Impact of Unethical Behavior on Boeing's Business and Reputation

This report analyzes the unethical behavior of Boeing following the 737 MAX aircraft crashes, which resulted in 346 fatalities. The introduction defines business ethics and highlights the context of the case, emphasizing the company's focus on profit over safety. The main body examines the impact of Boeing's actions on its customers, reputation, and revenue. It details how the company's unethical practices, including software failures and sensor issues, led to a loss of trust, financial losses, and damage to its market position. The conclusion summarizes the negative consequences of Boeing's actions, including reputational damage and financial setbacks. Recommendations include prioritizing customer needs, updating software, and addressing the root causes of the incidents to regain competitiveness and maintain ethical standards within the aviation industry. The report emphasizes the importance of ethical decision-making and its long-term effects on a company's success.

Report

Executive Summary
Business ethics is a formidable area. Philosophers from Aristotle to Rawls have taken
views on subjects that can be seen as part of business ethics. Research on business ethics
frequently appears in the fields of popular philosophy and social sciences. This report contains
detailed analysis of unethical behaviour of Boeing after two massive crashes of 737 Max aircraft
which took almost live of 346 passengers travelling through these aircrafts.

Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
ANALYSIS......................................................................................................................................2
CONCLUSION................................................................................................................................5
RECOMMENDATIONS.................................................................................................................6
REFERENCES................................................................................................................................8
1

INTRODUCTION
Ethics is a branch of philosophy which mainly involves defending, systematizing and
recommending a concept of wrong and right conduct. It also seeks to resolve question of human
morality by defining these concept as right and wrong, good and evil, justice and crime, virtue
and vice (Bergstra and Burgess, 2019). Whereas business ethics is study which is mainly related
to study of business practices and policies which are appropriate regarded to various potential
controversial subjects which include insider trading, corporate governance, corporate social
responsibilities, bribery, discrimination and fiduciary responsibilities. It ensures that a certain
basic trust level must exist between consumers and various businesses. The idea of business
ethics started in the 1960s when companies became more aware of a growing consumer-based
culture that raised concerns about the environment, social issues and corporate responsibility. A
hallmark of the decade was the renewed emphasis on so-called social issues. The following file
contains the detail analysis of the above given case. This case is about the lack of software
implementation of a boeing’s aircraft. This case study gives two incidents which states the
failure of software and issue with its sensors which took almost 346 lives, its chairman Dennis
Muilenburg refused to admit any flaws in their software and blamed it on pilots. Later Federal
Aviation Administration temporarily banned its jets. After these incidents Boeing has lost its
market reputation as its software defects killed nearly 300 people and also did not accepted its
mistake. Boeing’s which was favoured by pilots as number 2 aircrafts went to unfavoured.
Company lost its reputation when pilots outraged as company defended its design and suggested
pilots errors to blame for the crashes. The following file states the analysis of the case that how
company was only focused on making profits rather than the safety of its customers.
MAIN BODY
ANALYSIS
Unethical behaviour is an activity that drops outside of what an individual, a profession or a
business considers morally correct or proper. Individuals and companies professionals and
leaders may act unethically. Unethical practices affect many people at the same time such as
customers, shareholders, company’s reputation, revenue etc. In case of Boeing, around 346
people died due to two major accidents.
2

Aim of this report to make students aware the impotence of ethics and how it will affect the
individual as well as entire organization if it will not followed in proper mannered.
Topic: Impact of unethical behaviour on Boeing’s Customers and whether they allow
the organization to continue to operate.
In situations where various parties, desires, principles and laws are unclear or poorly
followed, ethical problems often come up. Companies and governments also have the power and
authority to take decisions that ultimately influence others 'excellently-being, therefore they
engage in ethical decision-making (Bergstra and Burgess, 2020). Their decisions and activities
have the potential to create significant social effects in specific with regard to consumer,
employee and community health, safety and welfare. Security has always been an inherently
vital component of the airline industry's productive business operations and at some stage
protection will take priority over revenue.
It's essential that society and governments take into account that company lying is not
restricted to tax evasion, cooking financial statements, or knowingly breaking laws. Warriors like
Boeing who are actually concerned with thousands of lives, need to act under strict ethical
standards and also make decisions that can boost short-term gains but protect their integrity and
long-term public trust. Investigations so far suggest that the two accidents that cost 346 lives
have deep roots in the struggle of a business to compete with its competitor and recover a
substantial market share. They were forced to believe their new aircraft acted just like the old
version. This kind of unethical behaviour affects the Boeing Customers and they did not allow
the company to continue its operations. It was affecting their customer base due to lack of trust
issues because company is only concern about their profit not for people safety.
Topic: Impact of unethical behaviour on Boeing’s Reputation and whether they allow
the organization to continue to operate.
Reputation is all that sticks with humans for longer and it's generally hard to fix whether
positive or bad (Campbell, 2018). A first mistake in business may be forgiven and considered an
error but when it is a recurring occurrence it becomes the name of the organization. The Boeing
737 Max 8 case would stand out as one of the most complex and thought-provoking examples of
how corporate ethics can be a matter of life or death and how "revenue-oriented"- oriented
businesses can almost irreversibly ruin their reputations.
3

Because of the reoccurred tragedy several countries have grounded the aircraft, branded it
dangerous and it has already cost the company its stock price, which fell to 13 percent on the
stock market with the finger shake. It is a matter of fact that at every moment they hear Boeing
737, people whose families died in the plane crash will always relive the sorrow. This has placed
the Boeing Company on the blacklist of many potential customers and even shareholders,
automatically.
It is important to remember that engine failure is far from being a uncommon incident in
aircraft and this is why pilots should be incredibly well qualified to find a solution when these
occurrences occur (Fischer, 2019). By claiming that the new 737 was running the same way as
the old ones, Boeing took away the possibility from the pilots to respond properly to a critical
device failure.
Businesses with poor public image are working at a loss and most of the time never sells
incredibly. They are generally seen as not being truthful or reliable and as time goes by, they also
lose customer loyalty which influences their importance in the society they work. It certainly
points out that one of the quickest ways to destroy any company, even the greatest of them all, is
a bad reputation.
Topic: Impact of unethical behaviour on Boeing’s Revenue and whether they allow the
organization to continue to operate.
Boeing said the suspension of its 737 Max jets in the second period would slash its sales and
profits by $5.6 billion, the greatest financial impact of the jetliners two deadly crashes so far.
The aircraft manufacturer said in a statement Thursday it will report a $4.9 billion charge to
reimburse airline customers for the difficulties in bringing its 737 Max aircraft back into
operation. Boeing's cost to manufacture the aircraft has also been $1.7 billion higher in the
second half due to improvements in production levels, the firm said.
The financial cost of the 737 Max down time is beginning to add up for Boeing, which has
frozen its flagship jetliner sales since the authorities announced the plane's global halt in March.
Airlines cancelled thousands of flights early into the fall to offsetting losses of hundreds of
millions of dollars and while a timetable remains elusive for the return of the aircraft (Sgobba,
2019). Boeing said, they should focus on the premise that regulators will authorize safety
changes to the 737 Max and secure business travel planes early in the fourth quarter of the year.
4

Boeing is forecast to record $20.4 billion in sales in the second quarter when it releases
earnings July 24. The firm said on a conference call with investors that day it would discuss the
economic effect of the 737 Max suspensions. American Airlines said in April that it anticipates
missing out on $350 million in 2019, predicting the grounding order will be removed by August
19. If grounding lasted longer than that, American Airlines could have an effect for a quarter of
about $180 million, said an official at the airline.
Boeing is expected to compensate consumers over a period of years in the form of
incentives, additional service bundles and other bonuses rather than cash incentives to cover the
losses, experts said that (Yardla and Subijanto, 2020). The airlines were waiting for the Federal
Aviation Administration to check off on a software fix for a flight control system developed by
Boeing which played a role in the twice serious crashes. Initially, this repair was supposed to be
implemented no later from April, according to an FAA guideline released in early March, but the
procedure was hindered by the detection of other technical problems. Boeing took measures for
the financial effect of the 737 Max grounding, including acquiring a new credit line, issuing
bonds and stopping a stock buyback programme. In order to manufacture new planes and invest
in operations, the company needs a significant amount of cash.
The accounting fee does not provide any calculation of how well the aircraft manufacturer
would potentially pay to the families of the 346 people who have died in the accidents in
Ethiopia and off the Indonesian coast (Zhongda and Mingguang, 2018). Families are appealing
for the corporation to be held liable for losses. For part or all of its legal costs, Boeing's policies
are likely to be on the line.
Basically Boeing affected very badly in terms of finances because those incident reduces
their sales as well as they have to compensate people who died. Such kind of unethical behaviour
affect the company most and its revenue generation process as well.
CONCLUSION
From the above discussion it has been concluded that company’s reputation got down due
to its unethical behaviour the company has to compensate for the lives of the passengers died in
crash of 737 Max aircraft. Company lost its reputation along with its financial position as it had
to compensate for the lives of 346 passengers died in air crash. It also lost the trust of its
shareholders as company was unethical and mainly focused on making profit. The above file also
states the unethical behaviour of company towards its customers as it defended its design of 737
5

Max and blamed pilots for crashes and lost lives of passengers travelling through it. The above
cases also states that how company did not take responsibility for massive air accidents caused
due to software failures and issue in its sensors which resulted in the nose dive of two 737 Max
aircrafts. It also states various other problems which were indentified later on such as airspeed
issues and one of the components which help the aircraft to life during takeoff was also found to
be fractured. Company should follow the business ethics in order to maintain its image and
competitiveness in market as in above case Boeing has lost its market share as well as its image
after two crashes of 737 Max.
RECOMMENDATIONS
The main recommendations after analysis of above given case of boeing is that company
needs to remain competitive and take corrective measures to get its software upgraded and
identify problems which caused these massive incidents. The Boeing Company will stay
competitive in the industry, concentrating more on the needs of its customers. The company
wants to provide services and goods that fulfil the wishes of consumers all the time. The
company will take steps to ensure the company follows the technological advances in the
aviation industry and implement the innovations in time and ahead of the competition so it can
keep its customers and gain more other customers as well. Especially when it comes to
evaluating the current market dynamics, which dictate how profitable the business is, it must
strategize well for each company to be successful. The Boeing Company must therefore ensure
that all the factors influencing the performance of its products, especially when it comes to the
sale of its product and the offering of commercial aircraft transport. The company will ensure
that it studies its competitors 'position, technical advancement and developments which will
boost the products ahead of the firms of the competitors.
6

7

REFERENCES
Books & Journals
Bergstra, J. A. and Burgess, M., 2019. A Promise Theoretic Account of the Boeing 737 Max
MCAS Algorithm Affair. arXiv preprint arXiv:2001.01543.
Bergstra, J.A. and Burgess, M., 2020. Candidate Software Process Flaws for the Boeing 737
Max MCAS Algorithm and Risks for a Proposed Upgrade. arXiv preprint
arXiv:2001.05690.
Campbell, S., 2018. Norwegian Air Boeing 737 MAX 8 at Helsinki Airport.
Fischer, D., 2019. Was Boeing’s Compensation Committee Sufficiently Independent in Judging
the Business Risk of the 737 Max?. Available at SSRN 3370066.
OVER, N.H., BOEING 737 MAX AIRCRAFT GROUNDED AFTER CRASHES.
Sgobba, T., 2019. B-737 MAX and the crash of the regulatory system. Journal of Space Safety
Engineering, 6(4), pp.299-303.
Yardla, Y. and Subijanto, S., 2020. ANALISA KERUSAKAN IGNITION EXCITER APU TIPE
TCN-1031 PADA PESAWAT BOEING 737-300 PK-MBP. Jurnal Industri Elektro dan
Penerbangan, 6(1).
Zhongda, Y. and Mingguang, L., 2018, October. Maintenance differences between 737MAX and
320neo. In IOP Conference Series: Materials Science and Engineering (Vol. 423, No.
1, p. 012059). IOP Publishing.
8