Boeing Business Case Study: Ethical Conduct Analysis

This case study examines the Boeing business, focusing on the ethical implications of the 737 MAX crashes and the company's subsequent actions. The analysis explores the impact of unethical behavior on Boeing's reputation, revenue, shareholders, and customers. The study highlights the role of the Manoeuvring Characteristics Augmentation Systems (MACS) software and the company's response to the incidents. The report investigates whether Boeing should be allowed to continue operating, considering the ethical breaches, and provides recommendations for improving ethical conduct within the company. The study emphasizes the importance of ethical decision-making for maximizing stakeholder interests and ensuring long-term business sustainability. It also discusses the financial losses incurred by Boeing, including decreased sales, compensation costs, and a decline in shareholder value. The recommendations include implementing a robust ethical code of conduct and prioritizing safety to rebuild trust with customers and regulatory bodies.

Boeing Business Case
Study

EXECUTIVE SUMMARY
Ethics play an important role in making decisions that can help in maximising the interests
of all the stakeholders of company and also help in its sustainability and success over a long
period of time. It is thus important that ethical code of conduct is followed in company which
can help in increasing its profits in the long run. In this report the impact of unethical behaviour
on Boeing’s stakeholders will be discussed along with analysing if it must be allowed to operate.
Further recommendations are also given to help in increasing its ethical actions and rebuilding its
image.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
ANALYSIS......................................................................................................................................4
Aim of the project...................................................................................................................4
Impact of unethical behaviour on Boeing’s reputation..........................................................5
Impact of Boeing’s unethical behaviour on its revenue.........................................................5
Impact of unethical behaviour on Boeing’s shareholders......................................................6
Impact of Boeing’s unethical behaviour on its customers......................................................6
CONCLUSION................................................................................................................................7
RECOMMENDATIONS.................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Ethics is a system of moral principles and perceptions that helps a person in deciding
between wrong and right conduct. This help in differentiating between what should be done and
what should not be done so that no harm is caused to anyone due to the decisions taken by the
person. It is important that businesses also follow the code of conduct so that interests of all its
stakeholders can be maximised and no harm is caused to any of them due to the unethical
decisions made in business. In this report the case study of Boeing business is discussed wherein
the incidents which happened related to the Boeing 737 Max Lion Air flight and Boeing 737
Max Ethiopian Airlines flight will be studied. In both the incidents both the flights went into a
sudden nose dive and crashed leading to their accidents and killing over 150 people in each of
these incidents (Duska, Duska and Kury, 2018). For these incidents the company’s software was
blamed specially the Manoeuvring Characteristics Augmentation Systems (MACS) which are
designed to keep the flights stable. The Federal Aviation Administration also banned the jets
temporarily which caused huge loss to the company and also it had to redesign it software so as
to win the trust of its customers back so that the company can regain its reputation in market.
Reputation of a company plays an important role in attracting customers and building a loyal
customer base so that its sales can increase and it can earn high profits. These incidents have
affected the reputation of Boeing in market and have also created a fear among people regarding
their safety. The main aim of this project is to determine if organisations which engage in
unethical behaviour should be allowed to continue to operate. Also the steps which can be taken
by Boeing to ensure ethical standards will also be discussed.
ANALYSIS
Aim of the project
The aim of this project is to study about the impact of unethical behaviour on company’s
reputation and its stakeholders due to which it is face loss in its profitability and revenue. Boeing
business has been facing various problems due to its unethical behaviour which involves
malfunctioning of its software and MACS which led two accidents killing over 150 people. This
has affected the brand image of company and the discussion in this report is regarding if the
company must be allowed to continue to operate. Further the steps that can be taken by Boeing to
improve its ethical behaviour will also be discussed.

Impact of unethical behaviour on Boeing’s reputation
The company is facing a downfall in its brand image in market as there has been two
incidents where the aircrafts of company Boeing 737 crashed killing over 150 people in each
incidents. This has created a fear among its customers and also the reputation of company has
been badly affected. This has also led the Federal Aviation Administration to temporarily ban its
jets which has further affected the company’s revenue and loss in its image. The company has
been blamed for its faulty software, issuers with its sensors specifically the MACS which
affected the aircrafts and led to their instability and their ultimate accidents. Later the company’s
CEO refused to accept that there were flaws in the software and blamed the pilots of company
for not following procedures. This further lead to the loss of trust of its employees in the
company and its reputation in market deteriorated (Hoppe, 2018). The banning of Boeing
aircrafts has created a fear among travellers and they are now going for other better options
which are also affecting the company’s profits. As Boeing has been known to provide flight
services to customers since a long period of time it is important that the company must be given
a chance to improve its brand image in the market. This can be done by making improvements in
its software, installing new sensors and making improvement in the MACS so that the problems
can be resolved and the safety of customers is given top priority. It is also important that the
company build an image of safety above profits rather than vice versa so that it can regain the
trust of its customers so that its profitability in market can increase.
Impact of Boeing’s unethical behaviour on its revenue
The company’s unethical behaviour of keeping profits above the safety of its customers
has led to the incidents of two accidents which led to its being temporarily banned by the Federal
Aviation Administration. Also there has been a loss of its loyal customer base which has also
increased fear of customers in using the services of company. All these factors has affected the
revenue of company leading to a loss of over $636 million as compared to its profit of $10.46
million in 2018. The company sales have also reduced by 24% to $76.6 billion (Kelchner, 2017).
The company is also facing a huge cost of renovating its software and other safety systems
leading to $8.3 billion in compensation to its customers and other $6.3 billion in order to build its
jets. Thus the company is said to be paying a heavy price for its unethical behaviour leading to a
decrease in its revenue and profits. It is thus important that Boeing make improvements in its
processes so that the trust of government and its customers can be regained that can help in

boosting up its business. Boeing after making the necessary improvements in its system and
processes and getting them verified by government must be allowed to operate in the market as
the business is also responsible for the economic and social development of all its stakeholders
and also help in providing huge employment opportunities in market.
Impact of unethical behaviour on Boeing’s shareholders
The unethical behaviour of Boeing where it gave priority to making profits than to increase
the safety of its customers has affected its reputation and revenue adversely which has affected
its profits. Boeing has estimated a loss of $18.4 billion for 2019 including 183 cancelled MAX
orders leading to a huge loss to the company (Lukasik and Wisniowski, 2017). The unethical
behaviour has also affected the shareholders as they withdrew their shares from company which
lead to a fall in its share prices that has affected the company. However the company must be
allowed to operate in the market by focusing on the cultural management in company so that all
the employees, leaders and managers can be encouraged to work ethically that can help in
delivering safe flights to their customers. Improvements in its system, processes and sensors
must be made by focusing on the mission of company which is ‘Connect, protect, explore and
inspire the world through aerospace innovation.’ This can help in innovating the company’s
aircrafts so that they can be made safe also the speed issues can be resolved helping in gaining
the faith of customers (Remak, 2017). The shareholders can also be benefitted by these
improvements as the company can revive its business in market by gaining the trust of its
customers and the government. This will help the company in building it image in market and
increasing the value of its shares that can create high value for the shareholders. The ethical
actions taken by company can help in increasing the interest of all its stakeholders and increasing
its profitability. Thus the company must be allowed to operate as the company has a large base of
shareholders who depend on company’s profits and are going through a financial crisis due to the
company’s current situation.
Impact of Boeing’s unethical behaviour on its customers
Customer play a major role in the success of a company as they purchase the products and
services offered by company so that their satisfaction can increase. As the two incidents where
people lost their lives due to the faulty software and MACS of Boeing this has lead to an increase
in distrust among customers for company. The customers have also started looking for other
options for travelling as their faith in company has decreased which has affected to the reduce in

company’s revenue and its profitability. The impact of unethical behaviour on customers is that
many of them lost their lives and also the fear of travelling by air has increased among them
which can also impact the business of company. It is therefore important that ethical decisions
are made in company so that maximisation of the interest of stakeholders can be given priority so
that a strong brand image can be created (Douglas and Swartz, 2017). The company must be
allowed to operate as it provides its services to a large number of customers at low prices and
also is among the largest global aerospace manufacturer. It is important that the company make
necessary improvements in their flights so that the trust of customers can be regained that can
help in boosting the business of company. Ethical code of conduct and surveillance in each of its
steps so that no wrong decision is made that can affect its stakeholders can be made.
CONCLUSION
From this report it can be concluded that ethical actions play an important role in taking
decisions that are beneficial for all the stakeholders of company. It is important that companies
follow ethical code of conduct so that they can ensure high interest of all its stakeholders that can
help in continuous running of the business. Unethical actions though can help in earning huge
profits but do not help the business to continue over a long period of time. In order to maintain
sustainability it is important that ethics are followed which is important in building a string brand
reputation of business in the industry. This also help the company to attract a large number of
customers thereby increasing its sales and profits which is beneficial for the company’s
shareholders as high interests can be given to them. Thus ethical actions are beneficial to both
the company and its stakeholders and can help in its sustainability over a long duration of time.
RECOMMENDATIONS
From the case study of Boeing business it can be said that the unethical behaviour of
company has led to huge losses to the company along with loosing the trust of its customers and
other stakeholders. This has affected the company adversely and has also led to being
temporarily banned by the Federal Aviation Administration which has affected its business. It
can thus be said that ethical code of conduct play an important role in the long term survival of
company and also in gaining the trust of its stakeholders so that it can continue to operate and
provide its goods and services in market. It also helps in creating high brand image that can help
in gaining a competitive advantage making the business highly profitable. Following are the

recommendations which can be implemented in Boeing so that it can revive its business through
ethical behaviour:
 The company needs to implement ethical code of conduct in all the business operations
and processes and also increase employee engagements through participative working
environment so that all the workers can be encouraged to work ethically (Lawrence and
Thornton, 2017).
 The safety plans and measures of company must be checked by the government and the
plans must be approved by shareholders so that ethical decisions can be made that can
help in increasing the ethical actions of company.
 The decision making in company must be improved like systematizing, defending and
recommending in the process of the manufacturing of the jets so that the manufacturing
process can become efficient.
 A standard code of conduct must be applied in the company so that each person
associated with the company can be motivated to follow them which is important in
implementing ethical actions making the stakeholders of company happy and increasing
their value for company.

REFERENCES
Books and Journals
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. John Wiley & Sons.
Hoppe, E.A. ed., 2018. Ethical issues in aviation. Routledge.
Remak, J., 2017. Boeing B-52 Stratofortress: Warrior Queen of the USAF. Fonthill Media.
Douglas, M.A. and Swartz, S.M., 2017. Knights of the road: Safety, ethics, and the professional
truck driver. Journal of Business Ethics. 142(3). pp.567-588.
Lawrence, P.K. and Thornton, D.W., 2017. Deep stall: the turbulent story of Boeing commercial
airplanes. Routledge.
Lukasik, B. and Wisniowski, W., 2017. All-electric propulsion for future business jet aircraft: A
feasibility study. Proceedings of the Institution of Mechanical Engineers, Part G: Journal of
Aerospace Engineering, 231(12), pp.2203-2213.
Kelchner, L., 2017. The importance of ethics in organizations. Accessed May, 10, p.2017.
Srivastava, J. and Pandey, R.K., 2016. Corporate ethics and social responsibility. In International
Perspectives on Socio-Economic Development in the Era of Globalization (pp. 212-220). IGI
Global.