Question

In: Finance

Read Case (Pinto) Then, answer following questions and turn these in by the deadline. Pinto54 In...

Read Case (Pinto) Then, answer following questions and turn these in by the deadline.

Pinto54 In the late 1960s, Ford designed a subcompact, the Pinto, which weighed less than 2,000 pounds and sold for less than $2,000. Anxious to compete with foreign-made subcompacts, Ford brought the car into production in slightly more than 2 years (compared with the usual 3½ years). Given this shorter time frame, styling preceded much of the engineering, thus restricting engineering design more than usual. As a result, it was decided that the best place for the gas tank was between the rear axle and the bumper. The differential housing had exposed bolt heads that could puncture the gas tank if the tank were driven forward against them upon rear impact.
In court, the crash tests were described as follows:55 These prototypes as well as two production Pintos were crash tested by Ford to determine, among other things, the integrity of the fuel system in rear-end accidents. Prototypes struck from the rear with a moving barrier at 21miles-per-hour caused the fuel tank to be driven forward and to be punctured, causing fuel leakage. A production Pinto crash tested at 21miles-per-hour into a fixed barrier caused the fuel tank to be torn from the gas tank and the tank to be punctured by a bolt head on the differential housing. In at least one test, spilled fuel entered the driver s compartment Ford also tested rear impact when rubber bladders were installed in the tank, as well as when the tank was located above rather than behind the rear axle. Both passed the 20-mile-per-hour rear impact tests. Although the federal government was pressing to stiffen regulations on gas tank designs, Ford contented that the Pinto met all applicable federal safety standards at the time. J. C. Echold, director of automotive safety for Ford, issued a study titled Fatalities Associated with Crash Induced Fuel Leakage and Fires. 56 This study claimed that the costs of improving the design ($11 per vehicle) outweighed its social benefits. A memorandum attached to the report described the costs and benefits as follows:
Benefits Savings 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles Unit cost $200,000 per death, $67,000 per injury, $700 per vehicle Total benefits 180 $200,000 plus 180 $67,000 plus 2100 $700 $49.15 million Costs Sales 11 million cars, 1.5 million light trucks Unit cost $11 per car, $11 per truck Total costs 11,000,000 $11 plus 1,500,000 $11 $137 million

The estimate of the number of deaths, injuries, and damage to vehicles was based on statistical studies. The $200,000 for the loss of a human life was based on an NHTSA study, which estimated social costs of a death as follows:57
Component 1971 Costs Future productivity losses Direct $132,000 Indirect 41,300 Medical costs Hospital 700 Other 425 Property damage 1,500 Insurance administration 4,700 Legal and court 3,000 Employer losses 1,000 Victim s pain and suffering 10,000 Funeral 900 Assets (lost consumption) 5,000 Miscellaneous accident cost 200 Total per fatality $200,725
Discuss the appropriateness of using data such as these in Ford s decision regarding whether or not to make a safety improvement in its engineering design. If you believe this is not appropriate, what would you suggest as an alternative? What responsibilities do you think engineers have in situations like this?

1) Are there any factual or conceptual issues in this case? If so, explain what they are.

2) What moral issue (issues) do you see in this case? Be specific.

3) Do you see any impediments to responsible action in this case? If so, identify them and explain how they contributed to the case.

Solutions

Expert Solution

Ford Pinto Case

Answer 1: In ford's cost benefit analysis, ford gave a figure of $11 to fix the gas tank. However, there could have been cheaper ways of fixing the gas tank. A lower cost could have changed the outcome of this analysis. Also, ford used the value of human life at $ 200,000 but it didnt put a price to the cost for the society, environment and the reputational damage it suffered as a result of betraying its own loyal customer base.

Answer 2:Ethical / moral issued include justifying a mistake using utilitarianism, calculating the value of human life, projecting the Company's loss as the cost for society, betraying loyal customers, ignoring field reports, neglecting safety issues, being legal doesnt imply being ethical (clash between moral and legal rights)

Answer 3: Impediments to Responsible Action - One main impediment that led to all this was the compromise on the engineering aspects of the car and focussing on the design elements due to high competition in the subcompact segment. More expenditure to repair the cars already sold by recalling them also seemed a big impediment in taking responsible action in this case.


Related Solutions

Read the following case study and answer the questions.                                  &
Read the following case study and answer the questions.                                     1*6=6 RBC’s Youth Marketing Strategy As stated above, the marketing strategy consists of selecting a target market and designing the marketing mix of your product, price, place, and promotion to appeal to your competitors. RBC, Canada’s largest bank, obviously has many different target markets, which results in the key managing different marketing mixes. One key target market for the bank is university students and recent graduates. The group is particularly...
Read the case and answer the following questions.                                  30 Mark
Read the case and answer the following questions.                                  30 Marks                                Richard Dana Associates (RDA) was brought in by the owners of a family-owned business with complex relationship issues at a time preceding an anticipated leadership transition. Following individual and group coaching sessions, RDA was able to help the leadership separate personal issues, and codify practices through formal policies to allow the leadership group to focus on business issues without personal complications. At the end of RDA's engagement, the client was...
Read the following accounting case and then answer the questions thoroughly. Questions are listed below the...
Read the following accounting case and then answer the questions thoroughly. Questions are listed below the case. Taylor and Ryan co-own and operate Hatfield Office Equipment (HOE) for 30 years. A local bank has continually financed HOE, which has an inventory worth millions of dollars. The siblings share ownership of the business. They hired James, Taylor’s son, to handle the company’s bookkeeping responsibilities. James, 30, had been working in various jobs at the business since high school. He eventually was...
Case Study Read the following case study and answer the questions that follow: Grace Speak is...
Case Study Read the following case study and answer the questions that follow: Grace Speak is a fourth-year student at Best University. She and her fellow classmates are working hard in their final courses and preparing for exams. Inspired by the teamwork that the healthcare profession espouses, Grace gets an idea for a study group. She thinks it will really help to share case experiences, course notes, and study tips. Unfortunately, several members of her peer group live out of...
QUESTION 4 CASE STUDY Read the following case study and then answer the questions. A market...
QUESTION 4 CASE STUDY Read the following case study and then answer the questions. A market darling falls to Earth: The EOH Meltdown Background EOH was listed on the JSE in 1997. Over the next twenty years it grew to one of the largest technology businesses on the African continent. By 2017 it operated in 36 countries in Africa and internationally. It had grown its annual turnover to R15,4 bn rand and was generally viewed as a highly successful company....
Read the case study in this chapter and answer the following additional questions in two to...
Read the case study in this chapter and answer the following additional questions in two to three sentences. Chapter 10: Long-Term Care Comparative Health Information Management. 4th Edition Capstone Activity Are there any technology considerations that should be addressed? How could the facility better prepare in the future for their next survey?
Instructions: Read the following case study and answer the questions at the end. Devin is a...
Instructions: Read the following case study and answer the questions at the end. Devin is a sixteen year old male with moderate mental delays, living with his parents in an upscale neighbourhood. Since he turned 15, Devin has begun to grab at his genitals and emit loud grunting noises whenever he is in the vicinity of girls his own age. This has caused Mr. and Mrs. Quentin a tremendous amount of distress. Because Mrs. Quentin’s profession requires them to entertain...
Case Study Analysis Read carefully the following case/scenario and answer the questions given at the end....
Case Study Analysis Read carefully the following case/scenario and answer the questions given at the end. A manufacturing company, involved in the business of food processing, faces a technical problem at one of their major plants. Recently they faced a technical issue which resulted in loss of production and was fixed by engaging their mechanical staff. Now this technical problem can result in even bigger loss of production and if it gains attention of public through social or electronic media,...
Case Study: Marketing and Customer Service Read the following case study to answer the questions provided...
Case Study: Marketing and Customer Service Read the following case study to answer the questions provided below. North Hampton Clothiers North Hampton Clothiers, a national nature and recreation clothing brand based in New England, has a commitment to providing its customers with what the company’s Vice President of Marketing and Customer Relations calls a “kitchen sink warranty program”, meaning the company will do whatever it needs to right a customer’s problem with one of their products. The company proudly embraces...
Q 2) Read the case and answer the questions below.                                  &
Q 2) Read the case and answer the questions below.                                        (Marks: 10)     Case: Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered in Toyota, Aichi, Japan. Recently a conflict arises from the management styles of two managers, Ralph and George, who head two different departments in the same organization. Ralph’s problem with George is that the latter is taking staff from his department without his approval. On the other hand, George feels that he is doing the right thing...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT