A major ethical dilemma in the business world is the issue of vehicle recalls. A great example of this is the legendary Ford Pinto case. In the 1970’s Ford accelerated the production of the Pinto, its new small car. Before the car went into production, but after parts had been manufactured, Ford’s engineers discovered a major flaw in the car’s gas tank. The faulty design created a higher risk of the gas tank bursting into flames when the car was rear ended. The cost of correcting this defect was $11.00 per car. Following a cost benefit analysis, known as the Ford Pinto Memo, the Company determined it would be cheaper to pay damages in lawsuits brought on behalf of injured or dead persons, estimated at $49.5 million, than to pay for a recall of the defective vehicles, estimated at a cost of $137 million. Ford decided to continue producing the Pinto with the defective parts, rather than recall the vehicle. After many accidents and several deaths resulting from the defective gas tanks, Ford was required to pay out $137 million in damages because of its negligent conduct, and to deter other corporations from ignoring safety to make a quick buck.
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