Case Analysis "Ford pinto"

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Case Analysis "Ford pinto"

  1. 1. 29/07/13 MVBE AmritaSchool of Business, Coimbatore Group 1 AGroup 1 A Managerial Ethics &Managerial Ethics & Business ValuesBusiness Values II MBA 2012-14II MBA 2012-14
  2. 2. RELEVANT FACTS Question: 1 29/07/13 MVBE 2
  3. 3.  Ford launched PINTO in 1971 to compete with German and Japanesecompact cars.  “PINTO wasintroduced by President Iacocca” succeeding an internal struggle.
  4. 4.  Ford wasfully awareof thefaulty fuel tank that often ruptured during rear-end impact.  But, Iacoccadecided it wastoo lateto redesign and go by thefaulty gastank design. 29/07/13 MVBE 4
  5. 5.  Thismeasurewastaken by themanagement for 2 reasons:  Cost consciousbuyers.  Cost on safety reflectsthebuying behavior. Colleaguesand other ford engineers agreed with Iacoccaabout thefaulty gas tank and launched PINTO into the market.
  6. 6. 29/07/13 MVBE 6 40 Court cases + Hundreds of Million paid as fine
  7. 7. 29/07/13 MVBE 7
  8. 8. PERTINENT ETHICAL ISSUES Question: 2 29/07/13 MVBE 8
  9. 9. COST OF DYING IN A PINTO:COST OF DYING IN A PINTO: UTILITARIAN APPROACHUTILITARIAN APPROACH
  10. 10. UTILITARIANISM “A general term for any view that holdsthat actionsand policiesshould beevaluated basis of thebenefitsand cost they will imposeon society”
  11. 11. COSTS • Autoswould bebuilt = $12.5 million • Cost for modifying thegastank = $11 Cost = 11 × 12.5 million = $137 million
  12. 12. BENEFITS • Modification of fuel tank could prevent about 180 burn deaths • In 1970’s, Government valued ahuman lifeat $200,000 • Insurancecompaniesvalued aseriousburn injury at $67,000 • Residual valueof thesubcompact at $700
  13. 13. 180 deaths × $ 200,000 + 180 injuries × $ 67,000 + 2100 vehicles× $ 700 = 49.15 million
  14. 14. Ethical Issues  A mistakeisjustified using theutilitarianism  Calculating thevalueof human lifeiswrong in thisconcept  Projecting thecompanieslossasthecost for thesociety iswrong  Asper theFord calculation, all thecost is absorbed by the180 peopledie
  15. 15.  Can theloyal customersbebetrayed?  Whether theloss& profit should beborneby thecompany or customers?  Did Iacoccafollow any moral virtues?  Iacoccachoseinjusticebetween theextremes in actionsand emotions  Breach of Aquinas. Ethical Issues
  16. 16.  Ignoring thefield reports  Neglecting safety issue  Obligation to protect theford employeesor the customers  Ford waslegal in itsbusiness Ethical Issues
  17. 17.  Being legal doesnot imply being ethical  Right to Liveisamoral right of the people(customersof ford)  A clash between moral and legal rights Ethical Issues
  18. 18. Boot Space OR Human Life???? “Ford” – The organization Credibility of the organization?? 29/07/13 MVBE 18
  19. 19. AFFECTED PARTIES Question: 3 29/07/13 MVBE 19
  20. 20. 29/07/13 MVBE 20
  21. 21. Affected Parties 29/07/13 MVBE 21
  22. 22. Patty Ramge appears dejected as she looks at her Ford Pinto where she put a sign on the rear of the automobile because of the fiery accidents involving Pintos Source:© Bettmann/CORBIS 29/07/13 MVBE 22
  23. 23. Victims Family 29/07/13 MVBE 23
  24. 24. CONSEQUENCES OF ALTERNATIVE COURSE OF ACTION Question: 4 29/07/13 MVBE 24
  25. 25. Alternative 1: Make the vehicle with rupture protection investing $ 11 BenefitsBenefits  So many invaluable human life can be saved  Regain Customer Confidence  Integrity and brand value of Ford Motors will be increased  So many invaluable human life can be saved  Regain Customer Confidence  Integrity and brand value of Ford Motors will be increased Trade- OffTrade- Off  Extra expenditure incurred to repair and produce.  May loose competition due to higher price  Extra expenditure incurred to repair and produce.  May loose competition due to higher price 29/07/13 MVBE 25
  26. 26. Alternative 2: Recall The Vehicles Soon After The Initial Accidents BenefitsBenefits  Could be prevented more human causalities  Could gain customer belief as a responsible company  Could have set a good example for the industry  Could be prevented more human causalities  Could gain customer belief as a responsible company  Could have set a good example for the industry Trade- OffTrade- Off  Brand value may be lost in terms of safety concerns  More cost will incur than the $11 repair.  Brand value may be lost in terms of safety concerns  More cost will incur than the $11 repair. 29/07/13 MVBE 26
  27. 27. OBLIGATIONS Question: 5 29/07/13 MVBE 27
  28. 28. Organizational Obligations Social Obligations 29/07/13 MVBE 28
  29. 29. Organizational Obligations Perform task asexpected by employer Uphold reputation of the organization Inform thenegligence'sto higher authorities- organization at stake. Focuson thecourseof action not theoutcome. 29/07/13 MVBE 29
  30. 30. Social Obligations Reliability and quality of product sold Accept mistakeand takecorrectivemeasures Built and maintain relationships Deliver valueto Customer 29/07/13 MVBE 30
  31. 31. COMMUNITY STANDARDS Question: 6 29/07/13 MVBE 31
  32. 32.  Professional: Being loyal to thecompany  Social: Being responsibleto thesociety  Personal: Having personal valuesand beliefs
  33. 33. OUR DECISIONS Question: 7 29/07/13 MVBE 33
  34. 34.  If wearein theshoesof therecalling coordinator, we will recall theproduct, for wecannot afford any more livesand grab thepeoplesmoral right to live  Wepromisearevamped vehiclefreeof cost  Wewould recommend compensation for thelost lives
  35. 35. 29/07/13 MVBE 35

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