Business Ethics January 2013

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Business Ethics CA

by Brendan Traynor
D00110015

Introduction

In the following article we will discuss how multi-national organisations such as Ford, and Nestle saw fit to exploit Customers through clever lobbying, marketing, and pricing to buy their product over nature and competitors at the expense of human lives. We will discuss how Ford placed a price on human life, and how Nestle manipulated millions to die, as the provided false information. We discuss the ethical dilemmas around these issues.

The Ford Pinto

Infamously remembered as the very definition of 'Business ethics gone wrong'. Ford, in a bid to compete in the American small-car market, rushed their production of their Pinto model, this was to catastrophic repercussions, as in nearly all rear-end crash test, the car's gas tank would explode. After been reported as a flaw, Ford decided that correction would be too time consuming and costly, $11 too costly. The general public were outraged by Ford's sheer disregard for human life.

For every Ethical decision, one must consider the three steps to decision-making involved:

Analyze the consequences:

A report by Mark Dowie in 1977 entitled 'Pinto Madness', claimed that Ford had knowingly put an unsafe car on the road, a car in which hundreds of people needlessly suffered burn deaths. Dowie goes on to explain that Ford engineers discovered, after testing, that rear-collisions would rupture the Pinto's fuel system extremely easily. Ford owned the patent for a much safer fuel tank design, however, deemed that because production procedures were already in place, they would proceed with the original, unsafe tank. Dowie claims the result of all this claimed at least 500, if not 900 lives, 42% of all road-burn tragedies.

Ford admitted the fault and in-tastefully remarked 'Pinto leaves you with that warm feeling'. Their admission of failing the rear-collision standard test, prompted Ford to conduct a 'cost-benefit analysis' which placed a dollar value on human life, found it 'wasn't profitable' to make changes sooner.

Ford's consequences, were ultimately measured in monetary value and provided a break-down of benefits and costs. The benefits of not spending an extra $11 on each car to rectify the problem, out weighed the cost on compensation by $137 million (they didn't spend) to $49.5 million paid in compensation, the cost of each death estimated to be $200,000.

Had Ford not rushed the Pinto into the Market, they would have lost the battle with German rival, Volkswagon for the 'small car' market.

Analyse the Actions:

Having known of the flaws of the car prior to production, Ford must have envisaged a negative backlash, thus, have mechanisms, lobbying and wonderful marketeers in place to cope.

Ford publicly claimed there were no government regulations in place regarding rear-collision testing at that time. Ford claimed it was unfair to contend that a car was somehow unsafe because it didn't meet what were then 'future standards.'

Ford were actually successful in delaying the government's attempts to impose such standards and were described by Dowie as “being the envy of Washington lobbyists.”

Ford also elected to settle most claims out-of-court in a bid to reduce awareness of the flaw.

Their action, and reaction was one of deflecting blame and cover-up, and was successful certainly in terms of sales.

Make a Decision:

After failing rear-collision tests, Ford made their decision to proceed with the production of the Pinto, and placed monetary value over morality. Ford Pinto went on to sell over two million units worldwide. The outpour of public outrage and emotion has certainly cost them life-long custom. It is hard to measure whether the Pinto has seen the company grow or if their lack of dignity has seen them exclude a percentage of potential customers forever.

They say Hindsight is a wonderful thing and it's always very easy to...
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