recommendation
 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 Safety?
What safety.
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?
 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

Pros Cons
 Repairs the safety defect  High cost

 Saves Ford from potential  Slight delay before launch

lawsuits

 Protects Ford’s reputation

Pros Cons
 A cheaper alternative could  Pinto release would be
be found delayed indefinitely

 Profit margin could be  Still decreases total profit

higher than first
alternative

 Repairs the safety defect

before launch
Pros
 Design can be more
focused on safety
 Improve Ford’s reputation
Cons
 Significant delay of launch
 Most costly alternative
Pros
 Releases the Pinto to the
customers immediately
 The largest profit margin is
obtained from each Pinto
sale
Cons
 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
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