Business Ethics & Sustainability: Ford Pinto Case

This report investigates the Ford Pinto case from a business ethics and sustainability perspective. It identifies key ethical issues, relevant stakeholders, and persons responsible for ethical decisions. The report concludes that unethical behavior affected the brand image of the organization and harmed its competitive edge.

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Business Ethics & Sustainability: Ford Pinto Case
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1BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
Table of Contents
Introduction....................................................................................................................2
Overview of the case..................................................................................................2
Analysis..........................................................................................................................3
Relevant stakeholders.................................................................................................3
Ethical issues..............................................................................................................4
Persons responsible for ethical decisions...................................................................5
Conclusion......................................................................................................................6
Unethical behaviour affected the brand image of the organisation............................6
References......................................................................................................................9

2BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
Introduction
Overview of the case
The well-known car manufacturer Ford Motor Company designed a car Pinto way
back in beginning of 1968, for responding to the market trend of sub-compact cars in
America (Fordpinto.com 2019). The trend of sub compact cars in 70’s used to be a classic
phenomenon. Car manufacturing companies like Volkswagen employed a new design within
this category as well. The most attention-grabbing feature of these cars is its small size which
does not exceeds more than 165 inches. It makes it little larger than micro cars but does not
looks like other compact cars. Other significant specifications are its light weight and
reasonably priced range. However, Ford launched classic piece of Pinto coloured in red to the
market within two years to capture the latest trend. The organisation was operating the
market driven by the fact that customers hardly evaluate safety facilities when it comes to
buying a car. They focus more on its outlook and likely to respond to market trends of
automobiles. Implementing this corporate concept Ford designed Pinto in a hurried manner
and tried to capture market trend and it turned out to be a disaster. As mentioned, consumers
generally focus on the outlook more and affordable pricing more preferred than provided
safety measures. According to Karlidag (2013), public relations management in an efficient
manner has positive impact to the business irrespective of industries. Ford’s renowned brand
image obliges the customer base to trust enough to invest on Pinto without thinking twice.
A disastrous case occurred when an American family; a teenage boy of thirteen years
and his mother, was travelling driving a Pinto car. Even a mild collision with another car
running at a speed of 30 mile per hour ignited a fire in Pinto. It caused the mother’s
unfortunate death and the boy received fatal brunt wounds. After that collision happened, rear
portion of Pinto warped up completely towards back seat and blasted into fire. Although, the

3BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
family received compensation for damages that took place, yet argument raised against the
faulty car safety and design related defects of fuel tank. Although, there were numerous
controversies the company did not make any significant transformation to upgrade its quality.
People who have already bought the cars cannot really get rid of that due to its bad reputation
of being explosive. The most shocking accidents took place even when a car in motion
collided with a Pinto parked in roadside. That Pinto car blasted into fire just after collision
happened. This incident highly specifies the manufacturing deficiency in case of fuel system
that situated on its rear set up and design as well. Aside from that, Pinto was criticised for
jammed doors that restricted customers from coming out and burned till death. In this due
course, abiding by the strategies mentioned in Carroll and Buchholtz (2014), the case is going
to be investigated and key ethical issues will be identified at first. Responsible designations
will be recognised who could have taken the ethical decision of restructuring the design yet
did not take any initiative. Further, this report will try to mark its stakeholders and inaugurate
relationship between major ethical issues and the brand image of Ford as negative publicity
or any kind of controversy is harmful for brand popularity immensely.
Analysis
Relevant stakeholders
American families who had always wanted to buy a car within affordable range felt
excited after the launch of Ford Pinto. The controversy left them with massive psychological
burden as they were potential threat of explosion. Both the internal and external stakeholders
were the victim of multiple incidents of ill-fated accidents. The management received public
criticism for ignoring social responsibility of modifying important factor of manufacturing.
Suppliers, responsible employees along with shareholders confronted with tremendous public
pressure and hatred. Consumers trust was broken by the company as Ford could not satisfy
customers’ expectation not only that led them towards fatality. Additionally, there were

4BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
numerous families who have been victimized and their future was at stake. Government was
questioned for not commencing concrete steps against them for violating environmental
norms along with manipulating consumers’ trust.
Ethical issues
Surprising fact is that management was fully aware of the design faults regarding the
way fuel tank was placed. It was positioned at back of the car at end. By the time Ford
comprehended its influence it was too late to make any changes. Acknowledging the cost
effective analysis they unethically ignored their social contribution and launched with faulty
designs for the customer base who are least bothered about faulty designs. It has been
perceived that if they would have trailed the path of transforming the entire thing following
ethical guidelines, it would cost lesser amount than offering frequent compensation for
damage. Moreover, designing the car in a safer way could have prevent unfortunate demises
as well. This context highlights ethical issues as follows.
 Ford Motor along with contemporary government were accused for valuing human
lives with monetary amount and presenting the compensation amount and the
company considered those compensation amount as their loss. A reading of Weck and
Ivanova (2013) indicates towards significance of trust in business. This unethical
behaviour of Car Company not only led people towards premature death, but also they
were penalised for manipulating customers with false commitment for profitability.
The company chose the most unethical way to defend itself stating further monetary
investment for restructuring was much higher than cost of social wellbeing.
 The cost of improvements was not that high to create cost related risk in their balance
sheet. The company’s carelessness for correlating existing faults by initiating
modification fell under serious unethical concern. The most astonishing thing was no
serious actions was granted against the company on behalf of Government or tried to

5BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
withdraw Ford’s business permit. Therefore, Ford continued to business legally
following an unethical and unjustified way.
 The cost benefit analysis made them to reject the thought of designing the car again
considering the high expenditure. To restrict the weight, small size and operation cost
within certain parameter customers met with extreme consequences.
 According to Neubert, Wu and Roberts (2013), an ideal organisation must follow a
culture where adequate training will be provided to employees guiding them for
maintaining high moral behaviour. However, it disheartened people as they saw
Ford’s culture is filled up with untruthful practices and their encouragement is
towards employee behaviour where they are trained to ignore important matters like
safety and security; according to Xu, Loi and Ngo (2016) which is a mandatory
aspect. Their indifferent behaviour regarding structuring safety policies falls under
violation of ethics which was recognised, instead more importance has been noticed
towards increasing sales along with profit.
 Internal stakeholders were accused of remaining silent in case of maintaining safety
policies while manufacturing other brand of cars too. Their behaviour of ignoring
moral obligation generated a doubtful image of Ford in front of its shareholders.
Persons responsible for ethical decisions
 Social responsibility was ignored by employees which manifested degraded sense of
ethical values. Employees who were involved into the Pinto project, they had that
privilege to take serious initiative of complaining to higher management about
internal hypocrisy of launching such a faulty design and save customers from
probable risk of explosion. Customers would appreciate the venture if they experience
honest effort of admitting ignored responsibility. Cost benefit analysis was much
expected from employees while dealing out the car’s design.

6BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
 Ford’s work culture of practicing such duality, contemporary leadership style were
questioned as employees could not vocalize their opinion with seniors holding high
designation. The study of Choi, Ullah and Kwak (2015) indicates poor
communication channels restricted employees to add their valuable opinion in the
ethical decision making process.
 As described in Madanchian et al. (2016), theory indicates a problematic leadership
style can lead employees towards practicing faulty behaviour. Therefore, requirement
of training in necessary to bring forth ethical behaviour. However, why such initiates
were not taken it was the culture itself, people questioned that too. Besides, voice was
raised among the customers against dishonest business practice of Ford and criticized
their marketing theory, “safety does not sell’. Being the most important external
stakeholders, manipulating customers comes under exploiting consumers’ right. It
harmed Ford’s reputation and created sustainability issues for them.
 Following the theories detected in Uprety (2016), management’s moral senses, duties
and responsibilities could have been applied more logically to preserve commercial
association with shareholders as well as suppliers. According to the business
regulations, shareholders should have known the project plan entirely. It was
unexpected not to obtain any protest from their behalf in the first place. More positive
efforts were expected from them regarding researching the matter deeply and come up
with a logical sub-compact design which adheres to all the ethical standards.
Conclusion
Unethical behaviour affected the brand image of the organisation
It is collectively acknowledged that preserving the community standard within
business system improves a business in terms of sustainability within competitive business
culture. As it is true for entire automobile market, American market is not an exception as

7BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
well. In 1972, even then also business thoughts were profit oriented yet overlooking moral
responsibility cannot be acknowledged at any state of affairs. Its impact was entirely negative
over the targeted customer base and influenced their buying behaviour at large. Ford’s
standing as a trusted business organisation was smashed tremendously as customers asked for
legal assistance in both the civil and criminal acts. In this due course, Ford lost their
competitive edge not only in national market but internationally too.
It is a tendency of consumers to choose products or service which satisfy their hopes
and not leading them towards fatal consequences (Rani 2014). Ford Pinto displayed extrame
controversial performance particularly in the field of sub compact designs which raises
questions against their business training and both the personal and professional morale.
Undoubtedly, it extremely caused harm to their premium automobile brand image.
Researchers like Malik et al. (2013) recommends that customers behaves in a loyal way when
they get to know about responsible practices within the management following three
dimensions of sustainability. In this scam, Ford handled customers’ unlawfully by selling
defective machinery which led them towards extreme casualty. As stated in to Moore (2014),
this is an instance of violated social, environmental and economic sustainability standards; an
unprofessional practice of ‘corporate social responsibility’. In addition to that, a section of
customer lost their trust over other existing sub-compact designs of cars like Volkswagen
Beetle as well which was a damage to the automobile industry all together. On the other
hand, another section stared to rely on foreign car brands more than American brands.
The fact must be remembered that the old perception of purchasing behaviour used to
oblige people to buy a car or any product out of necessity. However, contemporary buying
behaviour is driven by wishes and kind of psychological. Customers had a particular
perception while buying Pinto that it is the car which suits their small family and fulfil budget
concerns as well. There is no point of buying a defective piece of car paying high monetary

8BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
amount. Customers would be satisfied if price were higher following ethical norms.
Extended research and justified pricing strategy were more tolerable by the customers even in
this era than harming brand image with such controversial scam. Hence, to conclude it can be
stated that an authentic brand is acceptable in all the spectrum of society if both the social and
business requirements can be fulfilled. Being honest and true towards sustainability practices
can be considered as vast competitive advantage for a product that secures business in terms
of retaining the interest of the market.

9BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
References
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Choi, S.B., Ullah, S.M. and Kwak, W.J., 2015. Ethical leadership and followers' attitudes
toward corporate social responsibility: The role of perceived ethical work climate. Social
Behavior and Personality: an international journal, 43(3), pp.353-365.
Fordpinto.com (2019). Pinto Car Club of America - Index. [online] Fordpinto.com. Available
at: https://fordpinto.com/ [Accessed 2 Feb. 2019].
Karlidag, S., 2013. Is a corporate social responsability a public relations invention in mobile
communication?.
Madanchian, M., Hussein, N., Noordin, F. and Taherdoost, H., 2016. The Relationship
between Ethical Leadership, Leadership Effectiveness and Organizational Performance: A
Review of Literature in SMEs Context. European Business & Management, 2(2), pp.17-21.
Malik, M.E., Ghafoor, M.M., Iqbal, H.K., Ali, Q., Hunbal, H., Noman, M. and Ahmad, B.,
2013. Impact of brand image and advertisement on consumer buying behavior. World
Applied Sciences Journal, 23(1), pp.117-122.
Moore, C., 2014. Corporate social responsibility and creating shared value. Heiffer
International, pp.1-6.
Neubert, M.J., Wu, C. and Roberts, J.A., 2013. The influence of ethical leadership and
regulatory focus on employee outcomes. Business Ethics Quarterly, 23(2), pp.269-296.
Rani, P., 2014. Factors influencing consumer behaviour. International journal of current
research and academic review, 2(9), pp.52-61.

10BUSINESS ETHICS & SUSTAINABILITY: FORD PINTO CASE
Uprety, R., 2016. Does Chief Executive Officer (CEO) leadership style matter? An empirical
analysis of the relationship among CEO leadership style, job satisfaction and profitability in
Nepali financial institutions. Journal of Business and Management Research, 1(2), pp.1-16.
Weck, M. and Ivanova, M., 2013. The importance of cultural adaptation for the trust
development within business relationships. Journal of Business & Industrial
Marketing, 28(3), pp.210-220.
Xu, A.J., Loi, R. and Ngo, H.Y., 2016. Ethical leadership behavior and employee justice
perceptions: The mediating role of trust in organization. Journal of Business Ethics, 134(3),
pp.493-504.