Ethics And How It Shaped The Ford Pinto Case Study

Length: 5 pages Sources: 4 Subject: Business - Management Type: Case Study Paper: #8655285 Related Topics: Complacency, Civil Liability, Business Ethics, Negligence
Excerpt from Case Study :

Ethics and Ford Pinto Crashes

For any organization, the ethics that are embraced will have a dramatic impact on their long-term profit margins and ability to quickly troubleshoot critical challenges. Those who are supporting the highest practices will receive better favorability ratings for the firm, management and brands. These factors will play a critical role in determining if customers will do business with them and the potential litigation from missing critical mistakes that were not disclosed. (Winter, 2011)

In the case of the Ford Pinto, there are obvious problems which were ignored in the design and products phases. These variables created a major product liability with the gas tank exploding in rear end collisions. To fully understand how ethics influenced the decisions made by the firm requires examining the best philosophical approach, Ford's moral awareness and the best approach. Together, these different elements will illustrate the importance of certain values in order to avoid similar problems in the future. (Bazerman & Tenbrunsel, 2011)

Ethical Issues

During the 1970s, Ford followed non-cognitive ethics. This is where everyone believes that various moral standards are irrelevant in modern business. Instead, they feel that the organization, its goals and the attitudes of the firm must be taken into consideration to understand how to deal with these challenges. This is problematic, as it meant that Ford ignored critical design flaws and continued with production regardless of these issues. To make matters worse, subordinates were afraid to speak out based upon fears that they will be fired or become a scapegoat. These issues created an atmosphere of complacency over everything else. (Winter, 2011)

Stakeholders

There were conflicting interests among the different stakeholders. The most notable include: management, stockholders, regulators, consumers and competitors. The result is certain groups received greater priority at the expense of others. A good example of this can be seen with insights from an employee talking about the culture at Ford during the production and development of the Pinto. In an interview with Mother Jones magazine, safety was not considered to be the most important factor. Instead, the firm was concerned about meeting its production deadlines and introducing a competitive, fuel efficient car. These factors meant that safety was ignored with the employee saying, "Safety wasn't a popular subject around Ford in those days. With Lee (Iacocca) it was taboo. That person would have been fired. Whenever a problem was raised it meant a delay on the Pinto, Lee would chomp on his cigar, look out the window and say 'Read the product objectives and get back to work." (Bazerman & Tenbrunsel, 2011) This is showing how there was a lack of ethics inside the organization.

These attitudes evolved over the course of time. This occurred with non-cognitive ideas creating an alternative form of ethics. This happened with the company losing its competitive advantage from shifts in customer demand to fuel efficient cars, rising oil prices and the inability to adjust to changes in the marketplace. Over the course of time, the management was no longer concerned about safety. Instead, they wanted to have a fuel efficient car that could compete directly with the Japanese and German automakers. (Bazerman & Tenbrunsel, 2011)

Consequences

In the case of the recall coordinator, faced internal pressure to ignore obvious design problems with the Pinto. This is because any negative publicity could have hurt sales and the brand image of the firm. At the same time, the management was concerned about meeting their production goals. Anyone who stood in the way of this, was seen as a troublemaker and was disciplined or terminated from the organization. (Bazerman & Tenbrunsel, 2011)

It was only after series of accidents and deaths occurred that the company had no choice but to deal with the design flaw. This happened, with the recall manager overly influenced by the executives inside the firm. He was pressured to follow non-cognitive ethics from the attitudes that were embraced by everyone and a desire to maintain the status quo at all costs. (Bazerman & Tenbrunsel, 2011)

Obligations

Ford and its recall coordinator did not show any kind of moral...

...

This is because the company was concerned about maintaining its competitive edge, lowering its cost structure and generating higher profit margins over everything else. According to Trevino and Nelson (2011), this can lead to what is known as organizational blindness. In these kinds of situations, the firm will become a victim of its own success. Over the course of time, these attitudes and the desire to rush through new products can lead to even greater challenges once it is introduced to the market place with them saying, "It's well documented that people see what they want to see and easily miss contradictory information when it's in their interest to remain ignorant -- a psychological phenomenon known as motivated blindness. This bias applies dramatically with respect to unethical behavior. At Ford the senior-most executives involved in the decision to rush the flawed Pinto into production not only seemed unable to clearly see the ethical dimensions of their own decision but failed to recognize the unethical behavior of the subordinates who implemented it." (Trevino & Nelson, 2011) This is illustrating how Ford and its recall coordinator were very reactive to the problems they were facing. When this happened, it became more difficult for someone to speak out against the firm and the policies that were in place. Instead, everyone continued to follow the company's procedures, regardless if they were illegal and could harm consumers who are using the product.

Moreover, any kind of delays would have resulted in the costs of the car increasing. During the 1970s, the company was facing considerable challenges from Japanese automakers (i.e. Nissan and Toyota). They had several different makes and models that were more fuel efficient and cheaper in comparison with Ford's vehicles. If the issues with the gas tank were reported early on, it could have meant that the company would lose market share even further. At the same time, the costs of will increase and shareholders will see the value of the stock decline. These issues pushed the management to focus on maintaining its competitive advantage at all costs. The only way they could do this was to sustain the production schedule and ignore the obvious design flaws. (Bazerman & Tenbrunsel, 2011)

These factors are showing how Ford and its recall coordinator did not have a sense of moral awareness. Instead, they were only concerned about their own well-being over everything else and did not address the problem until it was too late. It is at this point when Ford began to face regulatory challenges and was sued civilly for gross negligence. This was the first time in American history when a company had to deal with so many problems that were directly related to safety issues they failed to troubleshoot or do further testing on. (Bazerman & Tenbrunsel, 2011)

Character and Integrity

The philosophical approach should have been utilized to support the larger ideals of virtue ethics. It is focused on understanding the how the character of the person relative to all of the different stakeholders will provide the greatest benefits for everyone. If the recall manager had embraced this approach, they could have been able to reduce civil liabilities and deal with the larger challenges. (Bazerman & Tenbrunsel, 2011)

Creative Actions

To address these issues requires focusing on a number of areas in conjunction with each other. The most notable include: establishing clear goals, utilizing translation targets, proper selection and making effective connections. Establishing clear goals requires understanding the social / economic factors, the competitiveness in the sector, specific activities that are crucial to company's success, critical strengths / weaknesses and having the foresight / resources to adjust with critical challenges. Proper selection is looking at those variables that influence the outcome of the project to include: measuring economic and technical feasibilities. Making effective connections requires establishing strong communication among the different groups. Their main objectives are to enhance communication and coordination through setting the attitudes and practices. The combination of these factors will help to focus on areas that will deliver long-term results. This is when everyone understands the impacts of these changes and can identify the best avenues for dealing with them. If this approach had been utilized by the recall manager, they would have been more proactive in addressing the problems associated with the Pinto. Once this occurred, is the point they could prevent the problems early and deal with critical challenges before they became a bigger. (Wilson, 2014)

Check Your Gut

Clearly, there was a lack of values at Ford during the 1970s. This is because the company became a victim of its own success and was concerned about foreign competitors taking market share from them. The combination of these factors had a dramatic impact on mindset of managers. They wanted to introduce a low cost, fuel efficient vehicle (i.e. The Pinto). (Bazerman & Tenbrunsel, 2011)

However, the design flaws with the gas tank…

Sources Used in Documents:

References

Recalling his Time at Ford. (2015).

Bazerman, M. & Tenbrunsel, A. (2011). Ethical Breakdowns. Harvard Business Review.

Trevino, L. & Nelson, K. (2011). Managing Business Ethics. Hoboken, NJ: Wiley.

Wilson, J. (2014). Essentials of Business Research. Thousand Oaks, CA: Sage.


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