Discussed by

AMAN GUPTA

SUDEETI DAS

MANORMA SINGH

NEHA SATSANGI

KUSUM SINGH

SATGURU PRASAD

In 1968, the Ford Motor Company decided to introduce a subcompact car and produce it domestically; an attempt to gain a large market share, the automobile was designed and developed to meet the company sales and distribution schedule.

During the first few years sales of the Pinto were excellent, but thereafter arises the problem of product defects.

This is a case involving the explosion of Ford Pinto's due to a defective fuel system design, the issue of questionable design and the use by Ford of a cost-benefit analysis to support their decision not to upgrade the fuel systems or recall the  product.

A manufacturer is liable for any injury or

damages caused by faulty products.

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

1st strategy calculationCosts $137.5 MillionBenefits - $49.5 MillionDifference $ 88.0 Million 

2nd strategy calculationCosts $ 64 MillionBenefits - $49.5 MillionDifference $ 14.5 Million

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

But one thing is left without consideration, and it is the things that can’t be measured.

It is the things that remains intangible, and if can be weighted and valued depends on individual perception.

It is life that may not be equivalent to any monetary valuation regardless of the amount requires and set by laws.

It is seems unethical to determine that people should be allowed to die or be seriously injured because it will cost too much cost to prevent it.

An organization, which is well-known for its ethical practices, creates a goodwill for itself in the market.

Investors or venture capitalists are more willing to put their money in the businesses which they can trust.

Shareholders too, remain satisfied with the practices of an ethical businesses.

Thus, ethics creates goodwill and builds long-term relationships, and that cannot be denied.

Also, an ethical business puts greater value on its employees and thus, employees remain loyal to such an organization too.

The importance of business ethics can be understood from the fact that it helps the businesses in achieving its goal of profit-making by creating goodwill for the business in the market, increasing its loyalty among the customers, by aiding in employee retention and by maximum utilization of its resources.

 

In an organization, people working at the junior levels often emulate the ones working at the top. The same applies with ethics too.

If the management or seniors of an organization follow ethical business practices, i.e.; they do not bribe to get their way or they do not cheat the customers, investors, suppliers, etc., the employees will follow suit.

The employees too will refrain from using the office property or resources for personal benefits. This will result in better and efficient utilization of the business resources

Satisfying Basic Human NeedsCreating CredibilityUniting People and Leadership: Improving Decision MakingLong Term Gains: Securing the Society: 

Ethics tries to create a sense of right and wrong in the organizations and often when the law fails, it is the ethics that may stop organizations from harming the society or environment.

In our opinion, with this particular case CSR can be managed by Ford, since they have new designs and alternative ways of to address the problem. The problem that arose in the Ford Pinto is that human and emotional circumstances behind the numbers which are not factored in the risk/benefit analysis. It is product liability and precaution cost, Ford might have been considered the so called ordinary care standard to which there is a certain degree of care in evaluating a decision. It is a kind and degree of care which careful and cautious men would use, such as required by the necessity of the case, and such as is necessary to guard against probable danger. It is also said that there is a moving standard of negligence that vary on situations, Ford should have taken some kind of preventive measure in advance that could have foreseeable prevented the harm. But the problem is Ford already forecast and assumes future liability from a defective product. To resolve the problem the balancing" approach to negligence must be consider, if death and accident has a low probability and there is a cost associated with it, the company must take precautionary measures and the levels of risk society could tolerate that somehow prevented so much negative reaction from a defective product.

The risk/benefit analysis did not consider other consequences of their decision, Ford did not include public reaction that eventually leads to protest, negative publicity and law suits. The company studied economic and financial impact but did not evaluate the risk of social distress.

Ford did evaluate well the cost of precautions but did not consider the social implications.

from the start the degree of ethical obligation was not met by Ford and minimal ethical requirements was compromised by assuming that the cost of recall is greater than the social benefits.

The corporate social responsibility of Ford has not something to do with ethics. However in a conceptual approach, we place ethics as a heart of corporate responsibility meaning the company purpose, constraints, performance and impact. If the social and environmental concerns are merely used as means in order to achieve a single and frequently economic purpose (to make profits) the idea of CSR becomes self defeating resulting to ethical judgment of the society.

It will be forever debated whether it is possible to set a price or value on a life to use in these calculations and whether this leads to an economically efficient outcome. Ford adopted a policy of allowing a certain number of people to die or be injured even though they could have prevented it.

The decision seems to be a deliberately disregard human life. From a human rights perspective, Ford disregarded the injured individual's rights and therefore, in making the decision not to make changes or recall, Ford acted unethically. After all the cost risk/benefits analysis has its loopholes. 

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