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Utilitarian Evaluation of the ‘Ford Pinto Case’

Utilitarian Evaluation of the ‘Ford Pinto Case’

            The purpose of this paper is to present justifiable arguments supporting Ford’s decision to produce the Ford Pinto model. A utilitarian approach will be used to evaluate the case – the cost-benefit analysis is assumed to be of secondary value to the overall utilitarian analysis.

Summary of the Case

            In May 1968, the Ford Motor Company, based upon a recommendation by then vice-president Lee Iacocca, decided to produce the Ford Pinto model. The purpose of the choice was clear. The company wanted to gain a large market share in the automobile industry. The first few years were good for the company. Sales were good, and the Pinto model seemed perfect. However, in May 1972, the first accident involving the new model occurred. The Ford Company lost the legal battle. Another case struck the company. The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the private cost (to the company) was greater than the societal benefit. Based on a fairly accurate estimate, the cost would have been $137 million against $ 49.5 million price tag on the possible deaths, injuries, and car damages. The risk/benefit analysis was made out of the development of product liability, where if the expected harm exceeded the cost to take the precaution, the company must take the precaution.

Utilitarian Approach

             Based from the case, the Ford Company chose to produce the Pinto model because its expected harm is less than the cost to precaution. This choice was logical and sound from a manager’s point of view. Not producing the said model would entail greater cost to the company, lessening its productive capacity. Using the marginal cost/marginal benefit approach, it is also clear that the marginal benefit of producing the Pinto model is greater than its marginal cost.

            Assuming one uses the so-called ‘balancing approach’ (a subset of the utilitarian approach), Ford’s decision seemed to be sound. This approach assumes that if an accident has a very low probability, and there is a cost associated with its prevention, then a company is never liable if it does not take precautionary measures. It may also be of help to use the standing criteria of utilitarian approach in assessing the decision of the company. The criteria are as follows: equity, soundness, and maximal social benefit (in relation to private cost). Based from the equity criterion, the company chose to produce a model which would invariably increase the overall product utility. The public can utilize a fairly large number of Ford Pinto cars. Based from soundness (derived from SWOT analysis), it is also clear that the company chose the design which entailed less problem both to the company and the public (consumers). The decision also maximizes social benefit. If the company chose to produce the other model, then overall social benefit may be actually less than if the company chose to produce the Pinto model (large number of produced cars is directly related to social benefit).

            With these criteria in mind, it is clear that Ford’s decision to produce the Pinto model is ethically justifiable because it takes into account social utility and benefit.

Bibliography

Daft, Richard. Cases in Management. New York: Macmillan Publishing Company, 1999.

De George, Richard. Business Ethics. 6th Ed. New York: HarperCollins Publishers, 2003.

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