BUSM4403 Ethics & Governance

Business Ethics – Normative Theories

Week 2 Tutorial Questions

I. Questions
1. What is the difference between consequentialist approach and non-consequentialist approach?
2. What is the difference between utilitarianism, Kantianism and virtue ethics?
3. Describe the strengths and weaknesses of utilitarian and Kantian ethics (Kantian ethics is a non-
consequentialist approach).
4. If you had to choose just one of the philosophical theories to guide your decision making, which
would you choose? Why? Would that theory alone be able to help you resolve all ethical dilemmas
that you may encounter?
5. How can normative ethics help people in business make better decisions?

II. The Ford Pinto

In the late 1960s and early 1970s, the Ford Motor Company introduced the “Pinto” model to the American
car market, a small compact car designed to challenge the increased competition of Japanese and
European small cars.

Typically, it took 42 months to design a new car. However, Ford shortened the designing process of the
Pinto to just little over 2 years.

During crash testing, Ford identified that if the petrol tank was placed at the rear end of the car, the tank
was prone to rupture and fire that may possibly injure the driver or passenger. However, Ford also found
that a redesign to prevent tank rupture would increase the cost of the car.

Being aware of the faulty petrol tank design and the cost of modification, Ford conducted an internal study
to analyse the costs and benefits of modifying the Pinto. The study showed that

1) Costs of modifying the Pinto:

- There would be 12.5 million cars that need to be modified, and

- It would cost $11 to modify a car.

Total Cost: $11 x 12.5 million = $137 million

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 2) Benefits of modifying the Pinto:

- Ford calculated that the modification of the Pinto’s petrol tank would prevent 180 burn deaths,
180 serious burn injuries and 2,100 burned vehicles.

- Ford then used figures from the National Highway Traffic Safety Administration to calculate the
benefits of preventing 180 burn deaths, 180 serious burn injuries and 2,100 burned vehicles.

- The National Highway Traffic Safety Administration, in its 1971 study, found that

o Every time someone died in a car accident, there was an estimated “cost to society” of
$200,000;
o Similarly, an estimated “cost to society” of a serious burn injury is $67,000; and
o an estimated “cost to society” of a burned vehicle is $700

- Thus, the modification, according to Ford, would prevent the losses of $49.15 million.

Total benefit:
(180 deaths x $200,000) + (180 burn injuries x $67,000) + (2,100 burned vehicles x
$700) = $49.15 million

Since the Pinto met all the minimum safety standards set by the government (crash testing was not legally
required at the time the Pinto was designed), and the costs of modifying the Pinto outweighed the
benefits (by almost three times), Ford decided not to modify the faulty petrol tank design.

The introduction of the Pinto into the market had a dramatic impact on the lives of many people. It was
estimated that over 500 people were killed as a result of the defect in the petrol tank design. Other
sources claim that the figure is much higher. In June 1978, in the face of pressure from the media, the
government, pending court cases, and the potential loss of future sales, Ford ordered a complete recall of
1.5 million Pintos built between 1970 and 1976.

QUESTIONS:

1) Was the decision not to modify the faulty petrol tank design made on the basis of the ethical
theory of utilitarianism? If so, is there any flaw in the application of this theory by Ford? What
would a proper application of utilitarianism look like?

2) Critically explain whether the decision not to modify the faulty petrol tank design can be justified
from the perspective of

a. Duty-based theories
b. Kantian theory
c. Justice ethics
d. Virtue ethics

3) If you were the president of Ford, what would you do in this case?

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