Abstract
The Ford Pinto case occurred in the 1970s. Famous automobile company Ford designed a new model, and named “Pinto”. Due to its stylish appearance and reasonable price, the Ford Pinto quickly became a popular model.
However, the public has raised a lot of questions about the safety of the car. One of the fatal question is that the car’s gas tank has design flaws. And there is evidence that in case of Pinto suffer a rear-end collision, the gas tank is easily punctured by bolts on the differential, causing a serious accident.
Issue
Should a cost-benefit analysis be used in this situations where a defect in design could lead to death or seriously bodily harm?
Identify Stakeholders
The Ford Motor Company and manager should be confronted with this issue.
The victims and their families and millions of workers are being impacted by the issue.
RULE
The prosecutor of Elkhart County, Indiana chose to prosecute the Ford Motor Company for reckless homicide and criminal recklessness. Eventually, Ford's appeal was dismissed, $ 3.5 million in punitive damages verdict was approved and constitutes product liability case.
ANALYSIS
The Ford Motor company defended itself on the grounds that it used the accepted cost-benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit. At first, ford estimates that due to design flaws, Pinto car could cause 180 deaths and 180 people burned, and plus 2100 cars burned. Accordance with the prevailing price of the standard of life, Ford needs to average paid $ 200,000 per death, burns $ 67,000 each, plus a burned car Pinto, Ford expects to pay $ 49.5 million. However, this seemingly high cost of risk was stabilized by another calculation. Ford calculated that if recall 12.5 million vehicles Pinto all (just $ 11 each) to increase safety device, it would require $ 137.5 million. In comparison, the Ford Motor Company concluded that increasing the cost of safety devices beyond maintaining the safety of motorists earnings. Therefore, the company gave up the recall program.
I think on the one hand, if Ford company do not apply cost-benefit analysis, they will ultimately fail because they can not be profitable.