Ford Pinto Case in Terms of Corporate Ethics

Josephson’s core values model provides the core values which can guide a CEO in making decisions which protect the interests of both the consumer and the investors. Three core value I would have used in making a decision regarding the safety of Pinto are citizenship, trustworthiness and respect. Trustworthiness requires that individual acts according to the truth. Several tests previously conducted by Ford engineers had revealed that Pinto was not safe and that it required additional modifications so that it can be safer. These modifications according to Ford engineers would cost the company around $5 per car. These changes if undertaken could make Pinto more secure even though it could mean the loss of investors’ money. Citizenship requires that a CEO acts according to the laws of the land. I would have ensured that the design of Pinto meets all the requirements set by the government agencies. Instead of lobbying for the delayed implementation of the National Highway Traffic Safety Administration (NHTSA) rules, I will ensure that Pinto meets all the required standards. Respect dictates that a CEO makes impartial judgments, that decisions be based on merit. After analyzing the crash reports presented by the engineers, I will make objective decisions which put the safety of our customers ahead of money.

The hurried design of pinto so that it can counter the Japanese entrance into the American market has had some negative impacts on the company. Several stakeholders were affected by the CEOs decision to bypass security measures so that the car can be unveiled on time. The first group is investors. These are the people who have shares in the company. The news that Pinto is not safe drives customers away, few customers, therefore, implies that the company revenue drops. Competitors are other stakeholders affected by the pinto case. Competitor’s especially local ones such as General Motors and Chrysler lost significantly during the trial. General Motors sales dropped by 7.2 and Chrysler’s dropped by 26%. Following the trial of Ford, customers began questioning the safety of cars made by other companies and that was the cause of the drop (Fisse & Braithwaite). Foreign companies which Ford was seeking to compete with by making subcompact cars benefited by selling more cars. The stocks of Ford also dropped during that period. Prior to the scandal, Ford’s stock traded at $ 50 during the 1960s and 1970s but this dropped to $ 22 after the scandal was publicized. Reduced sales of Pinto due to the safety issues will imply reduced income to the company, the company had to cut down workforce.

Compliance to the law implies following the law to the latter. It means following the law without question. Corporate ethics ensures that a company works in an ethical manner and at the same time taking care of the interests of the stakeholders (Tai & Chuang, 2014). What the law considers right might not necessarily be what the is ethically right. In order to succeed as a company, a mix of corporate responsibility and compliance with the law are necessary. In the case of Pinto, Ford, complied with what the law required them to at the time, they complied with the law but at minimum standards. NHTSA had stated that by 1972, cars hit from behind at 20kph should not explode. Ford modified the engines so that it could pass the test at the time even though they knew that Pinto was a threat to the safety of consumers. Ethically, the company acted according to the Utilitarianism ethics whereby cost-benefit-analysis is encouraged. Utilitarianism encourages the overall happiness of an individual or company and not society as a whole. Morally, this was wrong as they put money above the lives of people.

References

1. Birsch, D., & Fielder, J. (1994). The Ford Pinto case: A study in applied ethics, business, and technology.
2. Fisse, B., & Braithwaite, J. (1987). The Impact of Publicity on Corporate Offenders: Ford Motor Company and the Pinto Papers. Corporate and Governmental Deviance, 244-262.
3. Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.