Boeing 737 MAX Crisis: A Corporate Governance and Ethical Analysis

This research paper provides a detailed analysis of the Boeing 737 MAX crisis, examining the corporate governance failures and ethical breaches that led to the tragic crashes. The paper begins with an introduction to the 737 MAX and the circumstances surrounding the accidents, including the role of the Maneuvering Characteristics Augmentation System (MCAS). It then explores the ethical responsibilities of the organization, highlighting the prioritization of profits over safety and the lack of proper training and communication. The research delves into the ethical analysis, applying theories like Confucian ethics and deontology, and identifies the violations of moral values and Kohlberg's theory. Finally, the report offers recommendations for improvements, including software updates, enhanced pilot training, and adherence to FAA standards. The paper concludes by emphasizing the importance of ethical considerations and responsible decision-making in corporate governance to prevent future disasters. The assignment is based on the course BUSM3115 Ethics and Governance.

Research Paper
Boeing's 737 MAX
A detailed research based upon the case of Boeing 737 MAX

Corporate Governance 1
Introduction
It was in the initial years of 2000’s when an announcement regarding the launch of one of the
most successful airplanes in the commercial history was made by Boeing, claiming that it
was the most new version of commercial aircrafts to be launched and they had been working
over it. 737 –MAX was launched in 1965 over which the work had been going on for years,
parts of the aircraft were made in several countries where they were famous for and then
assembled later in America where the Aircraft was to be launched (Bloomberg, 2019). Once
these aircrafts were made operational, everything was going fine till the first crash took place
in the October of the year 2018 and later in the March of 2019 another 737 MAX aircraft
crashed claiming an approximate of 346 lives. (Chang et al., 2019).
Here in this research paper the issues that shall be discussed include the whole analysis of the
crashes that took place causing deaths of so many individuals, the pre known lacks in the
system, ethical aspects, corporate governance of the company and the areas that need
improvement. This report also analyses the critical decisions taken by the higher ups and the
impact they had on the company as well as the miscommunication between the levels. This
also covers the area that what steps should have been taken in order to avoid the said situation
and the practices that could have been adopted in order to prevent such huge accidents. Apart
from these, the ethical issues including the accidents and the priority change that led to such
accidents to take place all are discussed in the discussion. The importance of ethical theories
in cases as such and the need for the organization to follow through as such are all included in
this debate.

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What Happened and the Ethical Responsibility of the organization as such
In order to compete in the aviation market, Boeing launched 737 MAX prior to the date it
was supposed to take to launch the same, so that the competitors could not gain much
recognition and Boeing took over the aviation market through that (Gelles et al., 2020). 737
became one of the best seller commercial jetliners in the worldwide market as soon as it was
launched in the market (Johnston & Harris, 2019). There were several internal issues being
faced by the company as the launch of a major competitor by the Airbus was introduced. In
order to capture the whole market, the higher ups at the Boeing took certain decisions that
were harmful for the company and this rush resulted in accidents like the one that took place
in 2018 and 2019 (Cruz, 2020). The evidence that was obtained through the black box of the
crashed aircrafts stated that the emergency system malfunctioned and there were also issues
with the software that was used in the planes that resulted in such devastating effects leading
to accidents due to which so many people lost their lives (Abramoff et al., 2020). Apart from
these, it was also found that there were several other issues with the operational, functional
and governance systems within the company that led to such huge damage. All of the said
issues could have been avoided and all these aspects could have been taken care of if the
action was taken in time. It was a moral responsibility of the organization to take steps at the
initial stage when they found out about the minor issues with the software (Giuffrida, 2019).
Apart from this, proper guidance and training should have been provided, which was never
given to the crew members and not just them, but even the pilots were not clear about the
software or the functioning as such (SLOTNICK, 2019). This is sheer ignorance of the moral
responsibility that the organization had as they just provided a manual regarding the whole
thing. It was an ethical responsibility of the organization to train them accordingly and in fact
when the reality or the malfunctioning was highlighted at the slightest, it should have been
taken care of instead of ignoring as it could have been very dangerous for people travelling

Corporate Governance 3
through it. This harm was clearly inflicted in the accident when so many people died due to it
(BBC, 2019).
From the inquiry, it was found that there were many loop holes in the whole system as such,
as the crew members were not enough trained to deal with the issues that might arise as per
the new design as well as the new aircraft was concerned. In order to deliver fast, the
company gave a crash course to the pilots and neither did it hire pilots with apt knowledge
neither did they provide proper training to them (Hawkins, 2019). Which is a factor due to
which the accidents took place, the fault in the system could not be figured in time as the
pilots could not recognise the malfunction. Apart from this, there are various other issues as
well that came into light when proper enquiry was done (North et al., 2019). Also, there was
no extra certification done as the aircraft had the body or the framework of the plane that was
already certified and only the internal changes were made such as the engine as well as the
software, hence, there was no extra certification done as well as there was no interruption of
authorities as well (Alles, 2019). There were many other changes made so as to make things
convenient for the company as the new engine was supposed to work based on the design laid
and ease the work of the pilots and the pilots that could fly one of the 737’s could control
other 737s as well. The company also adopted software known as MCAS or the Maneuvering
Control Augmentation System that was meant to prevent any harm or to guide the pilots
regarding emergency situations that was installed to run in the background (SKYbrary, 2020).
Regarding this system, no proper training or information as such was provided to the pilots so
that they could take action in emergency situations or inform the same at the base (Kitroeff et
al., 2019).
Later when these planes or aircrafts were sold, they passed the initial tests without any
trouble, which is why, FAA certified the MAX in the year 2017 after which other global
certifiers or authorities also gave it the certification it required without much issue (Smith,

Corporate Governance 4
2019). During this whole process, there were a few instances where the certain firms would
warn the company about certain issues in the manufacturing of the aircraft. These warnings
were avoided and also were not taken very seriously (Peterson, 2019). The first accident that
took place around the Java Sea made the Indonesian government specifically to take steps so
as to thoroughly go through all the Boeing aircrafts throughout the country. In this inspection,
no issues or faulty aspect could be figured, hence the fault was never figured and the Boeing
aircrafts kept on selling and the issue with the aircraft could not be resolved as it was never
highlighted in the inquiry (Leopold, 2019). In March 2019, another such incident related to
the automatic functioning of this software MCAS led the Ethiopian Airlines to crash within a
few minutes of take –off (Singh, 2019). After this, the next day itself, the aviation industry
throughout the world grounded the 737 aircrafts by Boeing. Even after various ground
breaking discoveries being made, the issue here was found to be the basic virtues that were
avoided by the organization in order to make more profit. Initially also to make Boeing as the
market leader, the waiting time to launch the aircraft was reduced and compromise based on
the quality was done by the organization. The decision making people at the top had their
priorities set to the only motive of earning more rather than ensuring the safety of individuals
(Sofradzija, 2019).
Ethical Analysis
All the actions that were taken in regards with the accidents were all to ensure that the
organization earned enough rather than making sure of the basic virtue to be followed as in
regards with the safety as well as the health of the individuals (Petrescu et al., 2017). There
are various ethical theories that can be implied to the situation that has resulted over in the
above situation. Ethics in general is an aspect that is mostly based upon the standards, actions
as well as behaviours of individuals that ultimately lead to a person acting in a certain way.

Corporate Governance 5
These mostly relate to the morality or the level of morality involved in the actions of
individuals in power (Chang et al., 2019). The people in the top management are the people
that need to make it a point to ensure that the organization is following through with the
ethical aspects as well. Though in business there are less of the grounds that relate to ethics,
yet there is a need to ensure that the people working for the organization as well as utilizing
the product or services as such are safe and sound specifically in the capacity where the
product or goods are being used (SCHAPER, 2019).
In the above case, the ethical grounds that have been violated as such are the grounds related
to the Confucian ethics, as well as Dentology related ethics (Ethics Wrapped, 2020). In the
above situation the intention of the individuals at the top was to earn more and more profits
despite knowing the fact that the airline here had issues took steps in order to gain profits
instead of working upon the machine in order to ensure the safety of individuals travelling in
it (Dawson, 2020). Moral values were to be considered an important aspect in order to take
action, while they were totally ignored by the administration and in order to build goodwill as
well as position in the market. In order to cover the deaths that had been caused and to take
responsibility regarding the failure of the aircrafts, no one took the blame and it was laid on
the authority that certified the aircraft instead of taking the responsibility of the same (Calvo,
2019). The administration as such showed an irresponsible behaviour based on the level of
company or the organization they have. As in the given case, the Kohlberg’s theory was
totally avoided. According to this theory, the public welfare is to be regarded as the priority
as well as promotes reciprocity and loyalty and trust. Neither of these was considered by the
organization (McLeod, 2013).
The whole fiasco could have been avoided if the ethical grounds were taken care of by the
organization. Moral intensity was the main aspect that had to be taken care of by the higher
administration which was never regarded as an option here. All the work was done towards

Corporate Governance 6
the betterment of the profits rather than focusing on the ethics involved as well as the safety
of the individuals that had laid their trust as well as invested money in the organization.
Recommendations
The recommendations as to what can be done in this kind of situations as such is that on wide
scale the sale of the aircrafts needs to be stopped and checked as well as the best thing to do
here would be, remove the faulty software and replace it with new. As per the investigation
by National Transportation Safety Board, it was found that there was a lack in the software as
well as lack in the training of the crew (Kitroeff & Gelles, 2019). With the proper technology,
the knowledge regarding the aircraft, they will be able understand the situation better and act
accordingly without much trouble and preventive measures according to the standards of the
FAA are need to be installed as well this needs to be ensured by the board of directors as well
since it is a part of the governance of the company. All the ethical grounds were ignored
before that led to so many deaths, this needs to be amended in the best way possible. The
board also needs to take care of the internal governance as it is something that is very
essential. The measures need to be taken as soon as possible. The issue of governance here is
something that needs proper attention as all the aspects that have been talked about in the
above report clearly state the major areas of lack and the improvements that are needed. The
board primarily needs awareness regarding the ethics involved in the business as such as in
the case of Boeing 373 –MAX most of the ethical issues were ignored and the lack of
awareness on part of the higher level led to such huge issue worldwide. When people on the
top level such as the Boeing’s chief executive, Dennis Muilenburg, knew there was an issue
regarding the aircraft, why was there nothing done about it (Kitroeff & Gelles, 2020). Things
like software issue and training is such a minor thing, yet no instant plan was made to amend
the issue. Hence, particular safety measures or plans need to be made in order to protect the

Corporate Governance 7
people using the services of the plane from issues or dangerous situations that might arise in
future.
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