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
his customers?
Safety?
What safety.
 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
 Profit margin could be
higher than first
alternative
 Repairs the safety defect
before launch
delayed indefinitely
 Still decreases total profit
Pros
Cons
 Design can be more
 Significant delay of launch
focused on safety
 Most costly alternative
 Improve Ford’s reputation
Pros
Cons
 Releases the Pinto to the
 Selling unsafe products to
customers immediately
customers – could lead to
serious injuries and deaths
 The largest profit margin is
obtained from each Pinto
sale
 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