1. Would you have proceeded with marketing the Pinto knowing the potential for fires?
Ford, one of the biggest names in the automotive business, encountered as a serious setback after getting lawsuits being filed against the company. The company, had launched the Ford Pinto in the year 1970 with the anticipation of leading the subcompact car market. Even though the company had spent millions in developing a smaller and more fuel efficient car, they failed to address the serious issue which was expected to cause serious damage. The Company was able to identify that there was a construction fault in the fuel tank of the car and even a minor accident will create serious accidents. After considering the amount of money that will be required for a complete recall and fixing the damage, the Company kept their faulty cars still on the road leading to some of the horrific accidents and highly paid lawsuits (Product Liability, 2013)
After knowing the potential construction problem and the damage it can do to the life of the driver as well as the surroundings, it would have been in the best interest of the company to put a halt on the marketing activities of the Pinto. The Company should not have thought ahead about the potential lawsuits and settlement costs, they should have declared a recall and fixed the construction problem and further improvised on the model.
2. Research another example of a product that resulted in liability claims?
On the similar lines, even Toyota Motor Corporation suffered a setback due to the accelerator pedal defects which affected millions of their Scion and Lexus model of cars and trucks. This was due to the investigation post the identification of the brake problem in the Company’s Prius model. The Company had to pay nearly $1.1 million in class action lawsuit in the year 2012 (Findlaw, 2013).
3. Compare the similarities and differences in both cases
Even though both the cases were pertaining to the defects identified in their respective models, Ford failed to take any action against the findings, but on the other hand, not only Toyota settled a lawsuit but also called for a nationwide recall of their defective models. Toyota was able to stop the damage at the right time and also had to face low cost lawsuits when compared to Ford.
4. Please define cost-benefit analysis and include a cost-benefit analysis in your response of the example you provided
Cost-benefit analysis is the easiest means of financial analysis. It can be defined as a systematic approach which is taken by the organization to estimate the strength and weakness of alternatives that satisfies the transaction. It helps in calculating and comparing the costs and the benefits expected from a given project (Gines 2010).
The example considered in the analysis is the Toyota Hybrid cars. The Company was reportedly able to save $100 millions from the recalls.
5. If you were the CEO of the company in the example you researched, what would you do and why?
If I were to be the CEO, I would have taken similar action by timely recall of the vehicles. The Company is more about comfort and safety of people rather than their own benefits. May be the Company has to pay huge amounts in lawsuits and recalls impacted their revenue, but till today people remember Toyota for their brand and the safety measures they take for their customers.
References
FindLaw. (2013). “Toyota Recall and Lawsuits”, accessed on 7th Oct 2014, http://injury.findlaw.com/product-liability/toyota-recall-and-lawsuits.html
Ginés de Rus. (2010). Introduction to Cost-Benefit Analysis: Looking for Reasonable Shortcuts, Edward Elgar Publishing
Product Liability. (2013). “Accident Case Studies”, accessed on 7th Oct 2014, http://www.regisuniversity.org/ford-pinto-a-pre-law-case-study-in-product-liability/
