Sealed Air Case Study

Pinto Case Study

Facts of the Case

• Competitive market with Japanese car companies helped launched the “Pinto” that was designed and produced by Ford Motor Company.
• The Car was meant to compete against the fuel efficient, compact models produced by the Japanese and was intended to be less that 2k lbs., and cost under $2k.
• Lee Lacocia VP of Ford Motor Company at the time was the lead on development of the Pinto, and oversaw production that was intended to be completed within 2 years, 1.5 years shorter than industry standard.
• There were greater chances of unintended defects given the “rushed” nature of the production and launch of the product.
• Design of the car featured a fuel tank being placed behind the rear Axle, where it would be vulnerable to puncturing in a rear end collision.
• All test conducted in house showed a 100% of cars caught afire when hit from the rear at speed of 20 mph.
• Modifications if don to change position of the tank would carry an extra $11 USD per car carrying the price over the 2k USD price required to be competitive in the market
• Cost Benefit Analysis used as primary justification to proceed with no modification as it would cost Ford 137.5 Million vs the $49.15 million value calculated on the 360 person who would was estimated to be directly affected by any accidents the defect would cause.
• Government regulation at the time stated that the fuel tank of cars must be intact at below 20mph, Pinto just about met that regulation
• Launch of the Pinto was done eventually costing the lives of at least 60 people and injury to at least 120 people. This resulted in huge controversy criminal charges and lawsuits laid against the company and eventual phase out of the pinto.

Critical Issues of the Case

• Ethical Dilemma faced on whether Ford should make the necessary modifications to prevent a fire hazard and ensure safety of consumers at significantly higher cost or launch without the modification and risk lives being lost.
• Marketing Ethics called into question:

a) Did product cause harm to the customers knowingly?

b) Were marketing campaigns honest an performed in good faith without any intention of unfairly exploiting anyone’s vulnerability

c) Not deceive, especially while communicating about the products or services

d) Deliver products and services that are safe and fit for their intended uses

e) Follow all applicable laws and regulations.

• Act Utilitarian approach used and primarily the Cost Benefit Analysis tool of the theory to determine a business decision.

a) This kind of calculation used to calculate greatest number of good to the greatest number of people on which part, the interest of Ford Motor or Consumers.