Ford Pinto Case Study and Executive Summary

Ford Pinto Case Study and Executive Summary

Mgmt 216

April 4, 2011

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Case Study and Executive Summary

The creation of Sarbans Oxley in 2002 was reactionary legislation passed after thousands of investors lost unimaginable amounts of money (Soxlaw.com). After a long class action court case, The Americans with Disabilities Act was created in 1990 after hundreds of citizens that possessed physical disadvantages sued several large corporations for discrimination (ADA.gov). Unfortunately laws and regulations are created in reaction to unethical practices. In the case of the Ford Pinto, new regulations were not formulated, however it caused companies to become more socially conscience with the products they manufacture and sell.

Henry Ford II was faced with an enormous amount of pressure. Ford II was attempting to step out of the shadow of his father and needed to make a company defining decision.

Portrait of Henry Ford (ca. 1919)

English: Ford Motor Company Headquarters, Dearborn...

Ford Pinto V6

His top advisors maintained opposing points of view on what the automobile giant's focus should be. Lee Iacocca envisioned combating German and Japanese manufacturers by producing smaller compact vehicles while Semon Knudsen argued that Ford should focus its attention on the more lucrative medium and larger vehicles. The success of the Mustang elevated Iacocca's status and ideas and eventually forced Knudsen out. Testing proved the Pinto was not the safest vehicle however Ford lobbied and argued that accidents and fatalities were an assumed risk of driving. Also Ford felt the public wanted to maintain an inexpensive product and that extra safety features, though only an additional $11 per car, would inflate the base price substantially.

Ford's mission consists of the company relevant and profitable in the future. This mission still holds true today. In the...