1. 29/07/13 MVBE
AmritaSchool of Business,
Coimbatore
Group 1 AGroup 1 A
Managerial Ethics &Managerial Ethics &
Business ValuesBusiness Values
II MBA 2012-14II MBA 2012-14

2. RELEVANT FACTS
Question: 1
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3.  Ford launched PINTO in 1971 to compete
with German and Japanesecompact cars.
 “PINTO wasintroduced by President
Iacocca” succeeding an internal struggle.

4.  Ford wasfully awareof thefaulty fuel tank
that often ruptured during rear-end impact.
 But, Iacoccadecided it wastoo lateto
redesign and go by thefaulty gastank design.
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5.  Thismeasurewastaken by themanagement
for 2 reasons:
 Cost consciousbuyers.
 Cost on safety reflectsthebuying
behavior.
Colleaguesand other ford engineers
agreed with Iacoccaabout thefaulty gas
tank and launched PINTO into the
market.

6. 29/07/13 MVBE 6
40 Court cases + Hundreds of Million
paid as fine

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8. PERTINENT ETHICAL ISSUES
Question: 2
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9. COST OF DYING IN A PINTO:COST OF DYING IN A PINTO:
UTILITARIAN APPROACHUTILITARIAN APPROACH

10. UTILITARIANISM
“A general term for any view that holdsthat
actionsand policiesshould beevaluated basis
of thebenefitsand cost they will imposeon
society”

11. COSTS
• Autoswould bebuilt = $12.5 million
• Cost for modifying thegastank = $11
Cost = 11 × 12.5 million
= $137 million

12. BENEFITS
• Modification of fuel tank could prevent about
180 burn deaths
• In 1970’s, Government valued ahuman lifeat
$200,000
• Insurancecompaniesvalued aseriousburn
injury at $67,000
• Residual valueof thesubcompact at $700

13. 180 deaths × $ 200,000 +
180 injuries × $ 67,000 +
2100 vehicles× $ 700
= 49.15 million

14. Ethical Issues
 A mistakeisjustified using theutilitarianism
 Calculating thevalueof human lifeiswrong in
thisconcept
 Projecting thecompanieslossasthecost for
thesociety iswrong
 Asper theFord calculation, all thecost is
absorbed by the180 peopledie

15.  Can theloyal customersbebetrayed?
 Whether theloss& profit should beborneby
thecompany or customers?
 Did Iacoccafollow any moral virtues?
 Iacoccachoseinjusticebetween theextremes
in actionsand emotions
 Breach of Aquinas.
Ethical Issues

16.  Ignoring thefield reports
 Neglecting safety issue
 Obligation to protect theford employeesor the
customers
 Ford waslegal in itsbusiness
Ethical Issues

17.  Being legal doesnot imply being ethical
 Right to Liveisamoral right of the
people(customersof ford)
 A clash between moral and legal rights
Ethical Issues

18. Boot Space OR Human Life????
“Ford” – The organization Credibility of the organization??
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19. AFFECTED PARTIES
Question: 3
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21. Affected Parties
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22. Patty Ramge appears dejected as she looks
at her Ford Pinto where she put a sign on
the rear of the automobile because of the
fiery accidents involving Pintos
Source:© Bettmann/CORBIS
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23. Victims Family
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24. CONSEQUENCES OF ALTERNATIVE
COURSE OF ACTION
Question: 4
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25. Alternative 1: Make the vehicle
with rupture protection investing
$ 11
BenefitsBenefits
 So many invaluable
human life can be saved
 Regain Customer
Confidence
 Integrity and brand value
of Ford Motors will be
increased
 So many invaluable
human life can be saved
 Regain Customer
Confidence
 Integrity and brand value
of Ford Motors will be
increased
Trade- OffTrade- Off
 Extra expenditure
incurred to repair and
produce.
 May loose competition
due to higher price
 Extra expenditure
incurred to repair and
produce.
 May loose competition
due to higher price
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26. Alternative 2: Recall The
Vehicles Soon After The Initial
Accidents
BenefitsBenefits
 Could be prevented more
human causalities
 Could gain customer
belief as a responsible
company
 Could have set a good
example for the industry
 Could be prevented more
human causalities
 Could gain customer
belief as a responsible
company
 Could have set a good
example for the industry
Trade- OffTrade- Off
 Brand value may be lost
in terms of safety
concerns
 More cost will incur than
the $11 repair.
 Brand value may be lost
in terms of safety
concerns
 More cost will incur than
the $11 repair.
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27. OBLIGATIONS
Question: 5
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28. Organizational Obligations Social Obligations
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29. Organizational Obligations
Perform task asexpected by
employer
Uphold reputation of the
organization
Inform thenegligence'sto higher
authorities- organization at stake.
Focuson thecourseof action not
theoutcome.
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30. Social Obligations
Reliability and quality of product sold
Accept mistakeand takecorrectivemeasures
Built and maintain relationships
Deliver valueto Customer
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31. COMMUNITY STANDARDS
Question: 6
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32.  Professional: Being loyal to thecompany
 Social: Being responsibleto thesociety
 Personal: Having personal valuesand beliefs

33. OUR DECISIONS
Question: 7
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34.  If wearein theshoesof therecalling coordinator, we
will recall theproduct, for wecannot afford any more
livesand grab thepeoplesmoral right to live
 Wepromisearevamped vehiclefreeof cost
 Wewould recommend compensation for thelost lives

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