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Reaction paper on Ford Pinto

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Business Ethics

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Ford, a brand that revolutionized the automotive industry, launched a sub-compact car
called Ford Pinto in 1971 to compete with the Japanese and German automotive companies.
This project was spearheaded by Lee Iacocca, the man who also spearheaded the
development of one of the worlds most successful cars, Ford Mustang. Ford came up with a
plan to launch Pinto in a period of two years, which was less than the time normally required
for a design board idea to reach the showroom. Through crashing testing the prototypes of
Pinto, Ford came to learn that Pinto fails to comply with an upcoming safety standard
proposed by NHTSA to reduce fire from traffic collisions. As per the standard, it was required
that all cars produced by 1972 must withstand a rear end impact of 20 mph without any fuel
loss and by 1973, they should withstand a rear end impact of 30 mph. In the event of a rear
end impact of 20 mph, the fuel tank of Pinto used to get ruptured and cause dangerous fuel
leaks. Ford soon devised a solution to install a rubber bladder in the gas tank to avoid leaks
and got the final model pass the test. However, Ford did not implement the solution in the
production ready model to keep the cost low and avoid any kind of delay in launching the
vehicle. Fords decision of not implementing the solution was based on a cost - benefit analysis
which showed them that the additional cost involved in implementing the solution was higher
than the total compensation amount to be paid out in any kind of damage or loss of life. Ford
continued with the flawed design for six years until the 30 mph rear end collision standard was
adopted and it had to include a rapture proof fuel tank.
The question that arises here is that whether Fords decision to move ahead with the flawed
design to avoid the loss of market share and financial loss ethical? I think the decision taken
by Ford just based on a cost-benefit analysis is totally unethical. Their decision of not
implementing the necessary changes has jeopardized the passenger safety for their monetary

gains. Also, I dont agree with their approach in the cost-benefit analysis. You cant let people
lose life or get injured for your financial gain. And, it is impossible to measure and quote a value
for a human life. To analyze this case, I would first build a model and identify all the possible
elements. In this case, I find Ford and Lee Iacocca to be the active agents since they had the
right to make the choice and customers, shareholders, investors and employees to be the
passive agents since they have been affected by the consequences of the choice made by
the active agents. Ford made the choice not to implement the recommended modifications
in the final model and move ahead with a flawed design and put the lives of their valued
customers in danger. They made this choice even when they had an option to either redesign
the rear end of Pinto or install a bladder in the tank. They decided not to pursue any of the
alternatives because it costed them additional expenses and delayed launch. They kept their
consumers safety and the reputation of their brand at stake. They valued the financial gain
in acquiring the market share over consumer safety. The outcome of their choice is that the
customers lost their loved ones and they lost the reputation and trust their customers had in
them. They made this choice even after being aware of its outcome. It is quite clear that Lee
Iacocca and Ford as a whole, are responsible and accountable for the outcome of their
choice.
I also find that Ford made a utilitarian approach to take the decision. They calculated
the additional cost they had to bear and compared it to the compensation amount they
would need to pay to the victims, which turned out to be a lot lesser than the additional cost
for safety. Since Pinto was being developed for cost conscious customers, the additional
safety cost if passed on to the customers would impact their sales as it would increase the
price of the car and if they decide to bear it, it would reduce their profit margin. So they saw

the benefit in not implementing the recommended changes to make sure they keep the price
lower than their competitors and sell more. But this approach is not at all justifiable when there
is loss of lives and reputation. Utilitarian approach also rest on two important principles,
consequentialism and end-statism. I think, they did not consider these principles while applying
utilitarianrism. They did not think of the consequences of this cost-benefit analysis and what
would be the end state. Further, if we apply the contractarianism to analyze Fords decision,
we can see that they had a contract of delivering quality and safe product to their customers.
They did not consider about the promise they made to their customers while taking the
decision.
Lets do an ethical analysis of their decision using Graham Tuckers five box frame work.
Was this decision profitable? Yes. Ford saw the profitable business opportunity in the growing
market of compact cars and thereby wanted to grab the market share at the earliest by
launching Pinto before more players enter into the market. They were infact successful. But
What they did was legal? No. Pinto in the beginning failed to comply with the safety standards
and was later on made to comply the standards through several modifications. But then did
they launch a safety standard complying Pinto? No. Their act was illegal. Was it a fair decision
to launch a flawed vehicle? No. Pinto posed a serious fire hazard to its customers. Ford was
totally unfair towards its customers. Was Ford right? No. Ford was not right. It had an obligation
to protect its customers. It could not keep the promise of delivering a safe product to its
customers.
Even though what Ford did was unethical, but they had options to correct their action.
Ford could have announced about the fire hazard and initiated a recall of the vehicles for
free repair. This not just would have increased the brand value of Ford but could have also

driven the future sales. Along with that this action could have saved so many lives which were
lost otherwise. We can also look at a similar case to understand this better. Soon after Tata
launched the famous Nano car, cases were reported about the car catching fire on its own.
Tata did not wait for more accidents to happen, it immediately launched a nation-wide recall
and started the investigation for the fire reasons. When Tata discovered that it was due to
some quality issues, it undertook free repairs and also declared the reason of the fire to its
customers publicly on their website. It not just increased the trust in the brand but also avoided
loss of lives and other damages. Similarly in the Takata airbag case, Takata asked all the
automotive manufacturers to whom they supplied their airbag systems to do a recall for the
vehicles fitted with their systems. When they realized that their investigation was taking time, it
understood its responsibility and decided to install the airbag systems of their competitor
companies on their expenses so that the safety of the customers doesnt get compromised.
This decision has certainly strengthened Takatas business ties with its clients and helped the
customers of their clients to restore trust and faith in the brands.
It is clear that Ford had options to ethically deal with situation still they decided to go
unethical for financial gain. But they ended making losses and damage to self.

References
http://www.forbes.com/2010/05/20/forbes-india-wheels-of-fire-tata-moters.html
http://www.bbc.com/news/world-south-asia-11726992
http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html
https://hbr.org/2011/04/ethical-breakdowns
http://entertainment.verizon.com/news/read/category/Asia%20News/article/the_associated_presstakata_ceo_air_bag_defect_still_under_investigatio-ap
http://www.consumerreports.org/cro/news/2014/10/everything-you-need-to-know-about-the-takata-airbag-recall/index.htm#details
https://quizlet.com/24219244/ethics-ch-4-flash-cards/
http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html
https://ckienzle.wordpress.com/2013/03/12/act-utilitarianism-applied-to-the-ford-pinto-release/

Final Page

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