Impact of Unethical Behavior on Boeing's Reputation and Revenue

This report analyzes the impact of unethical behavior on Boeing's reputation and revenue, focusing on the case study of the Boeing 737 Max crashes. It also provides recommendations for the company to comply with ethical standards.

Academic and
Professional Skills

Executive summary
Ethics plays an important role in the success of a business and on the other side, if
company did not comply with the ethical principle then it leads to affect the brand image of the
firm in negative way. Thus, report is based upon the case study of Boeing business where more
than 300 people were killed from last two incident. Therefore, the report will explain that it
creates negative impact upon the overall business as well as its reputation as well. Further, report
also show that it will definitely affect the overall revenue of the company because its business
was temporarily stopped for sometimes. Overall, having such a huge loss, will reflect that
company should not allow to continue to operate its business.

Table of Contents
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................1
Analysis............................................................................................................................................1
CONCLUSION................................................................................................................................4
RECOMMENDATIONS.................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
Ethics is the set of moral rules which are govern how the business operates and how the
business decision are made by treating all the employees same. Thus ethics is mostly concern
with an individual such that what are good for them and what is bad for them and that is why, it
is also known or describe as a moral philosophy (McCurdy, 2019). Through ethical behaviour
firm may easily attract large customers and also sustain the brand reputation of the company as
well. Further, by complying with the ethics, it also raise or boost the sales and profit which
further assist to make employees want to stay connected with a business for long term. Or else,
this will reduce the labour turnover and also increases the productivity too. That is why, it is
essential for the company to comply with the laws and develop ethical principles as well.
The chosen case study for this report is Boeing Business in which on Oct, 2018, 189
people were killed in a Boeing in Indonesia, when aircraft suddenly nose dive and crashed into a
sea. While in March, 2019, 157 people are also lost their lives from 737 Max Ethiopian Airlines
flight dived into outside Addis Ababa. Therefore, the Federal Aviation Administration has
temporarily banned this jet but it is analysed that this aircraft should be back in operations before
the end of 2019. So, the current study describe, whether the company should continue their
operations or not.
The current study will describe the impact of unethical behaviour on Boeing reputation
and its impact upon the company. Further, study also analyse the impact of unethical behaviour
on Boeing revenue and their shareholder's as well as customers and their impact upon the overall
company performance. Further, report also provide recommendations which make sure that
company comply with ethical standards.
Analysis
The aim of this report is to determine whether Boeing business should operates or
continues their operations from 2019 onwards or not.
From the case study it is analysed that in 2018, October, around 189 people were killed
after the 13 minutes of its take-off. In the same way, again the same tragedy happens in 2019,
March where around 157 people were lost their lives and as a result, Federal Aviation
Administration has temporarily banned the jet because the company did not follow exact
procedure and this in turn creates a negative impact upon the overall business. Further, from the
secondary research it is also analysed that the software of aircraft are not working properly and
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that is why, it will leads to sudden nose dive and most of the people got killed (Malone and
et.al., 2016).
This, is the clear example set of unethical behaviour and also creates negative impact
upon the company's overall brand reputation. Therefore, this incident also prove that company
should not operate their business till its software got updated so that it will help to minimize the
chances of the risk as well. Moreover, it is also realized that aircraft have another issue related to
their airspeed in which recently the component of the wing was found in a susceptible manner
and this in turn leads to affect the overall component of the aircraft and that is why, it met with
an accident (McCurdy, 2019). Hence, it is clear that company did not comply with ethics and
that is why, Federal Administration has temporarily banned the jets. Along with this, it is also
stated that company operations should be stopped till the software got updated and this in turn
leads to creates positive impact upon the brand image of the firm.
The revenue of Boeing due to this case has seen as decreasing with a huge amount
because people prefer very less to travel from the aircraft of Boeing after this case happened.
The company was reflected as desperately worried regarding its price cut due to the 737 max
case as it brand reputation affected adversely (Jain, 2017). Airbus had announced fro producing
a plane for the 737 in consideration with the 15% efficiency in the fuel. This 737 case resulted a
disruption in the supply chain in the year 2018 that impacted timing of the certain deliveries in
the year. Addition to this one or more of raw material on which the company was dependent,
seen as unavailable or are available only at the higher prices. This causes a disruption in the
delivery of better and effective services to the customers and as the customers were not satisfied
with the service so revenue of the firm get reduced with a billion of amount. As the services of
the company were banned by the government due to its unethical practices, this also results to
decline in the revenue or the sales of the company. Boeing had taken $5.6 billion of the revenue
hit in compensating the customers of 737 Max. Company said that the grounding relating to its
737 Max jets reduced its revenues and the earnings $ 5.6 billion in a second quarter, largest
financial effect has been caused of the two deadly crashes that the jetliner was facing (Hoppe,
ed., 2018). It has been represented by the manufacturer of Boeing that $4.9 billion charge has
been employed for the purpose of compensating an airline customers fro delays in getting its
respective 737 Max plane again into a service.
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Lawsuits accused an organisation in defrauding the shareholders through concealing the
safety deficiencies in context of the 737 Max plane crashes prior to the fatal crashes that leads to
the grounding globally. It has also been stated that growth prospects of Boeing and 737 Max
were been undermined through its alleged conflict in retaining the broad authority from the
federal regulators for assessing the safety of planes (Mitchell, Reynolds and Treviño, 2019).
Often the shareholders has filed with the lawsuits by accusing the companies in relation to the
securities fraud in terms of concealing negative information which in turn causes decline in the
present stock price on becoming as public. With decrease in the price of the securities in the
market, the value of the shares that has been hold by the shareholders of Boeing also reduces
with a greater value. This causes an effect on the wealth of the company's shareholders in a
negative manner and this affected the overall market performance of the company within an
Airline industry. Due to this company had decided for making buyback of the shares so that it
could strive for the increasing its stock value or stock price. Thus, the case of the 737 Max
crashes posed a larger impact on the shareholder in respect of their investment made in the
company and their amount of dividend. This had induced many of the shareholders in
withdrawing their ownership from the company in cash or in kind. It has been presented that
further the company must not be operated with this 737 Max plane as it has ruined the brand
reputation of the firm. Otherwise, with the other planes, it should make its practices more ethical
and must provide quality services and information to its customers and shareholders.
The customers has largely been affected by the 737 Plane crash happened within the
company as it results to kill many of the lives of customers. People tend to travel less after this
case happened because they feel as unsafe and insecure in travelling by the flights of Boeing.
The customers has switched to another brand of airline after this case as which leads to loss of
an existing customers of the company (Goebel, Smith and Bajwa, 2019). Moreover, due to this
company had decided to lower the prices of travel tickets for the customers as the strategy to
attract the customers again towards the brand but this case causes a severe impact on the
company and this reduces the sales and stock price of an organization in the market to a larger
extent. Thereafter company has opt for entering into various industrial agreements with the
customers and build more and more strategies in relation to ensuring safety and security of the
customers.
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CONCLUSION
In the end it is summarised that ethical working is very essential for the company in
order to become successful in the highly competitive world. This is necessary because if
working will not be ethical then the consumers will not like the services of company and will not
use and this will result in decrease in number of consumers. Hence, for becoming successful it is
necessary for the company to apply all principles of ethical working and practices. Thus, the
present report focused on the issue faced by Boeing company and the complete critical analysis
of the issue was done. Also, in the end some recommendation was provided like providing
training and guidance to employees on the ethical and moral working, focusing on retention of
consumers and many other working.
RECOMMENDATIONS
The major recommendation for Boeing is that they must provide training and learning
sessions to their employees and workers. This is necessary because in this competitive world
there are many international airline companies and it is very necessary after the two bad incident
to regain its position in the market. Thus, for this first strategy is to train the employees so that
they work in proper and effective manner and does not dissatisfy the consumers. For this Boeing
can hire some experts and professional who are expert in ethical working and moral correct
working. This is majorly because of the reason that these professionals will provide and share
their knowledge and experience and this will motivate the employees in working in more ethical
and reliable manner.
In addition to this another recommendation for improving the company after the two
incident is to try to attract and retain more new as well as existing consumers. This is majorly
pertaining to the fact that without consumers the company cannot run and operate in successful
manner. For this Boeing need to use social media advertising in order to develop effective
market share. Also, it can use different sales promotion technique like discounts, festive offers,
free coupons and vouchers and many other sales promotion techniques. For using this
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recommendation, it is necessary for Boeing to first select a good social media platform like
Facebook, Twitter and many other sources. Then to create pages on these different platforms and
share the advertisement through these sites.
Other than this another recommendation is to abide by all the laws and rules and
regulation which are being applied over the airline industry. This is very beneficial for the
company because of the fact that these laws and regulation provide a guide in which the working
need to be directed towards success. This is majorly pertaining to the fact that this provides a
beforehand information that what all compliance they have to follow. Thus, this will improve the
working of Boeing because of the fact that all the guidelines will help the company in managing
the flow of work so that every work is coordinated and linked with other activities. Thus, for
implementing this recommendation Boeing need to hire an expert in field of law who will assist
the company in all the guidelines they have to follow at time of operating in the business.
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REFERENCES
Books and Journals
Goebel, K., Smith, B. and Bajwa, A., 2019. Ethics in prognostics and health
management. International Journal of Prognostics and Health Management. 10(1).
Hoppe, E.A. ed., 2018. Ethical issues in aviation. Routledge.
Mitchell, M.S., Reynolds, S. J. and Treviño, L. K., 2019. The study of behavioral ethics
within organizations: A special issue introduction. Personnel Psychology.
Jain, P., 2017. Ethical and Legal Issues in Knowledge Management Life-Cycle in Business.
In Managing Knowledge Resources and Records in Modern Organizations (pp. 82-101).
IGI Global.
Malone, R. and et.al., 2016, July. Insights from large scale model based systems engineering at
Boeing. In INCOSE International Symposium (Vol. 26, No. 1, pp. 542-555).
Malone, R. and et.al., 2016, July. Insights from large scale model based systems engineering at
Boeing. In INCOSE International Symposium (Vol. 26, No. 1, pp. 542-555).
McCurdy, H.E., 2019. Boeing: Pairing Commercial Work with Government Contracts to
Reduce Risk. In Financing the New Space Industry (pp. 37-44). Palgrave Pivot, Cham.
McCurdy, H.E., 2019. Boeing: Pairing Commercial Work with Government Contracts to Reduce
Risk. In Financing the New Space Industry (pp. 37-44). Palgrave Pivot, Cham.
McCurdy, H.E., 2019. How Corporate Executives Approach Business Decisions: Financial
Planning for the Boeing 707 Jetliner. In Financing the New Space Industry (pp. 27-32).
Palgrave Pivot, Cham.
McCurdy, H.E., 2019. How Corporate Executives Approach Business Decisions: Financial
Planning for the Boeing 707 Jetliner. In Financing the New Space Industry (pp. 27-32).
Palgrave Pivot, Cham.
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