MGMT20134 – Ford Pinto Case Study – Management Assignment Help

Assignment Task

Ford Pinto Case In the late1960s, fighting strong competition from Volkswagen and Japanese carmakers for the lucrative small-car market, the Ford Motor Company decided to manufacture its own small car called the Pinto. When Lee Iacocca became president, he almost immediately began a rush program to produce the Pinto that became known in the company as “Lee’s car.” Lee Iacocca wanted that little car in the showrooms of America with the 1971 models. So he ordered his engineering vice president, Bob Alexander, to oversee what was probably the shortest production planning period in modern automotive history. The normal time span from conception to production of a new car model is about 43 months.

The Pinto schedule was set at just under 25. Despite this, the Pinto was built to the standards of the day and met all required US safety and construction standards. However, in preproduction crash tests, Ford engineers discovered that rear-end collisions would rupture the Pinto’s fuel (petrol) tank extremely easily. As the car was being driven at the time of the tests, the heat from the engine exhaust, or a spark from the collision, would typically ignite the fuel that had spilt from the tank and engulf the car in flames incinerating (burning) the occupant.

Internal company documents show that Ford crash-tested the Pinto at a topsecret site more than 40 times and that every test made at over 25 mph (about 40kph) without special structural alteration to the car ‘s petrol tank resulted in a ruptured fuel tank. Because assembly-line machinery was already tooled when engineers found this defect, top Ford officials decided to manufacture the car anyway—exploding petrol tank and all—even though Ford owned the patent on a much safer gas tank. However, the cost of re-engineering would add approximately $11 per car (in 1971). The pressure was on Pinto engineers to meet an important goal set by Iacocca known as “the limits of 2,000.”

The Pinto was not to weigh an ounce over 2,000 pounds and not to cost a cent over $2,000. “Iacocca enforced these limits with an iron hand,” recalls the engineer quoted earlier. So, even when a crash test showed that that one-pound (400 grams), one-dollar piece of plastic, stopped the puncture of the fuel tank, it was thrown out against the stated criteria, as extra cost and extra weight. 2 Ford undertook a cost-benefit or rather cost vs cost analysis to determine whether the re-engineering was justified.