Pinto Fires and Personal Ethics
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Class presentation (BUS 568) on the dangers of the Ford Pinto and ethical issues faced by management.
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Pinto Fires and Personal Ethics
- 1. Pinto Fires and Personal Ethics - Case Study: Business Models - BUS 568 Alin Sturek April 8th, 2015
- 2. Background The Pinto was introduced by Ford in 1970 as a domestic offering that could compete against smaller vehicles imported from overseas The product development process was completed in a record time of 25 months (industry average = 45 months) Prior to production, management instructed the engineering and development teams to not exceed: $2,000 in cost 2,000 pounds in weight
- 3. Background – Case Study Routine crash tests showed that the fuel tank ruptured at relatively low speeds Given the shortened time frame and cost constraints, the vehicle could not be redesigned One solution would have cost only $11 to install, but cost- benefit analysis indicated that costs ($137M) outweighed benefits (49.5M) However, Ford was not in violation of the Federal Motor Vehicle Safety Standards because regulations were not adopted until 1976
- 4. Background – Case Study In 1973, Dennis A. Gioia was appointed as Ford's Field Recall Coordinator Reports on Pintos catching fire led to an internal review for consideration of a “recall”, but voted against it Vehicles in the small car segment performed similarly in crash-tests Evidence was not overwhelming that the car was defective Dennis left his position at Ford before the NHTSA began its own investigation, and a full recall was initiated in 1978 Why couldn’t Dennis evaluate the ethical and moral issues when he had the opportunity to recall the defective Pinto?
- 5. Analysis Script schemas used in his decision making did not consider the issues in ethical terms because ethical dimensions were not included Schema: “A cognitive framework that people use to impose structure upon information, situations, and expectations to facilitate understanding” Script: Aids in understanding information and events, and can lead to appropriate behavior to deal with specific situations
- 6. Analysis - continued A lack of an ethical foundation to drive his decision-making His decision was driven by dominant scripts for the time, place, and context Scripts focused mostly on the economic and legal aspects Economicpillar Legalpillar Socialpillar (philanthropic)
- 7. Conclusion Because ethical dimensions typically are not applied in decision making: Management training should include models that focus on ethical considerations The necessary scripts need to be developed for management to properly handle ethical decisions
Editor's Notes
- Costs: $137,000,000 (Estimated as the costs of a production fix to all similarly designed cars and trucks with the gas tank aft of the axle (12,500,000 vehicles X $11/vehicle)) Benefits: $49,530,000 (Estimated as the savings from preventing (180 projected deaths x $200 000/ death) + (180 projected burn injuries X $67000/injury) + (2100 burned cars X $700/car))
- “Organizational decision makers are not necessarily lacking in ethical standards; they are simply fallible information processors who fail to notice the ethical implications of a usual way of handling issues. It is an indictment because ethical dimensions are not usually a central feature of the cognitive structures that drive decision making.”