Cost Benefit Analysis : The Ford Pinto Case

In the late 1990s, two of the Branson brothers wanted to bring their children and their spouses into the business. The role that these new family members would play in the business created discussions and some altercations. Dave James in particular was opposed to bringing in family members. Dave threatened to leave, and some of the Bransons thought that was a good idea. After few months of negotiations, it was agreed that Dave James would receive one year’s severance pay, and the three Branson brothers would buy his stock in the company at its fair value. Dave James resigned from the trucking company at the end of 2011. Branson Trucking Company does not trade in any market, and it is a closely held. The only stock sales have been directly from the company to the original holders of the stock.

AE = Profitability and/or decision analysis is applied appropriately in the analysis of at least three strategic alternatives and at least one other relevant performance management concept or tool is applied appropriately in the quantitative analyses;

The treatment of conflicts of interest and other ethical dilemmas that may arise in investment decisions.

The legal issue is: Should Ford Motor Company be liable for the car accident of it’s Ford Pinto which caused fatal burns to Lilly Gray and permanent burn injuries to Richard Grimshaw? Should Ford Motor Company pay historical punitive damages because of the car defects that the senior management was knowledgeable of before pushing it into the consumer market?

Indubitably, the company wronged the consumers and passengers by violating their rights to not be killed in a car fire and their right to minimal health

Milton Friedman believed a free-market system, in which goods and services are exchanged and controlled by individuals and privately-owned businesses without government authority, was the only way to achieve personal freedom. Adam Smith, a 18th century philosopher and economist, held the belief that in a free society, the role of government should be limited to the protection of the people, the administration of justice through the court system, and the maintenance of all public resources. Adam Smith developed the concept of the “invisible hand” theory, which says within a society that is free of government interference, individuals can pursue actions out of their own self-interest, and the collective result of this

The assumption that ‘it’s easy to be ethical’ assumes that individuals automatically know that they are facing an ethical dilemma and that they should simply choose to do the right thing. But decision makers may not always recognize that they are facing a moral issue. Rarely do decisions come with waving red flags. Dennis Gioia was recall coordinator at Ford Motor

In Canada, individual regulating bodies are in place to licence and regulate practitioners in their respective professions. It is in the public’s best interest that these professionals are knowledgeable and driven to progress society in a responsible manner. This includes acting in an ethical manner that aligns with the personal and corporate standards expected of members in a particular profession. The Professional Engineers of Ontario (PEO) is in place to regulate such behavior among engineers and protect the common interest of the Ontario community. At the end of this paper it will be evident that public welfare is paramount. This will be shown by how it ought to be enforced under the PEO, and how failure of the Ford Pinto was fueled by

One of the biggest automotive news stories in the latter part of the 1970’s dealt with tales of exploding Ford Pintos and the considerable awards civil court juries were presenting to victims of accidents involving the cars.

7. Would it have made a moral difference if the savings resulting from not improving the Pinto gas tank had been passed on to Ford’s customer? Could a rational customer have chosen to save a few dollars and risk having the more dangerous gas tank? What if Ford had told potential customers about its decision?

It consists of weighting and combining the weights of the ten factors and to evaluate implementing ABC. The potential benefits of ABC can be analyzed in advance along two separate dimensions. And there are ten mediating factors (Pricing Diversity, Support Diversity, Common Processes, Cost Allocation, Growth of Indirect Costs, Pricing Freedom, Fixed Expense Ratio, Strategic Considerations, Cost Reduction Effort, Analysis Frequency) can guide management in determining the answers. The fist five factors (PD, SD, CP, CA, FG) based on the probability. The second dimension of the model seeks to establish decisions. lY axis potential for ABC due to cost distortion---PD.SD.CP.CA.FG lX axis proclivity to use cost information in decision---PF.FE.SC.CR.AF To start management must analyze and responses to two key questions: 1. For a given organization, is it likely that ABC will produce costs that are significantly different from those that are generated with conventional accounting, and does it seem likely that those costs will be "better"? 2. If information that is considered "better" is generated by the system, will the new information change the dependent decisions made by the management? After finish these questions managers of company can discuses the ten factors that support or reject implementation. Finally, the combined weighted scores are plotted as a point on one of the four quadrants of a graph.Plotting the Answers--- Use Contingency Grid Method The steps in the

The customers (drivers of Ford) are the number one stakeholders that lost the most. They might not have lost much money or reputations, but they lost the one thing that you can never get back, their life.

On August 10, 1978 three young girls died in a 1973 Ford Pinto after being stuck from the rear by a driver in a van. The Ford Pinto was completely engulfed in flames and the accident resulted in the death of the three young girls. Today, the debate continues regarding whether or not The Ford Motor Company was responsible for this case and many other cases involving the Pinto bursting into flames resulting in disfigurement or death.

This paper explores how ethical issues of Pinto case have affected the Ford Motor Company business environment. A number of factors suggest that Ford Motor Company was negligent and violated its code of ethics. In this paper, we will review the corporate culture mindset which prioritizes profit over the value of human life for the purpose financial gain.

ABC refers to cost attribution to cost units on the basis of benefit received from indirect activities e.g. material ordering, material handling, machine setups, quality assuring, customer support services etc. For each such activity, it is necessary to identify a cost driver that causes incurrence of cost relating to that activity. For example, hours spent on testing for a quality assurance activity may be used as application base of cost driver for this activity.