Pinto/Ford the Ford Pinto: Case

Pinto/Ford

The Ford Pinto: Case study

Analyze and evaluate alternatives:

The Ford Pinto was a budget vehicle designed to compete with small, European models in the American car market. Lee Iacocca, working as a manger for Ford Motors, set a benchmark that the Pinto could not cost more than $2,000 and could not weigh more than 2,000 pounds. While the final model did fulfill these specifications, it also had a fuel tank that often ruptured during relatively minor forms of rear-end impact. Ford had the option of either spending extra money to change the car, which would be of great cost to the organization and perhaps reduce its profitability for the company because of increased costs, or allow the dangerous car to go to market. Ford had expended a great deal of money on the development of the Pinto so it released the car, rationalizing that it would cost less money to pay potential lawsuits generated by deaths on the nation's highway, than to pay money to change the vehicle

Formulate a solid evaluation of the case

The case of the Ford Pinto illustrates the dangers of merely looking at financial metrics without socially contextualizing them: Ford's faulty analysis from a business point-of-view was to look only at the immediate costs of accident-related lawsuits, rather than the bad publicity car accidents would generate for the company. Distrust of corporations in America of the 1970s was high. Ford's cold calculation of the costs of lawsuits was not simply bad publicity for Ford as a cruel organization, but seemed to embody the notion of American companies as organizations devoted to making profits, rather than caring about people.

Analyze and evaluate various alternatives

Ford could have installed a safety mechanism on the fuel tank and paid the extra money, possibly accepting lower sales. Given the rising costs of fuel during the 1970s, it is quite likely that the Pinto would have succeeded as a vehicle, despite the slight additional cost to the consumer. Ford could also have acknowledged the defect, and let consumers buy the product with awareness about the risk, but this would also put people driving on the highway, who did not accept the risk, in danger of losing their lives. The worst alternative, which Ford pursued, was to release the product to the unsuspecting public and to say nothing, and hope whatever accidents that transpired were minimal.

Weigh the pros and cons of alternatives

The 'cons' of correcting the 'explosive' fuel tank fault were the additional costs it would incur for Ford, costs that would have to be passed onto the consumers who bought the model. In retrospect, given the relatively minimal additional expenditure this would have cost Ford, the concern seems absurd. Iacocca was obsessed with 'beating' Ford's competition in the small car market. His ego as well as Ford's reputation was at stake, given that he had waged an internal political war to have control over the Pinto's development.

Iacocca wanted the Pinto in showrooms faster than the typical prototype-to-showroom turnover at ford. He was inflexible about the Pinto's cost and the size, even after the fact that the car's fuel tank ruptured at relatively slow speeds of 31 miles per hour, unless it was equipped with a plastic baffle placed between the axle housing and the gas tank, a steel plate between the tank and the rear bumper, and a rubber lining in the gas tank.

Because it was deemed to cost too much, relative to the target price of the car, Iacocca negated the proposed mechanical reform. "Safety doesn't sell," was his motto. The Pinto was deemed acceptable for the roads because it was a 1971 model and new National Highway Traffic Safety Administration (NHTSA) regulations regarding vehicle safety that would have prevented the release of the Pinto were not passed until 1977.

The 'pros,' however, of avoiding lawsuits seem obvious in retrospect, but within the hothouse managerial atmosphere at Ford, the focus on increasing sales and the bottom line was nearly obsessive, as was meeting set benchmarks.

Feasibility of alternatives

What grabbed the public's attention about the Pinto, in addition to Ford's rigid actuarial calculations of how many lawsuits were likely to ensue per customer death, was the fact that the safety mechanism was so inexpensive and easy for Ford to install. The only reason not to include it, from a feasibility perspective, was because of the company's idea that cost and meeting Iacocca's inflexible deadlines were non-negotiable.

Decide on the valid alternative and make recommendations, agenda of corrective actions

Installing the $11 valve upon the Pinto's release would have prevented Ford from losing sales across the board. Ford's feeble protests that companies make cost-benefit analyses all the time regarding customer safety rang hollow, given the horrific nature of the Pinto crashes and the carnage (third-degree burns all over a young boy's body; the deaths of young girls) that subsequently ensued. The argument that actuarial predictions suggested that 'only 180' lives would be saved that persuaded government regulators to allow the Pinto to be released rang hollow in the minds of the public, which was emotionally devastated with the anecdotal examples of the dangers of driving a Pinto.

What specific functions and activities must be performed to solve the problems?

Eventually, Ford was forced to order the recall of all 1.5 million Pintos built between 1970 and 1976. To prevent fiascos like the Pinto, Ford executives would have had to have included an analysis of how perception could affect sales. Even if safety did not 'sell' in the sense that consumers would buy a vehicle simply because it was safe, which did not make the reverse true, that consumers would buy a vehicle that was demonstrably unsafe.