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Bus 303 Group N. Summary Cost Benefit Analysis Ethical Issues Change Alternatives Recommendation.

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Presentation on theme: "Bus 303 Group N. Summary Cost Benefit Analysis Ethical Issues Change Alternatives Recommendation."— Presentation transcript:

1 Bus 303 Group N

2 Summary Cost Benefit Analysis Ethical Issues Change Alternatives Recommendation

3 The Ford Pinto – a small car to compete with foreign car company competitors Pinto – weighed 2000 lbs and cost $2000 Rushed project led by Lee Iacocca Planning took 25 months compared to the industry norm 43 months

4 Testing found several safety 25mph+ the gas tank would rupture in an 30mph+ rear endings would cause the gas tank to leak and the rear of the car to be folded up into the back 40mph+ the car doors would jam

5 With Current Gas TankWith Safety Alteration 180 burn deathsCost = $11 per vehicle 180 serious burnsTotal = $137 million 2100 Pintos burned Costs = $ per death $ per serious injurySecond alternative = Rubber Bladder $700 per carCost = $5.08 per vehicle Total = $49.5 millionTotal ~= $64 million

6 Ford employees Lee Iacocca Henry Ford II

7 Were they morally responsible to refuse to produce a car they knew would hurt the customer? Should they have put more effort into convincing Iacocca that this car was unsafe? Should they follow Iacocca’s commands regardless of their opinions since he is their superior in the company

8 Is Iacocca responsible for the safety of his customers? Should he maximize profits for the company at any costs? If safety defects are found after production, does he have a moral obligation to inform all his customers? Should Iacocca have established a working environment where his employees did not feel that they would lose their jobs for disagreeing with him? Safety? What safety.

9 Should Ford have trained his managers and presidents in safety? Does Ford have a responsibility to design a culture that encourages employees to bring up safety defects? Does Ford need to have a new policy that puts the has safety of their products more important than maximizing profits? Does Ford have a moral responsibility to do what is best for his shareholders

10 Young and ambitious new president Foreign competitors entering N.A. market No small car to compete with VW Beetle and others The demand for results and profits are the most important aspect of business

11 1. Pay the $11 per vehicle 2. Explore different safety features 3. Restart the project from the planning process 4. Continue with production of the Pinto

12 Pros Repairs the safety defect Saves Ford from potential lawsuits Protects Ford’s reputation High cost Slight delay before launch Cons

13 Pros A cheaper alternative could be found Profit margin could be higher than first alternative Repairs the safety defect before launch Pinto release would be delayed indefinitely Still decreases total profit Cons

14 Pros Design can be more focused on safety Improve Ford’s reputation Significant delay of launch Most costly alternative Cons

15 Pros Releases the Pinto to the customers immediately The largest profit margin is obtained from each Pinto sale Selling unsafe products to customers – could lead to serious injuries and deaths High chance of lawsuits against the company If/When injuries occur, loss of reputation Cons

16 Explore Other Safety Measures Repair the Pinto so that it is a cheap, safe car that will please the customers Act as a responsible company and not expose customers to unknown risks Implement a more cost effective option than adding the $11 safety addition Save lives by not releasing unsafe Pintos

17 Ford workers were afraid to talk to Iacocca about the safety defects In Feb. 1978, Ford was sued for $128 million – more then 3 times the amount they had predicted May 1978 – Department of Transportation announces defects with the Ford Pinto – Ford recalls 1.5 million Pintos Mar – Ford was charged with reckless homicide – acquitted of charges, however they stopped all Pinto production

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