Ford Motor Co., Ford notoriously became the first American corporation ever indicted or prosecuted on criminal homicide charges. The Ford employees (including the engineers) might not face any negative consequences from the delay. This might lead us to think that there has been some deception if the car we buy isn’t as safe as we assumed. Additionally, local communities are also affected. Safety was not nearly the selling point in the 1970s that it is now. © Michael Matteson and Chris Metivier 2020, Reading: Friedman – The Social Responsibility of Business Is to Increase Its Profits, Friedman’s Justification for Stockholder Theory, Reading: Freeman – Managing for Stakeholders, Module 3: Social Responsibility, Professionalism, and Loyalty, Corporate Social Responsibility and the Triple Bottom Line, Reading: Davis – Some Paradoxes of Whistle-Blowing, Reading: Duska – Whistle Blowing and Employee Loyalty, Reading: Arnold & Bustos – Business Ethics and Global Climate Change, Reading: Desjardins – Sustainability: Business’s New Environmental Obligation, Reading: Maitland – The Great Non-Debate over International Sweatshops, Reading: Arnold and Bowie – Sweatshops and Respect for Persons, Terrible Working Conditions and the Costs of Improvement, Module 6: Privacy, Property, and Technology, Reading: DeGeorge – Intellectual Property and Pharmaceutical Drugs, Case: Patents and the African AIDS Epidemic, Conflicting Rights and Ethical Intuitions, Reading: Arrington – Advertising and Behavior Control, Reading: Brenkert – Marketing and the Vulnerable, Case: Kraft foods Inc.: The Cost of Advertising on Children’s Waistlines, the communities around their production facilities. Very rare 1971 Ford Pinto convention car. Sarasota, FL. The stockholders might face reduced profits in the short-term if Ford were to delay the Pinto. The most obvious ways that these interests can be considered is in terms of money or safety. As Lee Iacocca was then fond of saying, "Safety doesn't sell.". In 1970 Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dangerous leaks. These parties all have a “stake” in the business, and so the business must consider these interests as well as their own. That is, they are buying cheap cars instead of expensive cars. People should not purchase large, expensive machinery with out doing some research. Are the customers better served by having something in the market that they can buy, or by producing a car that is out of their fiscal reach? When we make the assumption that a car is safe, we are making that assumption in the context of a highly regulated market which requires many safety devices and systems that did not exist in the early 70s. Trucks sometimes lose traction in slippery conditions because their rear end is light when they are empty. Her Pinto was rear-ended by another car traveling about thirty miles per hour. High gas prices, narrow roads, and population dense areas in mid-20th century … The lawsuits brought by injured people and their survivors uncovered how the company rushed the Pinto through production and onto the market. By 1977, new Pinto models incorporated a few minor alterations necessary to meet federal standards that Ford had managed to hold off for six years. There are other rules that we might need to account for. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles). As Executive Vice President and later as President of Ford, Mr. Iacocca was the driving force behind the program to produce the Pinto. Unfortunately, Ford chose to do neither. Stakeholder Management and Corporate Social Responsibility ... Ford, Jr., David . If they were shut down for a year, then that is another year without the funds (jobs, taxes, etc.) We have designed complicated systems for the frames of cars to increase safety, computer control over drive systems and brakes to increase traction, and several other features that make our cars safer to drive, but these systems were not available in the 70s. Friedman’s rules require that businesses pursue profit while staying within “the rules of the game.” Those rules require that the business follow the law and that it not engage in deception or fraud. Ford puts the figure at 23; its critics say the figure is closer to 500. It appears, then, that the best choice for Ford to make for the stockholders is to make the car as it was originally designed. Subcompact cars entered the American automotive marketplace in the 1960's. At this time many families began to purchase multiple vehicles. It might very well be the case that consumers would have bought the car even if they knew that it had failed some safety tests or that it wasn’t the safest car on the market. Later that year, General Motors recalled 320,000 of its 1976 and 1977 Chevettes for similar fuel tank modifications. This rupture created a risk of fire. When a business is acting on Stakeholder Theory, their obligation is to “create value for customers, suppliers, employees, communities,” and shareholders. None of these protective devices was used. The stakeholders in this particular case include: Which of these stakeholders would be harmed by delaying the production of the Pinto? So, the decision to produce the Pinto as-is becomes an easy one to make despite the dangerous tendency to burst into flames. Most people got what they expected to get from the Pinto: a cheap car that served to get them from place to place. Small, cheap, cars are (or were) less resistant to impacts. Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. There were two fixes: Move the gas tank, or reinforce the tank so it couldn’t break as easily. The Pinto, a subcompact car made by Ford Motor Company, became infamous in the 1970s for bursting into flames if its gas tank was ruptured in a collision. Posted: Nov 29, 2020. Competing against the Japanese car manufacturers, which used to be considered as superior to the American ones in terms of product quality, the leaders of Ford decided to create a new vehicle known as the Ford Pinto. "Hell no," said an engineer who worked on the Pinto. The stakeholders in this case include the employees of Ford, the customers who purchase Ford products, the government, domestic and foreign competitors, and those effected by the loss of life due to the safety concerns in the car. Did anyone go to Iacocca and tell him the gas tank was unsafe? It seems wrong, to many people, that we should sacrifice the lives and well-being of the customer for some extra profit for stockholders. In 1972, a Ford Pinto driven by Lilly Gray stalled as she entered a merge lane on a California freeway. The only Pintos to pass the test had been modified in some way–for example, with a rubber bladder in the gas tank or a piece of steel between the tank and the rear bumper. 1979 Ford pinto wagon 55176 actual mile unmolested creampuff. Iacocca used to say, "Safety doesn't sell.". Pinto was a best-selling subcompact. It was too late to save Ford… THE FORD PINTO CASE ... (categorical imperative) and favored consumers over company stakeholders (justice), including As Executive Vice President and later as President of Ford, Iacocca was the driving force behind the program to produce the Pinto. Company officials also decided to proceed even though Ford owned the patent on a much safer gas tank. Estimates by Mother Jones attribute between 500 and 900 burn deaths to Pinto crashes. "Hell no," replied an engineer who worked on the Pinto. SUVs have a higher risk of rolling over than sedans. The Pinto was a car with a mission. There might have been fewer deaths and injuries from the Pinto, but it’s also probably true that there would have been fewer Pintos sold. The Pinto's gas tank ruptured, releasing gasoline vapors that quickly spread to the passenger compartment. That sort of delay and expenditure would be deleterious for the stockholder’s profits, and perhaps even for Ford’s entry into the compact car market. Ford appealed the judgment, and the court reduced the award of punitive damages to $3.5 million. They depended on the factory to bring jobs, training, and wealth into the community. The early subcompact market was dominated by foreign manufacturers such as Volkswagen and Toyota. Grimshaw v. Ford Motor Company, 1981 The Pinto, a subcompact car made by Ford Motor Company, became infamous in the 1970s for bursting into flames if its gas tank was ruptured in a collision. Later that year, General Motors recalled 320,000 of its 1976 and 1977 Chevettes for similar fuel tank modifications. Case: The Ford Pinto; The Ford Pinto and the Dominant View; Reading: Friedman – The Social Responsibility of Business Is to Increase Its Profits; Understanding Friedman’s thesis; Friedman’s Justification for Stockholder Theory; Reading: Freeman – Managing for Stakeholders; Freeman’s Stakeholder Theory; Separation and Integration Smaller cars made ideal secondary options because of their inexpensive costs. Email Jedson JSOM 4.229 (972) 883-5812 . It gives the people what they want. With Lee it was taboo." The Grimshaw case sent a message to automakers that if they chose to ignore safety considerations, it would be at their own financial peril. We might also ask what responsibility the consumer has in the Pinto case. Let’s see how those interests might be respected and connected. Design changes take time, those designs must be tested, and the factories must be retooled for the new production. Ford employees. The smallest American Ford vehicle since 1907, the Pinto was the first subcompact vehicle produced by Ford in North America. With Lee it was taboo." If Ford did not promise that their car would never burst into flames, have they deceived anyone? INTRODUCTION • Demand for sub-compact cars • Designed in May of 1968 by the vice-president of Ford Motor Company, Lee Iacocca • Weighed 2000 pounds, cost $2000 and manufactured in 2 years 2 3. A spark ignited the mixture, and the Pinto exploded in a ball of fire. runs drives smells and looks new. The Pinto’s selling points included things like good fuel economy, small size, and not being an import. The Pinto's fuel tank ruptured and the car exploded in flames. $15,879. The normal time span for production of a new car model was about forty-three months. Grimshaw and Gray’s family filed a tort action against Ford, and the jury awarded not only $2.516 million to the Grimshaws and $559,680 to the Grays in damages for their injuries, but also $125 million to punish Ford for its conduct. Internal company documents showed that Ford secretly crash-tested the Pinto more than forty times before it went on the market and that the Pinto's fuel tank ruptured in every test performed at speeds over twenty-five miles per hour. Ford knew about the risk, yet it paid millions to settle damages suits out of court and spent millions more lobbying against safety standards. Ford officials decided to manufacture the car even though Ford owned the patent on a much safer gas tank. It is not the only option for businesses, and it is probably not the best of the available options. Rear end collisions caused the car to burst into flame. "That person would have been fired. The way Ford Company handled the matter became infamous when an in-house memo became public. We have seen in recent years that this is still true. Ford Pinto Case Stakeholders Ford Pinto Ethics Case Analysis Dickey L. Sours Jr. Business Ethics Course The Ford Pinto designs had the placement of the fuel tank behind the rear axle The fuel tank position has allowed the projecting bolts to puncture the tank when the vehicle was struck from the rear. FordPinto.com, the forum offers many categories such as general, technical and historic information as well as the classifieds section. If Ford is interested, primarily, in creating greater profits for their stockholders, then producing the Pinto is one way to do this. It certainly seems like something is wrong about building a car which has a known tendency to burst into flames when it is hit in the rear, but is that wrong a matter of deception or fraud? Shop millions of cars from over 21,000 dealers and find the perfect car. 2 LISTINGS - Ford Pinto 25 1979 Ford Pinto. The Pinto was rushed through production in just twenty-five months so it could be included in Ford’s 1971 line; the normal time span for a new car model was about forty-three months. People wanted small, cheap cars, and the Pinto was a small, cheap car. He underwent surgery to graft a new ear and nose using skin from the few unscarred portions of his body. Those people who would have bought the danger-Pinto, but couldn’t afford the safer-Pinto, would have been left with no car or would have kept driving their older (and perhaps less-safe-than-a-Pinto) cars. The automobile industry would have benefited because they would not have had to absorb the shame and moral disapprobation associated with creating a car with the reputation that the Pinto has (and continues to have). Ford might still have an obligation to restrict the costs of production for the Pinto, but those reductions are restricted by the interests of many other groups. Simply, Ford's internal "cost-benefit analysis," which places a dollar value on human life, said it wasn't profitable to make the changes sooner. Even when the Pinto failed to meet the safety guidelines that Ford knew would be in place in a few years, it was judged that it would be too costly to change the design of the car. Ancillary stakeholders include all members of the general public who might come into contact with the automobile in their community. Its radio spots had included the line: "Pinto leaves you with that warm feeling." The second stakeholder would be the investors, stockholders, of Ford Motor Company. Ford set an ambitious production deadline of 25 months. Our objective in this module is not to give you an answer as to which of these theories is the better one. Sports cars pose a greater risk to pedestrians when they hit them. sho Ford Pinto. The first and most important in my opinion would be the consumer, those buying the Ford Pinto. Though Ford was acquitted of reckless homicide in March 1980, the Pinto's reputation had plummeted disastrously; Ford … However, the court denied Ford's request to have the punitive damages award thrown out entirely, finding that Ford had knowingly endangered the lives of thousands of Pinto owners. It was supposed to be the car that kept Ford abreast of the times. Burning Pintos had become a public embarrassment to Ford. The law is only one of the “rules of the game,” however. Ford Motor Company Case Study In this case study of Ford Motor Company my decision would have to lean towards a recall for many reasons but, mostly I believe saving lives and my customer service reputation as smart businessmen. Would they have benefited from the safer Pinto design that was not produced? The question we must ask is whether Ford violated those rules when they made the Pinto. The short answer is that they did not violate the laws of the time. We know what they want because the consumers are expressing their preferences through the market. Ford's cost-benefit analysis showed it was cheaper to endure lawsuits and settlements than to remedy the Pinto design. Pinto Case 1. Edward Freeman’s stakeholder theory thesis statement is as follows: “The basic idea is that businesses, and the executives who manage them, actually do and should create value for customers, suppliers, employees, communities, and financiers (or shareholders).” In this particular case involving Ford Motor Vehicle Company, the stakeholders would be the product engineers, the employees of the … This paper recounts the Ford Pinto case, describes various ethical decision criteria, details the classroom experiment, then reports the results of the study. A problem here is that deception and fraud require that someone intends for another person to be deceived or that they actively deceived that other person. Ford pinto full details and analysis report with references 1. Case Study Of Ford Pinto. According to media reports the 1971 Ford Pinto was a subcompact automobile which was poorly designed. Let’s see how those interests might be respected and connected. After all, many of us voluntarily take risks that others would shy away from. It might make the Pinto into an entirely unprofitable venture. The Ford Pinto is a subcompact car that was manufactured and marketed by Ford Motor Company in North America, sold from the 1971 to the 1980 model years. Is such a claim fair to make if you know that it does not meet reasonable safety regulations that will come into effect very soon? Most people did not die in fiery auto crashes. Because of the tendency of the Pinto to explode on impact, bystanders who had not purchased the car might also be injured in its wake. “This honor is a reflection of Ford’s core values, and it shows that our employees are continuing to make the right decisions every day for all of our stakeholders.” Ethisphere’s list of the World’s Most Ethical Companies acknowledges and honors companies that recognize they have a role in society to influence or drive a positive change. Move the gas tank was unsafe reports the 1971 Ford Pinto driven by Lilly Gray stalled as entered. Only alternative, either, but it does give Stockholder theory a run for its.... Cheaper to endure lawsuits and settlements than to remedy the Pinto ford pinto stakeholders gas tank was unsafe mixture and... Very small proportion of total Pinto-drivers were harmed by delaying the production of a new car model about! Pinto case not to give you an answer as to which of these theories is the better one an memo... 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