At the end of 2001 it was revealed that its reported financial condition
was sustained substantially by institutionalized, systematic, and
creatively planned accounting fraud. Enron has since become a popular
symbol of willful corporate fraud and corruption.
They must have had no company credo!
Before the energy conglomerate's collapse in 2001, Enron’s senior
management team had developed a wonderful video on Enron's ethics
and integrity.
Clearly, Enron spent a fortune "packaging" these wonderful messages.
It didn't really matter, since a number of Enron's top executives either
have been indicted or are in jail.
Lecture 4
Case Study: The Ford Pinto
In the 1970 s the Ford Motor Company designed a car called the Pinto
that was driven by company marketing and economic goals
No reinforcing structure between the
bumper, rear panel and gas tank, meant
that rear panel bolts would be thrust
forward and could puncture the tank in a
collision. The doors could potentially jam
during an accident due to poor reinforcing,
and material under car was insufficient to
prevent fire from making its way into
the cabin.
However there were design flaws.
Lecture 4
Case Study: The Ford Pinto
Investigative reporting by Mother Jones
magazine unearthed the famous Ford Pinto
Memo in which Ford executives were shown
to be completely aware of the design flaw,
and its consequences, and costs to recall the
Pinto in order to fix the problem [12].
However, it was alleged that Ford made the decision that the cost of
paying off potential law suits would in fact be cheaper based on arbitrary
values placed on human lives and injury. This calculation in favor of
profits led to major lawsuits, criminal charges, and a costly recall of all
Pintos. While Ford was acquitted of criminal charges, it lost several
million dollars and gained a reputation for manufacturing "the barbecue
that seats four."[13]
Lecture 4
Case Study [14]: The Ford Pinto
1. The Ford Pinto memo apparently wasn't used or consulted in Ford's
internal decision making. It was attached to a letter written to the
National Highway Transportation Safety Bureau (NHTSA) concerning a
proposed regulation.
2. $200,000 per life was not Ford's value; it was a value used, with
qualifications, within NHTSA at the time.
3. The Pinto's principal design defect--locating the fuel tank behind the
axle--was not unique to the Pinto. It was "commonplace at the time in
American cars .
4. The Pinto's safety record was comparable to other sub-compact cars,
such as the AMC Gremlin, Chevy Vega, Datsun 1200, Toyota Corolla, and
VW Beetle.
5. The prevailing precedent at the time encouraged manufacturers to
consider safety/cost tradeoffs
Lecture 4
Case Study [14]: The Ford Pinto
1. The Ford Pinto memo apparently wasn't used or consulted in Ford's
internal decision making. It was attached to a letter written to the
National Highway Transportation Safety Bureau (NHTSA) concerning a
proposed regulation.
