Determining discovered a serious failing in the gas

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Last updated: August 28, 2019

Determininghow to conduct business properly and responsibly at all times can be adifficult task. Any known or unknown act of misconduct by businesses not onlydraws public attention, but also unnecessary governmental involvement toreassure businesses take the appropriate steps to improve ethical actions intheir establishments.

The conducts of businesses come under routine scrutiny astheir entrepreneurial reach and power increase. Society constantly observes howthese companies treat their workers and their customers, how well they ensureto meet their responsibilities, how many contributions they make to theircommunities where they do business, etc. Hence, how quickly and the manner inwhich these organizations recognize and resolve ethical issues serve as animportant tool to assess ethical decision making practices by theseorganizations. The Ford Motor Company’s handling of the 1970s Ford Pinto modelsprovides an excellent example of an ethically controversial practice ofbusiness. The cases involved Ford Pinto’s defective fuel system design, whichFord decided not to rectify due to a cost-benefit analysis they had conducted.This led to Ford taking a lot of heat for what was seen as an unethicaldecision. Dueto increased gas prices in the 1970s, American car buyers were looking forsmaller, more fuel efficient automobiles.

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Japanese automakers, who were specialistsin creating such models of cars, had a strong presence in the U.S market. Tocompete with the Japanese automakers, Ford’s president, LeeIacocca, decided to produce an economical vehicle called the Ford Pinto. Unfortunately,due to a rushed production, the design ended up being faulty. Crash testsdiscovered a serious failing in the gas tank, which was placed directly behindthe rear axle to create additional trunk space. The improper placement of thegas tank increased the risk of an explosion in an accident involving rear endcollisions. At Ford, a debate broke out about whether or not to move forwardwith the existing Pinto model.

Legally, the automaker stood on solid groundsbecause government guidelines at the time required gas tanks to remain intact uponimpacts under 20 miles per hour(Hoffman,2005). However, dilemma was whether it was an ethical decision, despite being alegal one. Ford made the final decision based on utilitarian terms, in which a cost-benefit analysis was carried outto evaluate the loss. Ford assigned monetary values to assess the redesigncost, probable litigation cost, and the cost value of lives of potentialvictims. The calculation assigned the value of human life at $200,000, aserious burn injury at $67,000 and estimated fatalities of 180 people and criticalinjuries to 180 people.

It was concluded that it would cost $137 million to redesignPinto’s gas tank, while possible liability costs could add up to $49 million.Ford decided it would be more lucrative to continue to produce the defective Pintorather than to rectify the design. Thus, in September, 1970, Ford released itsfirst Pinto in the market. They sold the faulty model for almost seven yearsbefore the company was eventually litigated for the faulty gas tanks, whichallegedly killed hundreds of people.

  OnAugust 10, 1978, three teenage girls died driving a Ford Pinto in Elkhert County,Indiana. Their car was struck from behind by a van, and their Pinto’s fuel tankruptured causing the car to explode in flames. The information about the Pinto’sfaulty gas tank had already became a news in 1977 through investigative effortsby Mark Dowie of Mother Jones Magazine (Hoffman, 2005). Subsequently, Ford was suedin an Elkhart County court where a grand jury indicted a criminal homicide andrecklessness charges against Ford, the first ever against an Americancorporation. During the litigation procedures, Elkhart County prosecutorsmaintained that Ford’s engineers were well aware of issue with the gas tank,but they did nothing to correct the failing design.

It was also revealed to thecourt that Ford valued profits over buyers’ safety and welfare. On the otherhand, Ford maintained that the Pinto was a safe vehicle and adhered to all the safetyregulations of Indiana. Ford also declared that the engineers deemed the Pintoas “a good, safe car and bought it for themselves and their families” (Hoffman,2005). Ford further convinced the court that it built the Pinto “to take on theimports, to save jobs for Americans, and to make a profit for its stockholders”(Hoffman, 2005). On March 13, 1980, the Elkhart County juryfound Ford not guilty of criminal homicide in the case involving three teenagers.Intheir defense, Ford’s showed how they considered “the greatest happiness orgood for the greatest number of people.” In Ford’s case, the decision to capitalize on profit while discountingsafety concerns was producing the greatest good because more people were ableto own an inexpensive car, which compensated for the loss of comparatively fewlives. Hence, in order to maximize collective well-being, Ford utilized theutilitarian approach and prioritized the benefits of the group over theinterests of individuals.

Adrawback of the utilitarian approach involves assigning values to the benefitsand harms of our actions and their consequences. First, how can Ford determinewhether the loss of lives justifies the economic benefit gained by others?  The calculations by which the welfare of thegroup is measured against that of the individual may leave scope for bias.Second, it may be considered unreasonable and faulty to make decisions based onimpossible calculations of the future. Another limitation of their decision wasthat Ford disregarded some of the other essential principles of ethics, such asautonomy and justice of the drivers. Personally,I disagree with Ford’s approach because I believe that Pinto drivers should havealso be given rights to make their own decisions.

These Pinto drivers mighthave handled the same information differently; they may have placed safetyconcerns ahead of finances. By not considering getting their consent, Fordviolated their autonomy. Moreover, limiting non-Pinto drivers’ liberties forthe benefits of Pinto drivers can also be considered unfair and biased. Ford’sdecision makers were only thinking from an organizational point of view, andfailed to consider that the Pinto, with its faulty design, could be a majorthreat to everyone on the road. Althoughthe utilitarian approach is a legitimate tool to calculate cost-benefitanalysis, I believe it should be limited for strictly financial decisions.

Byputting a value on human lives, Ford treated its customers as a means to anend. By utilizing the principles of utilitarianism, Ford implied that theirneglect for drivers’ safety did not matter, as far as they were successful in attaininga desired outcome for overall good. In this case, it was acceptable for Ford tonot fix the faulty design in the Pinto and sell the car at low cost as far as theiractions made their customers happy. By doing this, they not only let go of themorality of their action, but also disregarded the value of human lives.

   Based on Immanuel Kant’s theory, the integrityand rights of a person should always be respected. If I had to deal with thesame dilemma Ford had to, I would have followed Kant’s ethical perspective overthe utilitarian approach. Kant’s ethical perspective states that the rightnessor wrongness of actions are not determined by the outcome, but whether theseactions fulfill our moral duty. Kant’s ethical theory implies that the moralityof any action basically depends upon intrinsic nature of the action (Johnson,2015). Human lives have a fundamental value apart from any cost-benefit breakdown.There should not be a moral cost-benefit analysis that permits organizations torisk any human being for financial gain. Regardless of the consequences, harmingother human beings is not acceptable.

Byapplying the Kantian ethics to make adecision, I would also argue that the “categorical imperative” ofmoral action is not to treat human beings as means to an end, but as an end inthemselves. This is unlike the utilitarian view, which allows for use ofindividuals as means to benefit the many. Thus, any calculations generated in theFord Pinto cases should not have been taken as quantitative outcomes, butinstead as a basis for comparing and assessing different interventionapproaches. Ibelieve if Ford had made a decision using Kant’s approach to ethics, they wouldhave decided not to move ahead with production of the Pinto. Ford’s leaders andengineers would have probably argued that the car should not be manufacturedand sold to customers unless it is entirely safe. Ford’s decision would havebeen based on a responsibility to humanity, regardless of the consequences.

However,in reality, Ford’s leaders behaved irrationally by convincing themselves thatthey were producing a greater good.  Bymaking their decision on the basis of cost-benefit analysis, Ford’s executives becamevictims of what Harvard Professor, Max Bazerman, calls “Cognitive Biases.” Their decision was a product of “perceptualbiases than of unhealthy motivations” (Johnson, 2015).  It is interesting to look at the Pintodecision from this perspective. Although Ford executives knew that the car hada risk of exploding, their final decision gave no consideration to theircustomers’ welfares. They took no initiative to reach out to Pinto buyers andask if they were willing to pay an extra few dollars to fix the gas tank.

The “cognitive barriers” clouded theirdecision-making skills. They were under the impression that their decision ismorally permissible because it produces a greater good to society. In court, Fordalso used moral disengagement tacticsto defend their decision. They kept claiming that the “Pinto is safe,” thus refutingits risk of causing any harmful consequences. Ford managers also claimed thatFord did everything according to the NHTSA standard in effect until 1977. Indoing so, they separated themselves from any responsibility of any harmful effectscaused by the Pinto. By using a variety of tactics to excuse itself from wrongdoing,Ford showed moral disengagement.  Moreover, by making selfish decisions withoutregard for others, and trying to avoid its consequences, Ford’s leaders,engineers, and counsel demonstrated to be at the Pre-Conventional Moral Development stage in which what isconsidered right is what one can get away with.

Asa leader in the automobile industry, Ford should have thought about the long-termbenefits and consequences of the decisions they made as an organization. Theynot only disregarded their customers, but also did not set high ethicalstandards for their employees and followers. By not striving for fairness, not takingresponsibility for their actions and not showing respect for human lives, theyset low ethical standards.

Also for the similar reasons, Lee Iacocca cannot beconsidered as a role model for Ford’s followers, as he did not show qualitiesof a good leader.  Inanalyzing Ford’s behavior from an organizationalcitizenship perspective, it should have taken the information provided by itsengineers seriously, and should have discontinued production on the Pinto whenthe safety issues were brought up. However, Ford did not do that because bydoing so, it would have incurred monetary loss.

Hence, for Ford, the risk ofjeopardizing human lives was worth the monetary rewards. This irresponsible behavior places Ford in the elementary stage of development forcorporate citizenship because it gave priority to making a profit for thebusiness and not to the wellbeing of society and its people.  Furthermore, if Ford’s maturity of societalissues and the public’s expectations around such issues is measured, it putsthem in the latent stage, in whichthe issue is largely ignored or dismissed by the organization.  Asa result of analyzing this case, I have learned that a good leader is truthful,trustworthy, and demonstrates integrity. The leader who “walks the talk” byadopting and implementing moral values into action, generates the higher levelof trust and respect from followers. While ethical decisions may not always bethe easiest, a business can gain long-term rewards by conducting ethicalpractices. In Ford’s case, poor ethical leadership practices led to an eventualhit to their reputation, which likely financially hurt the brand following thefallout of the Pinto issue. If they had acted ethically instead of prioritizingprofits over lives, they might have gained the trust of the public, andincreased sales due in part to a good reputation.

Ethicality in businessdepends on many individuals making ethical decisions. Organizational behaviorcan lead to ethical business practices if the members of the organizationchoose to act ethically. However, if one individual in the organizationprioritizes profits over ethics, it could cause a series of business actionsthat result in unethical practices. Organizational leadership must be strong inits ethical stance in order to ensure that the organizations actions reflectthis ethicality.

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