Business Ethics and Social Responsibility

The word Ethics is derived from Greek word ‘Ethos’ which means character or custom. Ethics is a code of behaviour which an organisation should follow. Ethics is a creation of mind rather than science. Ethics is a conception of what is right or wrong. Business Ethics, on the other hand, it is the application of general ethical ideas to business behaviour. Business Ethics shows that business can be ethical and still make profits. A company who follows ethical values will attract customers and investors. One of the famous case regarding business ethics and social responsibility is Ford Pinto which is very popular in North America. Ford Pinto is a subcompact car. It was manufactured in North America by company named Ford Motor. In this case the problem is with the design of the Ford Pinto’s car model. It does not have sufficient space to fit fuel tank neither the Ford company rethink on the blue print of the model. The difference between gas tank and rear axle is only about nine inches. During design of Ford Pinto, the company place gas tank behind the rear axle. In the May, 1972, the three girls were travelling in the car and their car struck from the back. After hit from behind by a Van, the fuel tank break down and bursts into high flames although their car speed was low. During this incident, three of girls were died. It was become a big scandal in the year 1972. It is all about negligence and criminal liability. Afterwards Grimshaw sued Ford Motor in the court for reckless homicide and criminal activity. After the six month trial, finally decision is announced in the favour of Grimshaw and its legal heirs. They were awarded with the compensation. Ford further stated that punitive damage award is not necessary. Finally court stated that punitive damage will not be removed. This case is about business ethics and responsibility towards society (Friedrichs, 2009). Ethical values comprise social responsibility which refers that business have duty to act in the interest of society. Companies can achieve sustainability while fulfilling social responsibility. Ford Pinto’s case consists lack of social responsibility and business ethical values. This case also highlights the safety issues which a company should take care while dealing with any transaction (The Business Scholar, 2018). This case is also about negligence as Ford was aware with the problem of gas tank leaking. This report contain concept of business ethics and social responsibility in case of Ford Pinto.

Case of Ford Pinto

Ford Pinto was manufactured in the year 1970. Lee Lacocca is the new president of the Ford Company. Through Ford Pinto’s case key stakeholders were affected. Key Stakeholders include executive management such as Chief Executive Officer, Managing Director, Supervisor, etc. It also includes product manager, Engineer, employees of company, shareholders, suppliers, customers. Banks and Public Financial Institution who provides loan to Ford Company is also affected adversely. Middle management focused more on winning the case rather than improving their own product. On the other hand employees and engineers finding it financially beneficial.  However, all the stakeholders who were making the decision were equally responsible. Due to this decision, the stakeholder who affected very much is customer. To follow business ethics, it is the responsibility of the company’s decision board. Due to their negligence three people died. The people who died were also count as stakeholder as definition of stakeholder includes customer and other beneficial people. On the happening of Ford Pinto’s case, retailers and other suppliers also suffered a lot as their sale margin reduced immediately. It will result in heavy loss and it also reduced their reputation in the market.

This case involves various ethical theories. This case involves two different cultural perceptions. First perception is about valuing human lives over financial gain. Company should focused on ethical values and need to try to understand that business is not just about profit always. We should value and respect the human life. Negligence regarding human lives will be considered as civil activity and punish by severe punishment. On the other hand, the other culture is about gaining profit and increased market capitalisation (George, 2011). We create an environment in which business is all about making profits. In order to compete with the ongoing competition, we ignore the work ethics and responsibility towards society. We make our own personal values different from work values and work according to them without thinking that we are also a part of society. Negligence while performing duties leads to loss of our own values. According to utilitarian theory an organisation needs to understand that what is right and what is wrong. Ford Company should understand the concept of ethical standards and should follow while transacting business (Bowles, 2018) and (Macvean and Neyroud, 2018).  

According to the case stated above, decision maker of the Ford Company is responsible for ethical issues. Lee Lacocca, president of Ford responsible for the decision making. Robert Eidschun was responsible for the body structure of the Ford Pinto. Decisions should be taken with care and diligence as they involved many relevant key points. Ethical decision is influenced by key stakeholders. It is also influenced by the supply and demand of the particular product in the market. Research department also plays a vital role in the decision making. Mercury Bobcat is also responsible for the decision making. One of the main stakeholder who is responsible for the ethical decisions are customers. Launching of product is depends on the taste and needs of customers. While making decision management should be more responsible as it is affecting society and organisation as well (Zsolani, 2011).

Key Stakeholders and their Impact

Brand image is a general impression of the product. Higher the brand image, higher the value of the product. There are many factors which affects the brand image of the company. Factors includes Market Size, Product Newness, Competitive Situation, etc. (Wheeler, 2012). In the above stated case, the negligence is affected so much to the Ford Company. Due to the negligent behaviour of the organisation, a heavy amount is to be paid to victim as a compensation. This affected the brand of the Ford Company in a very adverse manner. Goodwill of the company no longer lasts after the Ford Pinto’s case. Ford Pinto’s case affected the Ford Company in an adverse manner (Batey, 2016).

This situation is clearly about negligence. I recommend that in this situation Ford Company should rectify the gas tank before manufacturing the Ford Pinto. Ethical issues can be rectified by gathering and analysing the information. This situation requires to point out the business ethical issues in the organisation. I suggest Ford Company to admit their fault while dealing with the victims instead of focusing on dealing with the case in the court. I would prefer to rectify the mistake as soon as possible and advice to comply with the applicable standards on the company. Follow up of ethical standards is play a very crucial role in enhancing the goodwill and attracting the customer (Winston and Edelbach, 2013).

Conclusion

From the above stated case it is concluded that the case of Ford Pinto is about Business Ethics and Social Responsibility. The Ford Company is responsible for the manufacturing of the Ford Pinto’s car which is not beneficial for the society. Design of the car is not according to the society ethics.  Ford Pinto is a car who is famous in North America. There is error in the gas tank in the Ford Pinto car. Due to the negligence, an incident occurred and three girls died because of the structure of the Ford Pinto’s car. This is the reason why goodwill of the organisation is fallen below after an incident. Carelessness of Ford Company shows their unwillingness towards follow up of ethical standards. Every company should understand the responsibility towards human values (Byrne, 2017). Business culture have their own standards which stated profit should be prior achievement. But this theory also stated that profit should not be earn on the cost of human lives and business ethics. In this case ethical values were compromised. Ford Company compromised with two cultural differences. One of the main issue is neglecting human values and other one is avoiding business ethics (Berry, 2015). This case refers issues regarding business responsibilities. In this case the Ford Company has responsible for the incident happened in the year as they willingly avoid the circumstances. Hence, it is concluded that Ford Company is responsible in breaching ethical values and business conduct. They failed to follow social ethics and responsible towards society. There are many other ways to earn profit and to sustain in long term. Earning profit while taking care of ethical standards is the way to sustain in ling term and attracting investors. They should understand the value of Business ethics and social responsibility. From the above discussed case, it is concluded that ethical beliefs, values and norms is play a very crucial role in maintaining brand image and achieving business targets efficiently and effectively (Eagle and Dahl, 2015).

References

Batey, M. 2016, Brand Meaning: Meaning, Myth and Mystique in Today’s Brands, New York: Routledge.

Berry, D. 2015, Journalism, Ethics and Society, London: Routledge.

Bowles, C. Future Ethics, 2018, United Kingdom: Nownext press.

Byrne, D. 2017, Global Ethics and Civil Society, London: Routledge.

Eagle, L. and Dahl, S. 2015, Marketing Ethics and Society, London: SAGE.

Friedrichs, D. 2009, Trusted Criminals, United Kingdom: Wadsworth.

George, R. 2011, Business Ethics, London: Pearson Education.

Macvean, A. and Neyroud, P. 2018, Police Ethics and Values, London: SAGE.

The Business Scholar. 2018, Ford Pinto: An Ethical Analysis, viewed 1/28/2019, https://the-business-scholar.blogspot.com/2014/06/ford-pinto-ethical-analysis.html 

Wheeler, A. 2012, Designing Brand Identity: An Essential Guide for the Whole Branding Team, New Jersey: John Wiley & Sons.

Winston, M and Edelbach, R. 2013, Society, Ethics and Technology, United States: WADSWORTH

Zsolani, L. 2011, Responsible Decision Making, London: Transaction Publisher.