Ford Pinto - Executive Summary - Ford Motor Company Essay Example

Ford Motor Company introduced the Ford Pinto into the consumer market place and the end result was profit over human life - Ford Pinto - Executive Summary introduction. Ford Motor Company analyzed the cost of replacing an inexpensive part and found that it was cheaper to pay for suits resulting in accidental deaths and injuries. This summary will provide details and the factors surrounding the Ford Pinto case, the results of the production of the car and how Ford Motor Company changed its mission, values and guiding principles. The Ford Motor Company created what they felt would bring them a lot of profit, and in the end cost them more that just money, but their reputation.

People are faced with making practical and ethical decisions. These decisions do not always entail choosing right from wrong but at times, depend on a person’s choice or preference. However, in the business world, companies make decisions that affect their employees, stakeholders and most importantly, consumers. An example of a business decision gone wrong is the Ford Pinto Case from early 1970’s which literally affected the lives of many people. Ford Motor Company manufactured supposedly an affordable car for the typical American.

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Unfortunately safety issues were overlooked which could have prevented the loss of innocent lives. An internal corporate struggle between two executives on which vehicles to market for the company and keeping up with the foreign competition, resulted in not only financial losses but the loss of human lives due to corporate greed. (De George, 2010 p. 13). Ford’s production of the Pinto was solely responsible for injuries and deaths which resulted in lawsuits. Ford’s approach on handling business matters was about the bottom line. They overlooked standards and neglected the customer.

These actions tainted there reputation. Senior executives, like Lee Iaccoca should have taken the utilitarianism approach of making an ethical decision of producing the Pinto with the appropriate parts, making it safe. Instead they took the short cut by literally cutting corners in making this vehicle for company profit. As Ford stated in their Mission Statement, “Our mission is to improve continually our products and services to meet our customers’ needs, allowing us to prosper as a business and to provide a reasonable return for our stockholders, the owners of the business. (Smith, 2005 p. 53). As it is written today, Ford’s mission and values are far from where they were in the 1970’s. Ford’s values and guiding principles today could have made a big difference during the 1970s but instead of the customers coming first, competition and profit was more important. Ford’s guiding principle is “Quality comes first”, making sure that they have the customer’s complete satisfaction. (Smith, 2005 p. 53) Ford’s outlook in the Pinto case was that customers were receiving good quality products and that consumers were happy because of pricing.

Ford felt that the consumers weren’t sold on safety but on how much money they could save on what they thought was a good quality product. Employee Involvement is another guiding principle today with Ford. During the Ford Pinto era, there were internal problems between then-President Semon “Bunky” Knudsen and Lee Iacocca. Knudsen wanted to focus on medium and large cars, Iacocca on profit and market control, regardless of impact to customers. Iacocca was eventually promoted to President forcing Knudsen to resign.

Today, Ford is all about “Employee Involvement” being a team and treating each other with trust and respect, unlike what happened in 1968. (Smith, 2005 p. 53). Ford’s organizational culture has changed over the past three decades. According to Larry Smith, “By making the decision to move forward by going back to basics, Ford saw a 27% decrease in warranty spending and saved more than $2 billion with Six Sigma”. (Smith, 2005 p. 55). Ford has made significant changes, learning a hard lesson after losing millions of dollars in lawsuits, and damaging their reputation.

Ford should have been more proactive in making it right with the consumers and their investors. According Dennis Gioia, Ford Motor Company Corporate Vehicle Recall Coordinator, “Ford’s recall coordinator received field reports suggesting that Pintos were susceptible to “exploding” in rear-end collisions at very low speeds (under 25 miles per hour). ” Ford’s 1970’s mission statement was not available, either they did not have one or safety was not a priority. “Safety isn’t the issue, trunk space is. You have no idea how stiff the competition is over trunk space. (Gioia, 1994) Today Ford’s Values are products, people and profit, nothing different than in the 1970s, however the culture of the organization has changed over the years, promoting customer satisfaction and ensuring that their customers come first by ensuring the products the consumers purchase are safe and that the organization holds up its reputation. “I value people’s lives, my family and children, “unlike Ford they were more concerned with profit and competition, whereas, I value the safety of my life and other’s lives.

I also value my reputation, Ford’s reputation was on the line and they still did not act immediately to fix the issue. ” “I feel Ford did not keep their end of the bargain that “they didn’t make sure that people were safe in their cars. Part of their job is to make sure that safety is taken in to consideration before they sell a car to someone. As far as the other issues with fords finances and reputation I feel that they were in it for the good of the company and not the good of the consumer. ” “Ford decided it was more important to create a new car and increase profits, rather than look at the cost of human life and safety.

Ultimately it cost them, what is really astounding is the corporate culture which allowed for this to happen. I was raised to honor and value lives, and to think of the end results. There is no price for a human life, even though Ford felt there was a price! ” “I say honesty and integrity earns the trust of the consumers. I also think that honesty builds strong working relationships between companies and consumers. Effective communication is important especially working in getting the message or information across and has to be clear and concise.

Ford overlooked standards and was focused on making a quick buck. They tainted their reputation and in the end were dishonest and showed lack of integrity. ” Ford Motor Company paid a hefty price for its lack of integrity, ethics and values. A business must have these qualities in order to survive and remain competitive, as individuals our team agreed on these qualities and felt that Ford was completely wrong. In the end there is no price for the loss of human life, and that should be what matters in business.

Reference

De George, R. T. (2010). Business ethics (7th ed. ). Upper Saddle River, NJ: Prentice Hall. Retrieved from http://ecampus. phoenix. edu. Gioia, Dennis A. (1994) “Pinto Fires and Personal Ethics: A Script Analysis of Missed Opportunities”. ” 1970’s Law and Justice. Retrieved December 4, 2010 from http://www. enotes. com/1970-law-justice-american-decades-ps/pinto-fires-personal-ethics-script-analysis> Smith, L. R. , (2005). Back to the future at ford. 53. Retrieved from http://sqp. asq. org/pub/qualityprogress/past/0305/qp0305smith. pdf

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