Bad business decisions can be seen throughout history; however none has stirred such controversy as the error made by Ford Motor Credit concerning the 1971 Ford Pinto. Despite many safety concerns Ford CEO, Lee Iacocca and Ford executives began the production and distribution of the 1971 Ford Pinto. During routine safety tests of production models, it was discovered that every Ford Pinto tested and sustained a ruptured fuel tank during a slow to moderate speed rear end collision. The resulting fireball could cause severe burn injuries and even death to its occupants.
Ford engineers designed a solution. By installing a baffle between the gas tank and the rear bumper, the threat of it possibly rupturing was nearly obsolete. These modifications would only have cost $11 per vehicle to complete. After conducting a cost/benefit analysis, Ford estimated that the cost of lawsuits and the amount Ford would have had to pay (estimated at more than $50 million), far exceeded the amount saved ($20. 9 million), by not installing the baffle (De George, R. , 2006). How can a major corporation put a price on human life?
Had I been involved in the dilemma concerning the Ford Pinto, I would have somehow convinced Lee Iacocca and the executives at Ford to install the baffle. I would have gone to the press and the U. S. government with my concerns over the safety of this vehicle. Iacocca wanted a car that would cost under $2000. Instead of raising the price of the Pinto, the profit margin for Ford could have been decreased. The stakeholders certainly would have agreed considering the safety concerns. It was only going to cost $11 per car which would have been a total of $20.
9 million; a small price to pay considering how many Pintos sold between 1971 and 1978. Installing the baffle would have thrown off the production date, but the defect would no longer be a problem. The defect should have been corrected after the first year of production, however, since it was not the entire dilemma was a terrible business decision (De George, R. , 2006). Corporations more so than individuals, have a moral obligation to keep the public safe from harm. When it comes to making and selling a product, in the case of human safety, money should not be an underline factor in doing what is considered morally the right thing to do.
Ford acted unethically when they introduced an unsafe vehicle that eventually caused serious injuries. The Ford Corporation crossed the line when knowingly decided not to make the necessary repairs in the Pinto which would ultimately save lives. Corporations have an ethical obligation to assume responsibility and admit their wrong doing. Did Ford have an internal office where an employee could go and report such wrong doing without suffering retaliatory actions? Whistle blowing was something new in both the corporate and public worlds.
How many people knew what was wrong with the Ford Pinto and refuse or were afraid to come forward with their concerns? The obligation not to harm any person primary falls on the responsibility of those who manage the corporation. If other people know about this, they could have had a hand in stopping this. However, other members of the corporation are not morally responsible for the actions of the corporation such as assembly workers, engineers, or office workers. According to University of Phoenix (2009), “whistle blowing is reporting improper activities to an appropriate person.
” If consumers and owners of the Ford Pinto known in advance that the Pinto would explode in low impact crashes and that death was a high factor, the sales would have probably been lower to none which in turn would have been even costly to the Ford Corporation. CEO Lee Laccoca should have thought about the long-term effects of taking consumer trust for granted and avoided the negative repercussions of the Pinto if a recall was issued and handle properly. Ford could have avoided the negative publicity. Meeting obligations is very important in a social environment.
Ford was operating on how internal social capital was more important than external capital. Most likely before the Pinto fires Ford had a good reputation as being one of the safest automobile in the car industry. Greed was the motivation behind Ford’s immoral ethical business decisions which resulted in the lost of many human lives. The competition of small cars was emerging and American consumers were very interested in this market. Ford decided to act quickly before they would begin to lose market their share in the marketplace.
Ford’s decision had nothing to do with the concerns of the consumers but with the money it was making and their status in society. In 1971, the year the Ford Pinto was released to the public, the organization knew about the potential safety issues the car faced when a rear-end collision occurred. According to DeGeorge (2005), Ford prepared a cost-benefit analysis to determine if it would be cheaper to fix the problem, an exploding gas tank, or wait to pay out possible lawsuits that could occur after the accidents happened. Ford ultimately decided it was better financially to produce a car that was dangerous to the owner.
It appears another current automotive company may have followed some of the same practices as Ford did in the 1970s. It was recently made public that there was a safety problem in some of the models Toyota produces. The problem with the Toyota’s cars is a gas pedal that causes sudden acceleration. Although it is still unclear when Toyota discovered the problem with the gas pedal sticking, and how they determined what the next steps would be, Toyota did appear to know about the problem and did not initially do anything to resolve it.
In an article written by Rooney (2010) “Toyota has been criticized for not responding quickly enough to customer complaints about sudden acceleration, which have been blamed for several accidents resulting in injuries or death” (Toyota Recall: What took so long? paragraph 10). It does not matter what decade, or year, this type of scenario happens, organizations have a moral responsibility to inform the customer about any potential danger he or she faces when purchasing a car from the respective company, especially when the flaw is potentially fatal.
In both cases, Ford and Toyota should have made it public as soon as they knew about the problem. If these organizations would have made the safety issues known immediately to the consumers, the consumers would have been able to make a well informed decision about the car they were thinking about purchasing; they may have even decided to purchase a different car that was safer. Rational thinkers will not put their lives, or the life of their families, in danger. As a country, America has a government that has implemented consumer safety laws in an attempt to protect the consumers from these types of situations.
Reference Tech Republic (2010). Interactive Inc. ‘Steer clear of these 10 illegal job interview questions’ Retrieved March 21, 2010, from http://www. techrepublic. com Linda Klebe Trevino, Katherine A. Nelson (2007). Axia College, Decide What’s Right: A Prescriptive Approach. Retrieved on March 20, 2010 https://ecampus. phoenix. edu/content/eBookLibrary2/content/eReader. aspx De George, R. (2006). Whistle Blowing. Retrieved March 31, 2010 from https://ecampus. phoenix. edu/content/eBookLibrary2/content/eReader. aspx.