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THE FORD PINTO
CASE STUDY
GROUP 1(1702293-302)
CLASS M5
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
 Planning took 25 months compared to the industry norm 43
months
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
COST BENEFIT ANALYSIS
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
ETHICAL ISSUES
Ford
employees
Lee Iacocca
Henry Ford II
FORD EMPLOYEES
• QUES 1:- Were they morally responsible to
refuse to produce a car they knew would
hurt the customer?
• QUES 2:-Should they have put more effort
into convincing Iacocca that this car was
unsafe OR Should they follow Iacocca’s
commands regardless of their opinions
since he is their superior in the company
LEE IACOCCA
• QUES 1:- Is Iacocca responsible
for the safety of his customers?
• QUES 2:-Should he maximize
profits for the company at any
costs?
HENRY FORD II
 QUES 1:-Should Ford have trained his managers
and presidents in safety?
 QUES 2:-Does Ford have a responsibility to design a
culture that encourages employees to bring up
safety defects?
 QUES 3:- Does Ford need to have a new policy that
puts the has safety of their products more
important than maximizing profits?
FACTORS CONTRIBUTING TO
THE CASE
 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 -Safety Kit Addition
• Repairs the safety defect
• Saves Ford from potential lawsuits
• Protects Ford’s reputation
• High cost
• Slight delay before launch
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
than adding the $11 safety addition
 Save lives by not releasing unsafe
Pintos
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
“Team is the most important thing. Business model and product will follow if you have the
right team.”
-Adam Neumann, Co-founder of WeWork
Thank You !

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Ford Pinto Case Study (Professional Ethics and Code of Conduct)

  • 1. THE FORD PINTO CASE STUDY GROUP 1(1702293-302) CLASS M5
  • 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 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
  • 7. FORD EMPLOYEES • QUES 1:- Were they morally responsible to refuse to produce a car they knew would hurt the customer? • QUES 2:-Should they have put more effort into convincing Iacocca that this car was unsafe OR Should they follow Iacocca’s commands regardless of their opinions since he is their superior in the company
  • 8. LEE IACOCCA • QUES 1:- Is Iacocca responsible for the safety of his customers? • QUES 2:-Should he maximize profits for the company at any costs?
  • 9. HENRY FORD II  QUES 1:-Should Ford have trained his managers and presidents in safety?  QUES 2:-Does Ford have a responsibility to design a culture that encourages employees to bring up safety defects?  QUES 3:- Does Ford need to have a new policy that puts the has safety of their products more important than maximizing profits?
  • 10. FACTORS CONTRIBUTING TO THE CASE  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. $11 -Safety Kit Addition • Repairs the safety defect • Saves Ford from potential lawsuits • Protects Ford’s reputation • High cost • Slight delay before launch
  • 12. 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 than adding the $11 safety addition  Save lives by not releasing unsafe Pintos
  • 13. 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
  • 14. “Team is the most important thing. Business model and product will follow if you have the right team.” -Adam Neumann, Co-founder of WeWork Thank You !