Course
Time
2 hours 8 minutes
Difficulty
CEU/CPE
2

### Video Transcription

00:00
Welcome back, everybody.
00:02
Now, if you play your case setting.
00:05
In the early 19 seventies, there was a massive gas shortage in high inflation
00:09
associated with that gas storage for one to build a car that was inexpensive and consume very little gas. So they decided to design the Ford Pinto. That's a solution to this problem.
00:23
For Rush the Pinto to market in order to solve the consumer need is fast possible. Where have you heard that before? A pretty much any aptitude that comes on the exchange.
00:34
A few months after rolling out the car, they noticed a critical design flaw. When the trunk was hit 20 miles an hour above three gas tank exploded.
00:43
00:46
12 and 1/2 1,000,000 cars to market already
00:48
the cost of a recall and change out of 11 bucks per unit
00:53
before it estimates.
00:55
And based on the collision data, Death by burning. And this was in a memo
01:00
was, ah, 180. Probably gonna be about 108 people based on the number of people that had bought and about injury by burning for about another 100 buyers. Courts, uh,
01:14
actually had an estimate of the cost of human life in about 200 K. An average cost of the serious burn at 67 came on average,
01:23
so you need to calculate the expected cost of recalling and the expected costs not recover.
01:29
So if you do the math, it's about 36 million. That would be the cost of the human mind element
01:36
and 12 million that is the cost of the serious burn.
01:41
And it costs 132.5 million for the recall.
01:45
So if you don't do the recall and it's actually \$84 million in savings your company
01:55
so in the four Pinto case, the problem statements just decide what to do with cars.
02:00
Should you recall the car or not?
02:02
What factors should you consider making this decision? And how should you evaluate this decision?
02:09
We're cheating a little bit because we're in ethics course, right,
02:14
so, as you know, for it made the decision to release the vehicle.
02:20
Do they make the rounds?
02:23
Are there alternatives they could have thought of?
02:25
02:32
And what were the outcomes? The case.
02:36
So I'd argue that
02:39
the company's responsibility is to his shareholders. Right?
02:44
So
02:46
02:50
and how this actually effects your company, right?
02:54
However, they didn't consider the brand risk.
02:59
And just how immoral this waas right, too.
03:04
Uh, and what might happen? Right.
03:07
So the outcome of the case really simple
03:13
there was, um
03:15
Ah, man, that was our young boy that was totally burnt up.
03:20
And his friend died in a car accident, right, Because they were hit from behind.
03:27
And essentially they awarded this person five x the amount of punitive damages that had ever been given three and 1/2 \$1,000,000 which changed the industry around punitive damages. Because
03:42
you look at this person, they're completely a shell of themselves on dhe, then also, and their their friend was actually killed in the accident. In addition, there are three teenage girls in Indiana. They were also killed.
03:55
As a part of this
03:58
is when you start to have these
04:00
totally immoral situations,
04:03
the whole the whole equation actually changes that ends up on the front page in this way you're known for.
04:13
And so this really did change the entire legal profession