... Supply and demand is at the root of everything, where exchange of goods and services is involved between producers and consumers for mutual benefits. These mutual benefits involve an exchange that provides value to the consumer and profits to the producer. It is not at all farfetched to think of these as basically human characteristics. At the beginning of a spectrum is the producer and at the end of the same, is the consumer. They interact with each other and with the governmental law regulating their transactions. In this economic system, what will be produced is determined by what will yield the greatest profit. From the readings, Milton Friedman and Robert Almeder recognize the merits of a profit-driven economic system. They do not quarrel over the importance of profits. But they do quarrel over whether or not business firms have obligations beyond making profits. A consumer may be a pet owner who feeds and provides care for a beloved animal, a doting grandparent who buys toys and clothes for the grandkids, an individual who wears contact lenses or hearing aids, a patient who buys prescription medications, or vehicle owner. Should a consumer have certain expectations from the suppliers and producers of the products that he buys? Can we trust corporations that they will not produce what will jeopardize the human life? Was Ford to be blame in the pinto case? Must we wait for the characters like “Erin Brokovich” to fight on behalf of the helpless consumers? Who is to be...
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...The ethical justification of a decision using utilitarian analysis allows the person making the decision a resolution to the question of what action taken is best for the most people involved in the decision. Utilitarianism holds that, in the final analysis, only one action is right and that action is such that it’s benefits outweigh all other alternatives for people affected by the action. James Rachel states “This principle requires that whenever we have a choice between alternative actions or social policies, we must choose the one that has the best overall consequences for everyone concerned.” It is easy to call an act unethical based on first sight, but utilitarianism forces a calculation to look deeper and to identify the best consequences of the act. This is uncomfortable in society due to the selfishness of the individual citizen. One may not be happy if they are of the few who are receiving the negative side of a decision which impacts everyone else for the greatest good and for the most people possible. From this philosophical standpoint, cost benefit analysis would be a natural outcome. The Ford Pinto case is based upon act utilitarianism’s approach to making a decision using a cost benefit analysis and whether that action makes the best ethical outcome for all involved. In 1968, Ford Motor Company had a decision to make as to whether it would compete in the subcompact automotive market. Ford needed to quickly introduce a small, fuel efficient, and cheap car on the...
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...Case analysis – Ford Pinto a. Brief Summary: In 1970, Lee Iacocca, the president of Ford Motor Co., decided to introduce a new car which is called Pinto. The final product will be produced at or below 2,000 pounds and sell for $2,000 or less. The design of Pinto was started in 1968, but the production was begun at 1970. Moreover, although Pinto project was accepted and approved by Ford’s Product Planning Committee, Many engineers of Ford resign from their supervisors, direct or indirect. There are several problems associated with Pinto that it cannot pass the crash test, and it is easy to burst into flames when rear-ended at 21 miles per hour. However, Ford’s many reports were refused the chain of command to report and repair those problems. Ford can make some remedies, such as mounting the gas tank above the rear axle, and installing a rubber bladder in the gas tank. However, the Cost-Benefit Analysis of Ford showed that the installation of rubber bladders were not cost-effective. In addition, the analysis was a part of lobby effort to against for crash test. b. Analysis of this case (five stakeholders: Ford Motor Co., shareholders of Ford, employees of Ford, customers, and government): 1. Profitable? – In the short-term, the decision is profitable for Ford and its shareholders. The reason is that if it installed the rubber bladder in the gas tank, the installation costs would exceed the death costs. Obviously, the death costs were as same as the benefits of Ford and...
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...Appendix 2: Ford Pinto Case and Cost Benefit Analysis Edited by Richard Brooks In 1968 in response to strong foreign competition, Ford decided to build a subcompact car — the Pinto — on a 2×2×2 plan (2,000 pounds, $2,000, in 2 years). In pre-launch tests, Ford discovered that rear end collisions propelled the gas tank onto the real axle, which had protrusions that ruptured the tank and caused the car to catch fire. Yet Ford did Figure 1: Ford Pinto not modify the Pinto’s rear axle. Nor did it follow through on an idea to place a rubber bladder in the fuel tank. Why? The reason seems to have been that these changes would have increased the price, lowered sales and reduced profit. That reason is given credence in a cost/benefit study done on modifying the Pinto. So the Ford Pinto went on sale with dangerous design faults in the position of the fuel tank and nearby bolts, and the tendency for the fuel valve to leak in rollover accidents. Design and production was rushed and cost of the vehicle kept down to sell it at $2000. It sold well, until 1972 when four people died and one young boy was horrendously burned and disfigured; these are only a few of the incidents that resulted from the Pinto’s flaws, many more followed, costing Ford millions in compensation. The engineers were fully aware of the flaws, yet the company continued to sell the car as it was, without safety modifications. Ford applied a generic cost/benefit analysis to accidents based on National Highway Traffic...
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...issues about the Ford Pinto is that they take their profit is more important than human life. They also did not inform the consumer about the facts of the Pinto. Lastly, they also lobbied the safety of the car to lowest standard.The Pinto case brought up issue of abusing human rights and behaved unethically in business. Ford had the design to reduce the possibility of Ford Pinto from exploding. However, the company refused to implement it, although it can prevent 180 deaths from happening at a cost of $11 per car according to the cost-benefit analysis. I think Pinto case raised some serious issue of abusing human rights and not behaving ethically in the world of business. Any business/service should never ever put a value on human life and not take consideration of a known deadly danger. Ford had an option as well as the solution to design the car in a way that prevented cars from exploding; however they refused to implement it. They thought that it was cost effective not to fix dangerous condition than to spend the money to save people in spite of the fact that the only added cost was $ 11 per vehicle. Suppose Ford officials were asked to justify their decision. What moral principles do you think they would invoke? Assess Ford’s handling of the Pinto from the perspective of each of the moral theories discussed in this chapter. The Ford officials would probably invoke the principles of utilitarianism. Ford had claimed that the strict cost-benefit analysis was made based on...
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...Commerce (COMM 101) Case 2.3 (The Ford Pinto) Week 4 1. What moral issues does the Pinto case raise? Moral issues that Ford Pinto case raises included producing dangerous products which are not safe to use it without informing the dangerous of the products to the public. In addition, lobbying the NHTSA to delay the safety measure of the products is also one of the moral issues that Ford Pinto case raises. (53 words) 2. Suppose Ford officials were asked to justify their decision. What moral principles do you think they would invoke? Assess Ford’s handling of the Pinto from the perspective of each of the moral theories discussed in this chapter. The theory of egoism is most suitable to describe the Ford Pinto case. Ford is doing things that benefit the organization itself. In addition, Ford only considered the short term benefits and neglected the long term interests of the organization itself. The handling of the Pinto from the perspective of each of the moral theories is as following. Act utilitarianism says that Ford did not produce the greatest possible balance of cost-benefit calculation for everyone affected. According to the Kant’s categorical imperatives, Ford should not place a monetary value on a human life. Based on W.D.Ross’s 7 basic Prima Facie Duties, Ford failed to apply the duties of nonmalefience because they did not produce safe cars. Lastly, Ford is unethical when applying the ethic of caring. Ford not only produced dangerous products...
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...THE FORD PINTO CASE: THE VALUATION OF LIFE AS IT APPLIES TO THE NEGLIGENCE-EFFICIENCY ARGUMENT Christopher Leggett Law & Valuation Professor Palmiter Spring, 1999 Abstract Text of Paper Abstract The cases involving the explosion of Ford Pinto's due to a defective fuel system design led to the debate of many issues, most centering around the use by Ford of a cost-benefit analysis and the ethics surrounding its decision not to upgrade the fuel system based on this analysis. ISSUE Should a risk/benefit analysis be used in situations where a defect in design or manufacturing could lead to death or seriously bodily harm, such as in the Ford Pinto situation? RULE There are arguments both for and against such an analysis. It is an economically efficient method which has been accepted by courts for numerous years, however, juries may not always agree, so companies should take this into account. ANALYSIS Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, which would have cost $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths. The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit. Based on the numbers Ford used, the cost would have been $137 million versus the $49.5 million...
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...public sector) that have a relevant reference to the key principles and approaches of the business ethics. However, in this assessment, we need to critically evaluate its performance by applying an appropriate criteria that may identify the extent to which ethical issues are being managed or resolved. With this, we need to include two of the following approaches in the assessment and that is by (1) including an identification and evaluation of ethical dilemmas within the organization by linking to the theories and approaches that has been covered in the module and (2) evaluate a possible ways in which the dilemmas can be managed and resolved. Therefore, I have chosen “Ford Motor Company” as the choice of organization that have a reference to the key principles and approaches to the business ethics. Ford Motor Company is an American automaker and the...
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...Utilitarian Analysis The Case of the Ford Pinto The Ford Pinto first rolled off the Ford Motor Co. production lines in 1971 and stayed in production in its original state until 1978. The vehicle engineers were tasked to develop the vehicle and put it into production within 25 months, which was nearly half the time in which the average new vehicle is put into production. The Ford engineers were aware that rear-end impact safety tests were pretty standard at the time, but they were not required by the National Highway Traffic Safety Administration at that time. The vehicle was rushed into production anyway to compete with foreign compact cars being developed by the Japanese during that time period. Only after the vehicle was made available to the public was the vehicle tested. The Ford Pinto ended up failing the rear safety test, due to the fact that it was susceptible to fire from rear end collisions. Ford engineers determined that the problem could be resolved by installing a baffle, which protected the gas tank from being punctured during rear-end collisions. The part would have only cost between $6.65 and $11 to be install, but the Ford Motor Co. determined through cost-benefit analysis that the cost of lawsuits would be less than the cost of installing the baffle and decided not to install the baffle. Ford Motor Co. also failed to notify customers of the problem and offer them the option to have the baffle installed. Between 1971 and 1978 the Ford Pinto would...
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...Ford's Risk/Benefit Analysis The main controversy surrounding the Ford Pinto case was The Ford Motor Company's choices made during development to compromise safety for efficiency and profit maximization. More specifically, it was Ford's decision to use the cost/benefit analysis detailed in section 11 to make production decisions that translated into lost lives. During the initial production and testing phase, Ford set "limits for 2000" for the Pinto. That meant the car was not to exceed $2000 in cost or 2000 pounds in weight. This set tough limitations on the production team. After the basic design was complete, crash testing was begun. The results of crash testing revealed that when struck from the rear at speeds of 31 miles per hour or above, the Pinto's gas tank ruptured. The tank was positioned according to the industry standard at the time (between the rear bumper and the rear axle), but studs protruding from the rear axle would puncture the gas tank. Upon impact, the fuel filler neck would break, resulting in spilled gasoline. The Pinto basically turned into a death trap. Ford crash tested a total of eleven automobiles and eight resulted in potentially catastrophic situations. The only three that survived had their gas tanks modified prior to testing.55 Ford was not in violation of the law in any way and had to make the decision whether to incur a cost to fix the obvious problem internally. There were several options for fuel system redesign. The option most seriously...
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...should never ever put a value on human life and not take consideration of a known deadly danger. Ford had an option as well as the solution to design the car in a way that prevented cars from exploding; however they refused to implement it. They thought that it was cost effective not to fix dangerous condition than to spend the money to save people in spite of the fact that the only added cost was $ 11 per vehicle. 2. Suppose Ford officials were asked to justify their decision. What moral principles do you think they would invoke? Assess Ford’s handling of the Pinto from the perspective of each of the moral theories discussed in this chapter. I think Ford officials would invoke the principles of utilitarianism. They claimed that they used cost benefit strictly based on data provided by National Highway Traffic Safety Administration (NHSTA). Moreover Ford also quantified a human life as a commodity at cost of approximately $ 200,000. As per their analysis, the $49.5 million benefits and $137.5 million cost suggested that Ford implementation of safety improvements would totally outweighed their benefits. 3. Utilitarian’s would say that jeopardizing motorists does not by itself make Ford’s action morally objectionable. The only morally relevant matter is whether Ford gave equal consideration to the interests of each affected party. Do you think Ford did this? I don’t think Ford gave an equal consideration to the interest of each affect party. The case has clearly mentioned...
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...Pinto Case Study Ford Motor Company launched the Pinto in August of 1970. This car was intended to compete with Volkswagen in the small car market. A tragic accident happen on August 10, 1978 in which three girls were killed. Two of the girls were sisters and the third was their cousin. The 1973 Ford Pinto was traveling on a highway when their car was struck from behind. The car burst into flames and all three teenagers were burned to death. Elkhart County prosecutor, Michael A. Cosentino took his case to the Elkhart County grand jury charging criminal homicide charges against Ford Motor Company. The trial was the first of its kind. The question was “Did Ford knowingly and recklessly choose to profit over safety in the design and placement of the Pinto’s gas tank?” (1) Cosentino was a part-time prosecutor with a $20,000 budget, some consultants working gratis and a task force of fired-up law school volunteers. (2) Ford had a former Watergate prosecutor with a million dollars to spend and legal team of 80 and all Ford’s resources at their disposal. Prosecutor Cosentino was driven by the fact that big companies are rarely phased by paying damage rewards and at that point criminal law should step in. Cosentino has to prove that Ford intentionally put a design out that was very dangerous. That Ford had the knowledge of the faulty design and recklessly chose profit over safety. Ford maintained that the Ford Pinto met the current safety standards for rear end crashes. Many...
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... Business Ethics Case Study: The Ford Pinto 1. What moral issues does the Pinto case raise? Answer: The Pinto case raise moral issues in human rights because even there were various ways of making the Pinto’s tank safer they refused technical improvement to prevent gas tanks from leaking. Given that number of people killed by fires from car, how they can value those individuals’ lives? Ford officials decide not to push the modification of the cars because it will be costly for them and not considering human’s life. 2. Supposed Ford officials were asked to justify their decision. What moral principles do you think they would invoke? Assess Ford’s handling of the Pinto from the perspective of each of the moral theories discussed in this chapter. Answer: With the use of risk/benefit analysis required by NHTSA, Ford officials justified in its decision not to change the Pinto model to increase vehicle safety, not considering the balance outlook on company’s perspective and human safeness. The moral principles that should invoke Ford officials is the act utilitarianism because this approach evaluates each action separately and the consequences that arise including any harms and benefits incurred by any people involved in the case. 3. Utilitarians would say that jeopardizing motorists does not by itself make Ford’s action morally objectionable. The only morally relevant matter is whether Ford gave equal consideration to the interests...
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...Ford Motor Company Pinto Case Karen Nollet, Alonso Miller, Michael Morra, Pamela Tenori MGT/216 Abstract In 1971, Ford Motor Company (FMC), on the advice of then vice-president Lee Iacocca, introduced the first subcompact vehicle, the Ford Pinto. After production, Ford discovered a defect in the design on the fuel system; the gas tank was placed in the rear of the vehicle. This error could cause the vehicle to explode on low speed rear end collisions. Ford conducted a risk/analysis to determine whether to recall the vehicles or leave the situation as is and suffer the consequences as they arise. After concluding that the vehicles could be modified for $11 per vehicle, Ford decided not to recall the vehicles. Based on their risk/analysis the cost to recall the vehicles sold would be $137 million, Ford determined that it would be more profitable to leave the vehicles as is and pay out costs in lawsuits because this figure adjusted to $49.5 million, substantially lower than the cost to recall the product. Ethics and morals would appear to be ignored for profit and gain. Ford Motor Company Pinto Case Ford Motor Company Mission Statement (1996), “We are a global family with a proud heritage passionately...
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...1970’s, Ford had been criticized by the public due to a defective fuel system design. Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploring, the company chose not to redesign the system, which would have cost $11 per car, even though the analysis showed that the new system would result in 180 less deaths (1999, The Valuation of Life As It Applies To the Negligence-Efficiency Argument). The company defended itself by using the accepted risk/benefit analysis to indicate that costs of making the change were higher than the fatality costs. This analysis was based on Judge Learned Hand’s BPL formula, where if the expected harm exceeded the redesign costs, then Ford must make the change, whereas if the redesign costs were higher than fatality costs, then it didn’t have to. Ford legally chose not to make the fuel system changes which would have reduced the fatality rate. However, it was legal doesn’t mean that it was ethical to the society. It is hard to accept how companies can put price tag on a human life. To me, it is unethical to determine that people should die or be injured because it would cost too much money to prevent it. Some things just can’t be measured in price, and that includes human life. Christopher Leggett stated in his case analysis: “Ford adopted a policy of allowing a certain number of people to die or be seriously injured even though they would have avoided it. From a human rights perspective, Ford disregarded...
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