Case Study

Ford Pinto
Submitted by:
Kapil Gupta (14810024)
Karan Sharma (14810025)
Karishma Manik (14810026)
Manish (14810029)

Introduction
In 1968, the Ford Motor Company
decided to introduce a subcompact car
and produce it domestically.
An attempt to gain a large market
share, the automobile was designed
and developed to meet the company
sales and distribution schedule.
During the first few years sales of the
Pinto were excellent, but thereafter
arises the problem of product defects.

The Controversy
In May 1972, Lily Gray was traveling with thirteen
year old Richard Grimshaw in a 1972 Pinto when their
car was struck by another car traveling approximately
thirty miles per hour.
The impact ignited a fire in the Pinto which killed Lily
Gray and left Richard Grimshaw with devastating
injuries.
On August 10, 1978, on U.S Highway 33, a van
weighing over 400 pounds traveling at fifty five miles
an hour stuck the stopped Pinto, resulting in the
death of two teenage girls, one severely injured, when
the car burst into flames.

Genesis of Problem
Questionable Design
The automobile's fuel tank was located
behind the rear axle, instead of above it to create more trunk space.
It made the Pinto more vulnerable to a
rear-end collision.
The gas tank and the rear axle were
separated by only nine inches.
Design meant, Higher Probability of fire
in case of collision.

Design Faults
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.

Crash Testing Results

When struck from the rear at speeds of
31 miles per hour or above, the Pinto's
gas tank ruptured.
Upon impact, the fuel filler neck would
break, resulting in spilled gasoline.
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.

Fords Decision
Because assembly-line machinery was
already tooled when engineers found the
defect of faulty design, top Ford officials
decided to manufacture the car anyway
exploding gas tank and alleven though
Ford owned the patent on a much safer
gas tank.
They did a Risk-Benefit analysis and
decided that it was better not to make
changes.

Risk Benefit Analysis

Ford estimated the cost to make this
production adjustment to the Pinto would
have been $11 per vehicle.
Most people found it reprehensible that
Ford determined that the $11 cost per
automobile was too high and opted not
to make the production change to the
Pinto model.
National Highway Traffic Safety
Administration (NHTSA) required
them to do a risk/benefit analysis.

Cost-Benefit Analysis
The estimated cost for the production
change was $11 per vehicle.
This $11 per unit cost applied to 11
million cars and 1.5 million trucks results
in an overall cost of $137 million.
Ford according to Probability of accidents
estimated that making the change would
result in a total of 180 less burn deaths,
180 less serious burn injuries, and 2,100
less burned vehicles.

Cost-Benefit Analysis
National Highway Traffic Safety Administration
values damages at $200,000 per death, $67,000
per injury, and $700 per vehicle equating to the
total "societal benefit" is $49.5 million.
Since the benefit of $49.5 million was much less
than the cost of $137 million, Ford felt justified in
its decision not to alter the product design.
The risk,/benefit results indicate that it is
acceptable for 180 people to die and 180 people
to burn if it costs $11 per vehicle to prevent such
casualty rates.

Second(Cheaper)
Alternative
The cheapest method involved placing a heavy
rubber bladder inside the gas tank to keep the
fuel from spilling if the tank ruptures.
On December 2, 1970, Ford Motor Company ran
a rear-end crash test on a car with the rubber
bladder in the gas tank. The tank ruptured, but
no fuel leaked.
On January 15, 1971, Ford again tested the
bladder and again it worked. The total purchase
and installation cost of the bladder would have
been $5.08 per car.

Ford's Cost/Benefit Analysis

at $5.08 Per Fuel Tank
Replacement

Ethical Issues
Ford did not consider the lives which would be
saved if the adjustment was made.
It is the things that remains intangible, and if
can be weighted and valued depends on
individual perception.
Some things just can't be measured in terms
of dollars, and that includes human life.
It is unethical to determine that people should
be allowed to die or be seriously injured
because it would cost too much to prevent it.

Responsibility of Ford
employees?
Were the employees morally responsible to
refuse to produce a car they knew would hurt
the customer?
Should they have put more effort into
convincing their vice president(Lee Iacocca)
that this car was unsafe?
Should they follow Iacoccas commands
regardless of their opinions since he is their
superior in the company?

Ethical Blindness
The fact that people can make decisions that
run counter to their own values and
principles, without being aware of it.
In reflecting upon his own role in the Ford
Pinto case, Pintos product manager asked
himself: Why didnt I see the gravity of the
problem and its ethical overtones?
Ethical blindness can be defined as the
temporary inability of a decision maker to see
the ethical dimension of a decision at stake.

Blind Spots
Customer Preference:
Ford had earlier based an advertising
campaign on better safety of their cars which
failed miserably.
Hence, there was a belief prevalent in the
company that customers are not willing to
pay for higher safety features.
Therefore, there was a corporate belief,
attributed to Lee Iacocca himself, of "safety
doesn't sell."

Blind Spots
Market Competition
Increased market for sub-compact cars.
Strong market position of Volkswagen Beetle.
Pressure on Vice President to improve sales.
Hence, Ford set limits for 2000 for Pinto and
limits for 2000 cost the lives of people.
Personality of the Leader
Designed in May of 1968 by the vicepresident of Ford Motor Company, Lee
Iacocca.

Negative impact of
Decision
Deaths leading to law suits.
Negative Publicity, protests.
Brand reputation took a serious blow.
The product failed and Ford brand had
to take a beating because they
neglected Ethical overtones.

Ethical Businesses create

Goodwill
An organization, which is well-known for its
ethical practices, creates a goodwill for itself
in the market.
Investors or venture capitalists are more
willing to put their money in the businesses
which they can trust.
Shareholders too, remain satisfied with the
practices of an ethical businesses.
Thus, ethics creates goodwill and builds longterm relationships, and that cannot be
denied.
Also, an ethical business puts greater value
on its employees and thus, employees remain

Conclusion
The risk/benefit analysis did not consider
other consequences of their decision.
Ford did not include public reaction that
eventually leads to protest, negative publicity
and law suits. The company studied economic
and financial impact but did not evaluate the
risk of social distress.
Ford did not consider the social implications
of implementing Precautions.
From the start the degree of ethical obligation
was not met by Ford and minimal ethical
requirements was compromised by assuming
that the cost of recall is greater than the

Conclusion
It will be forever debated whether it is
possible to set a price or value on a life to use
in these calculations and whether this leads
to an economically efficient outcome.
Ford adopted a policy of allowing a certain
number of people to die or be injured even
though they could have prevented it.
The decision seems to be a deliberately
disregard human life. From a human rights
perspective, Ford disregarded the injured
individual's rights and therefore, in making
the decision not to make changes or recall,
Ford acted unethically.

THANK YOU