Question;Ford Pinto Case Study-see attachmentCompany Background;The;Ford Motor Company was founded by Henry Ford, Alexander Y. Malcomsonhis, and;ten other smaller shareholders on June 16, 1903 in Dearborn, Michigan. In 1906 Henry Ford seized control of the;company. Ford became one of the top;automobile producers in the world with the development of the assembly line;process in manufacturing. This assembly;line process was put to good use with the introduction of the Model T;automobile in 1908 which was one of the most popular models of vehicles in the;world and was even internationally voted as the most influential vehicle of the;twentieth century. Ford rode the success;of the Model T until 1927 when they discontinued the model after selling more;than fifteen million units.;Ford Model T;Ford;was also the first auto maker to offer a higher pay for employees. The average pay rate for employees was $2.34;for nine hours of work, until Ford introduced a staggering $5.00 pay for eight;hours of work in 1914.;Beginning;in February 1942, Ford switched all of production efforts towards World War II;and withdrew from producing vehicles for civilians as ordered by President;Roosevelt. Ford began assembling jeeps;and putting the final touches on tanks, half-tracked armored personnel;carriers, armored cars, and other military vehicles destined for the war. Civilian production of vehicles did not;resume until July 1945.;The Ford Pinto;Throughout the years Ford;has had many popular vehicle models and also had its fair share of;under-performing automobiles. One;particular model that has always had a lot of debate is the Pinto. The Pinto was Ford?s answer to European;subcompact cars such as the Volkswagen Beetle that had become popular during;the Middle East oil embargo in the 1970s.;The oil embargo was the response of the Organization of Arab Petroleum;Exporting Countries (OAPEC) to the U.S. decision to re-supply the Israeli;military during the Yom Kippur War. This;drove the price of gasoline through the roof and created a fuel shortage in the;United States making the need for a fuel efficient car important.;Ford began marketing the;Pinto in September of 1970 as a simple, rear-drive, fuel efficient subcompact;car. The purpose of the Pinto was that;it would get much better gas mileage than the average American sedan which was;popular at the time. Fuel costs were a;large factor in the market during this time period due to the embargo which;increased gas prices up to $0.50 a gallon.;The Pinto was a crude but durable car that was designed to satisfy the;demand for subcompacts in the U.S. market.;The Pinto sold very well in the early 1970?s and by the time the model;was discontinued in 1980 the Pinto had accrued over three million sales for;Ford.;The Pinto was going to be;Ford?s answer to the great U.S. demand for a durable, high gas mileage;sub-compact car. The Pinto looked great;on paper with an estimated twenty to twenty-five miles per gallon highway fuel;economy. The 2,000 pound car debuted in;the early seventies with an asking price of around $1,850 which made it the;cheapest Ford model since the late 1950s. The Pinto sold very well throughout;the 1970s but did have some design flaws that proved fatal for some consumers;and ultimately for the Pinto itself.;Pinto Models and;Statistics;1971 Ford Pinto;Model;Weight (lbs.);Price (new);Number built;Sedan;1,949;$1,919;288,606;Runabout;1,933;$2,062;63,796;Total;352,402;1972 Ford Pinto;Sedan;2,061;$1,960;181,002;Runabout;2,099;$2,078;197,920;Station wagon;2,283;2,265;101,483;Total;480,405;1973 Ford Pinto;Sedan;2,115;$2,021;116,146;Runabout;2,145;$2,144;150,603;Station wagon;2,386;$2,343;217,763;Total;484,512;1974 Ford Pinto;Sedan;2,372;$2,527;132,061;Runabout;2,406;$2,676;174,754;Station wagon;2,386;$2,343;237,394;Total;544,209;1975 Ford Pinto;Model;Weight (lbs.);Price (new);Number built;Sedan;2,495;$2,769;64,081;Runabout;2,528;$2,984;68,919;Station wagon;2,692;$3,153;90,763;Total;223,763;1976 Ford Pinto;Pony MPG sedan;2,450;$2,895;MPG sedan;2,452;$3,025;Sedan V-6;2,590;$3,472;92,264 (all sedans);Runabout MPG;2,482;$3,200;Runabout Squire MPG;2,518;$3,505;Runabout V-6;2,620;$3,647;Runabout Squire V-6;2,656;$3,952;68,919 (all Runabouts);MPG Station wagon;2,635;$3,365;Squire MPG station wagon;2,672;$3,671;Station wagon V-6;2,773;$3,865;Squire station wagon V-6;2,810;$4,171;105,328 (all station wagons);Total;266,511;1977 Ford Pinto;Pony sedan;2,313;$3,099;Sedan;2,376;$3,237;48,863 (all sedans);Runabout;2,412;$3,353;74,237;Station wagon;2,576;$3,548;Squire station wagon;2,614;$3,891;79,449 (all station wagons);Total;202,549*;1978 Ford Pinto;Pony sedan;2,321;$3,139;Sedan;2,400;$3,629;62,317 (all sedans);Runabout;2,444;$3,744;74,313;Station wagon;2,579;$4,028;Squire station wagon;2,614;$4,343;52,569 (all station wagons);Total;188,899;1979 Ford Pinto;Pony sedan;2,329;$3,434;Sedan;2,396;$3,939;75,789 (all sedans);Runabout;2,442;$4,055;69,383;Pony station wagon;not available;$3,899;Station wagon;2,571;$4,338;Squire station wagon;2,607;$4,654;53,846 (all station wagons);Total;199,018;1980 Ford Pinto;Model;Weight (lbs.);Price (new);Number built;Pony sedan;2,377;$4,117;Sedan;2,385;$4,605;84,053 (all sedans);Runabout;2,426;$4,717;61,842;Pony station wagon;2,545;$4,627;Station wagon;2,553;$5,004;Squire station wagon;2,590;$5,320;39,159 (all station wagons);Total;185,054;Ford Pinto Car Club Online;Problems with the Pinto;The;Pinto began to see troubles with its design in the early 1970s when rear end;collisions with the lightweight car were causing the fuel tank to explode;causing the car along with its occupants to burn up. One flaw in the Pinto?s design was the;location of the fuel tank and the support structure that was used to protect;it. The Pinto?s fuel tank was located;behind the rear axle of the car instead of above the axle, like many other;vehicles. This was designed originally;to create more trunk space but ended up causing the fuel tank and the rear;bumper to be separated by only nine inches.;In the small amount of room between the tank and the bumper there were;also bolts positioned to where they could puncture the gas tank upon a rear end;collision causing fuel leakage. The fuel;line that ran into the tank was often disconnected from the tank in a collision;causing gas to spill out onto the ground resulting in fire and often an;explosion hazard.;Engineering.com;Research shows that the;engineers at Ford had knowledge of the design flaw in the testing stages of the;Pinto but did not make improvements to the car because it would have been very;costly and the original design was deemed legal by the federal court. Ford?s logic also stated that small cars were;inherently unsafe anyway so that was a risk the consumers were taking when;buying a sub-compact. The issue came up;again in the late 1970s when Ford was called out for a risk benefit analysis;they had performed on the Pinto. The;analysis stated that it would cost more for the company to change the design of;the Pinto to make it safer than it would to pay off the lawsuits of those who;were injured or killed in explosions caused by the unsafe Pinto. This rational caused an uproar and much;debate about the Pinto and the Ford Motor Company?s ethics and business;model.;Cost Analysis;Modified Vehicles;Expected Unit Sales;12.5 Million;Modification costs per;unit;$11.00;Total Cost to produce vehicles without fire hazard;$137.5 million;Lawsuits Paid;Expected Accident;Results (assuming 2100 accidents);Burn Deaths;180;Serious Burn Injuries;180;Unit costs of accident;results (assuming out of court settlement);Burn Deaths;$200,000;Serious Injuries;$67,000;Burned Out Vehicles;$700;Total Costs to Settle Lawsuits;$49.5 million;Leggett;Case Study Questions;1.;Please identify and explain three different issues Ford Motor Company is;facing in this case.;2.;As a consultant, please explain how Ford Motor Company could have;avoided the problems they faced with the Pinto?;3.;Discuss the ethical issues that arose from Ford?s stance concerning the;safety of the Pinto.;4.;Please perform a SWOT analysis on Ford during the time of this incident.;5.;Identify three changes that you would have suggested as an OD consultant;to Ford during, or after production of the Pinto. Explain how would you implement these;changes?;6.;Analyze the cost/benefit analysis Ford used in their decision making;process concerning the safety of the Pinto.;Discuss your argument in favor or against Ford?s decision. Make sure you evaluate both sides of the;argument when discussing.;7.;What is the most important thing Ford must consider for the future?;None Case Questions;8.;What is the difference between an internal and an external consultant?;9.;Why are organizations resistant to change?;10.;What is the most important element you have learned in this class so;far?
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