Introduction:
Ford Motor Company is American based motor company. The Ford Pinto was the model of the company in the years 1971 to 1980. It was a two door sedan model. More than 3 million Pinto model production was in the company’s manufacturing units. Pinto model was a subcompact car, which was manufactured on the idea of the company’s vice president of that time. The company wanted to gain the market share to maximize the profits. In the starting years the model performed well. there were very less issues but not to great extent. Then after sometime, the company started saving cost for the production by not implementing the $11 equipment in the design. This decision of the company resulted in the loss of the 180 deaths in the country and that was the maximum number due to design defaults.
The problems came into existence when the National Highway Traffic Safety Administration checked the model and resulted into the decision that the fuel system of the model was defective. The defected fuel system resulted in the several injuries in the country. As a reason of this, more than 1.5 million models cars were recalled in the manufacturing units, which is the largest recall in the motor industry till now. The number of cases were filed against the company regarding the safety issues and loss of the persons driving the model. The lawsuit of $127 million was filed against the company, which then reduced to $6 million on the appeal of the company. The company was also included in the criminal charges in 1980 and this was the first case in the history, when motor company faced criminal charges. Pinto model was manufactured from the different point of view than the other models, but the safety measures were not properly considered, which resulted in the largest recall in the history.
Legal matter
A. Grim Shaw v. Ford Motor Company1
In May 1972, Lily Gray and thirteen-year-old Richard Grim Shaw was going in a Pinto 1972 when their car jammed by other car which was roughly traveling thirty miles for each hour. The car burst into flames due to that Lily grey lost her life and Richard Grim Shaw with some terrible wounds. TO recompense their loss A verdict was announce against Ford and the jury grant $560,000 to Grey family and $2.5 million to MatthewGrim Shaw to heal their damages. The shock came in when jury declare $125 million for correctional damages too. Later on this was diminished to $3.5 million.
B. The Criminal Case3
After Six months of Grim Shaw dispute Ford was involved yet another questionable case included with Pinto. The framework of fuel system of Pinto car was the main cause of the death of three women (regardless it was only a single reason is arguable) on august 10,1918. When their car was bumped by other car. A man was driving car under influence of alcohol some beer bottles, drugs and caffeine capsules stated the whole scenario of speed. The way ford has picked not to upgrade the fuel system was turned a topic for open civil discussions. Prosecutor Elkhart countyincreased debated deliberately where Indiana Prosecuted Ford murder and criminal rashness.
Some felt the case was highlighted in the ford pinto as they were an absolute example of “profound pocket”. Organisation neglect the costumer safety for sake of dollar. Where other feel that they are illustration of runway media scope blowing a story out of proportion. Regardless off assessment The ford pinto case is a tangled web of numerous complex legal and moral issues.
To calculate the result of this case after that whether it is suitable need to access numerous issues. The main issue to choosing whether Ford should opt out to upgrade faulty product in order to boost its bottom line. One must have to study “cost/benefit “to support their decision. The cost and issues will be centre of discussion in the extend of paper. where other issues such as the moral involved in fords choice. The decision indicated FordCriminally, whistle blowing. The work of correction of all damages and the jury demand minimise the damages are all the vital task to consider in this issue, which will not be concentrate thus.
Problem definition:
SWOT analysis is a good tool to describe the company’s business points. This tools would be helpful in analysing Ford business implication in Pinto model by explaining the threats, opportunities, strengths and weakness.
Strength
• Ford Motor Company is famous in America and the other parts of the world. It is known for its brand name.
• the company is having good technological concepts with the gas tanks to manufacture good cars.
Weakness
• The Ford Pinto model was launched without many tests. There were not many factory tests done but the maximum of those tests proved that gas tank had explosions while the rear impact but the company neglected this and continue producing Ford rushed into producing the Ford Pinto despite of actual factory tests proving that the Pinto is susceptible to gas tank explosions during rear-impact.
• Ford was lacking in the moral aptitude to discern and address the issue of the Pinto’s road driving safety.
• The budget was fixed for the production the model in the manufacturing units.
Opportunities
• American people were attracting towards the subcompact car models. It was becoming the choice of the customers.
• Ford was becoming the reliable brand in the market as customers were buying the models.
Threats
• The competition was increasing in the market for the subcompact models that was affecting the company’s production.
• Number of cases against the company regarding Pinto model against the road safety.
This analysis tool is making clear that the company was having the limited budget, which makes the company not to choose the required safety measures. It is negligence of the company because they were known with the problem before in the tests.
Solution generation:
The crucial point – the cost-benefit analysis
The director of Automotive Safety for Ford described in his article ‘Fatalities Associated with Crash-Induced Fuel Leakage and Fires’ that the cost-benefit analysis is important point to be noted in the Pinto case. It was shown that the $11 technical installation was not easy because of the limited production budget. They said that this would have not protected those cases..
The costs and benefits are broken down in the following way (The Ford, 2011):
Benefits
Savings 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles
Unit Cost $200,000 per death, $67,000 per injury, $700 per vehicle
Total Benefit 180 X ($200,000) + 180 X ($67,000) + 2,100 X ($700) = $49.5 million Costs
Sales 11 million cars, 1.5 million light trucks Unit Cost: $11 per car, $11 per truck
Total Cost 11,000,000 X ($11) + 1,500,000 X ($11) = $137 million
According to this statement, the company said that the total cost of a human life as about $200,000
Future Productivity Losses
Components
Direct Total in dollars
132,000
Indirect 41,300
Medical Costs Hospital 700
Other 425
Property Damage 1,500
Insurance Administration 4,700
Legal and Court 3,000
Legal and Court 1,000
Victim’s Pain and Suffering 10,000
Funeral 900
Assets (Lost Consumption) 5,000
Miscellaneous 200
Total per fatality $200,725
Fishbone diagram – This diagram is also known as a cause and effect diagram. It is graphical representation of the causes and effects of the problems to find out the root cause of the whole problem. It is defining the causes on the upper part and the effects in the lower part and the last emerging one is the result of the causes.
Solution evaluation:
There are possible solution actions that can be taken in the case of Pinto model and those are defined as,
Criteria Preference by Percentage
Eradicate the issue 30%
Improve the name of the company 30%
Cost effective 20%
Fast turnaround time 10%
Ease of implementation 10%
In this case, the most preferred solution is eradicating the issue with 30% of preference. It can be taken with the improving the brand’s name as well. While eradicating the issue, the image of the company will also improve as customers will start having trust on the company. The cost effective solution is the second preference after the two main components. The cost effective solution is the possible solution because company lost millions of dollars in recall of this model. The last two possible solutions are fast turnaround time and ease of implementation.
The company in the whole case defended itself by saying that company analysed the cost benefit analysis to determine the changes would cost more or not than the social benefits. That analysed results said that the cost would have been $137 million versus the $49.5 million price tag put on the deaths, injuries, and car damages. So the company did not go with the change in the designs. This cost benefit analysis did not consider the product liability. The company said that the precautionsare taken in case if the expected harm becomes more than the cost, if it does not increase then no precautions are taken. The BPL formula in Ford company, only gets into the result on a specific accident. On this basis, the company said that it was not in their criteria to change the designs. So the above possible solutions are beneficial from all sides.
Implementation plan:
This implementation plan defines the steps for the future to avoid the risks. This implementation plan would be very helpful for the company to avoid such recalls.
1. Pre- planning
• Identification of participants.
• Training of partners
• Preparation of tools and supplies.
2. Logistics mobilization
• Sending to different locations.
• Ensuring 100% placement to targeted areas.
• Ensuring 100% compliance of partners.
3. Information dissemination
• Coordination with affected communities.
• ATL activities.
• BTL activities.
4. Feedback mechanism
• Provide feedback form/process.
• Check if all identified participants have been served.
Action plan:
The action plan includes the recall of the cars. This should have been the first and important step to save the brand name of Ford company from scandals. Moreover, it was the company’s duty to recall all the cars and replace the defects. The course of actions described are,
• The availability of technological safety modification that was of $11 at that time.
• Installation of the rubber bladder as the safety device, which costed $5.08 and this was to be installed on gas tanks.
• The production should have been continued as per the 1977 regulations.
Conclusion:
After analysing the situation, it is clear that the companies got stuck in the problems with their production units and can result in the biggest mistakes ever. The problems must be analysed properly with every possible solution. All the solutions must be analysed and the appropriate must be selected to handle the problem. The solution generator and evaluation experts in the companies handle all the problems in the companies. Ford got stuck into the largest recall in the history because they do not want to spend on the technical parts. The company was looking at the cost analysis basis but not at the image of the brand. If the company took the steps before transporting the model into the market, then the loss would have been less.