Boeing 737 MAX: Ethical Failures in Corporate Governance Analysis

This report presents a detailed analysis of the Boeing 737 MAX case, focusing on the unethical decisions and failures in corporate governance that led to two fatal crashes. The study examines the context of the organization's strategy, highlighting the pressure to compete with Airbus and the resulting compromises in design and safety. It explores the financial implications of prioritizing profits over ethical considerations and stakeholder well-being, including the egoistic culture that fueled these decisions. The report assesses the various risks associated with the flawed design, including the risks to customers, aircraft personnel, and the organization's resources. It critically evaluates the lack of compliance with corporate governance policies and the failure of management to act ethically. The analysis covers the implications of these failures, including the need for a thorough risk analysis, ethical decision-making, and the importance of prioritizing safety and ethical standards over financial gains.

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Assignment 2: Research Essay Board Paper
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Author Note

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Introduction
The concept of Corporate Governance mostly deals with the policies and procedures
that an organization documents in their organizational policies to control and direct the day to
day organizational activities. The Corporate Governance policy that the organizations puts up
with must be aligned to the ethical standardization as per the legal implications of the country
in which the organization is established. The concept of Corporate Governance is thus related
to the matter of ethics from every aspect. It is not a standardized one if the proposed
Corporate Governance procedures and policies are not abiding the standardized ethical values
(Ojo 2017). The paradigms that the Corporate Governance policies mostly deal with are the
people within the organization, the processes within the organization, the purpose of these
processes and the overall performance of the organization. It is again noticed in several cases
that some incidents in organizations occur because of the different activities performed by the
people within the organization, either the executives or the employees, do not align with the
organizational policies. These activities are to be redeemed as unethical, because neither do
they comply to the Corporate Governance policies or do they have an alignment to the moral
or ethical values. Following would be a detailed description of one such case by the flaws in
the case of Boeing 737 MAX design that would be assessed to find out the apparent unethical
conduct. This would figure out the ethical decision making in the case with its analysis, the
poor decisions made during the case and how all these could have been avoided.
Background
There have been several detailed information emerging about the Boeing 737 MAX
designs which were flawed at many levels and even the engineers at the designing end did
inform that the defections should not be making the aircraft to fly. However, to US airlines
decided to fend off the flaw and keep up its competition with the rival organization Airbus

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and make the Boeing 737 MAX take its flight (Calvo 2019). Quite naturally, the flight was
taken off with the claim that it had an upgraded version of the workhorse 737 and had a much
larger CFM LEAP engine that would have a longer range with a heightened fuel efficiency.
However, the entire airframe was found to be faulty, which to some extent, was blamed on
the executives in the organization who are held responsible for the faulty decision made. The
result was inevitable, when it was found that the entire cockpit of PK-LQP, the entire brand-
new Boeing 737 MAX stick shaker right beside the captain started to shake. The very shakers
that are meant to warn the pilots before any impending stall, became unmistakably loud for
that reason, but it also has a huge chance of impeccably making the pilot lose control
(Cantone et al. 2019). Even while this was happening, the captain in the aircraft had
apparently ignored the call. Then the flight computer even detected a sensor malfunction, and
even that was ignored by the pilot, which would require a little bit more of the attention of the
captain.
This fault was found even before the occurrence of the incidents happened, as the
Boeing 737 MAX design was primarily made as a way to compete with Airbus, with little
attention given to the design itself. The rival organization had a better fuel0efficient Airbus
designed and implemented in the market, which rushed the Boeing 737 MAX design. It was
found that the Boeing 737 MAX was no more than its previous designs and was proved to be
incompetent. It was this time that two consecutive crashes occurred when the executives
ignored the flaws in the system and yet the executives are of the opinion that they are not at
fault for anything. Instead they are of the opinion that the system has been robust and
effective to deploy an oversight for safety.
Issues
There were not just one but many flaws and issues throughout the decisions made all
throughout the entire case of the Boeing 737 MAX crashes. Mostly, there were several levels

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at which the entire strategy failed, but the gravest of all was the unethical decision made to
launch the aircraft despite its flaws and then denying the unethical behaviour after the crashes
occurred. At every level, the decision to make the Boeing 737 MAX fly was unethical and all
of these flaws have several implications at different levels of the Corporate Governance
measures that might have been taken during the occurrence of the incidents (Steinberg 2019).
It is obvious that the organization had a Corporate Governance policy that abided by the
ethical standardization of activities throughout the organizational day-to-day practices and
procedures, but the decision-making system denied following any ethical activities. Thus, the
next section would clearly describe how the debacle was unethical at different levels of
decision making and who were the most responsible for having the unethical practices deny
the Corporate Governance policies.
• Strategy Implications
To what extent are the issues due to org context
The issues that were occurring with the Boeing 737 MAX aircraft did not house for a
wise decision to be taken. The primary reason that the Boeing 737 MAX aircraft was brought
into the market was to compete against the archrival organization, who were launching the
fuel-efficient Airbus to the market. Having a strategy at the ready for competing against an
organization for being recognized as a competitive organization is not unethical until the
competition is harming the organization and its reputation, even causing harm to the
customers of the organization. One of the primary reasons that the market had been
suspicious about the idea behind the development of Boeing 737 MAX aircraft in
competition to the fuel-efficient Airbus was the rapid design and development before it was
placed to the market.
The issues are thus clearly due to the context of the organization solely, as there was
by no means that the customers and their wellbeing was being thought about in the

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organization but it was for the sake of competition (Giuffrida 2019). The Boeing 737 MAX
aircraft was even termed as flawed by the engineers themselves and was called for not being
presentable to the market. However, it was still launched in the market and even made to fly,
just to keep up with the market competition with Airbus. Therefore, in this case, even if there
were flaws in the system or the Boeing 737 MAX aircraft design, the issues cannot be blamed
on the engineers but it was all due to the organizational context of launching the flawed
aircraft to fly.
• Financial Implications
Boeing’s egoistic culture (profits over ethics and Airbus competition) possibly lead to
The implications regarding the issues behind the two consecutive crashes of Boeing
737 MAX aircraft was implied due to the probable financial gains that the organization was
aiming at. It was definitely the egoistic nature of the executive people in the organization who
were not concerned about the safety of the people and were more looking towards the
probable financial gains that the organization would gather. According to the ethical conducts
specified for the organizations, every organization should care about the wellbeing of the
customers first during the development or manufacturing of their products (Lindebaum, Vesa
and Hond 2020). Thus, it was an unethical decision made, when the organization was only
thinking about making monetary gains and not about the wellbeing of the customers. Since,
this is an aircraft manufacturing business, the safety of the passengers and the staff inside the
aircraft is primary. However, declining all these responsibilities, the flawed design was put to
the market, only because the rival organization launched its fuel-efficient Airbus to the
market.
It was egoistic as a decision for Boeing 737 MAX as before the wellbeing of the
stakeholders and providing them profit of service, the organization was much more inclined

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into the competition and market gain. Naturally, the ethical Corporate Governance was not
being followed at any instance.
• Risk Analysis
At several levels, there were risk associated to the decisions made, which was figured
out by the designers of the Boeing 737 MAX aircraft. However, the risk associated with the
design would bring about harm to the customers. It has been already disclosed that the
aircraft stalling alarms which were faulty and the cockpit started to shake (Hubbard 2020).
Therefore, the associated risk was not just with the executives taking unethical decision but
also the people in the organization, especially the captain the aircraft who had already denied
to fulfill any attention to the faulty system. The two consecutive crashes thus have associated
risk along the activities by the people in the aircraft making it fly as well. The following
would be a list of the risks associated with the decision taken to fly the Boeing 737 MAX
aircraft and the two consecutive crashes:
 The risk to the customers: The wellbeing of the customers was at stake since
the beginning of the decision taken to Boeing 737 MAX aircraft design and
bring it to the market for competing against the Airbus (Johnston and Harris
2019). The primary concern was not to provide the customers with an efficient
aircraft but to compete with the rival organization. This was unethical and
risky at the same time.
 Risk to the people in the aircraft: It requires several people inside the
aircraft to make it fly. Thus, it was a hasty and risky decision made before the
Boeing 737 MAX aircraft was designed, but even after the risk was prevailing
when the captain inside the aircraft did not provide the attention that the faulty
systems were having, although the person received warnings and signals
regarding the flaw (Chang, Ji and Arami 2019). This was a risk to self and to

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the other working people inside the aircraft. The two consecutive crashes after
was the result.
 The risks to the resources of the organization: It was reported that the
Boeing 737 MAX aircraft crashes had a huge impact on the organization itself,
regarding the amount of resources invested and wasting it all (Koporcic and
Törnroos 2019). For designing the entire aircraft and then putting it through
the organization, there was a requirement of about 9 million USD worth of
money, which after the crash wasted resources and had a recovery drawback
of about 90 million USD worth of money (Cruz and Oliveira Dias 2020).
Risks to the human resources were also drawn, along with the risks to the
other resources associated with the design of the Boeing 737 MAX aircraft.
• Corporate Governance and Compliance
The unethical conduct led by the people in the organization and the decision-making
body for the design and production in the market for the Boeing 737 MAX aircraft did not
comply with the Corporate Governance policy of the organization (Bergstra and Burgess
2020). This is because, when a Corporate Governance policy is first introduced in the
organization, it abides by all the ethical practices in the organizational needs (Fischer 2019).
This is why, the Corporate Governance and Compliance were not aligned with. It was not at
all an ethical decision taken when the entire system flaw was denied by the decision-making
bodies and instead, they also denied their unethical behaviour once the aircraft crashed two
consecutive times. Of course, the Compliances did not follow several points about the codes
of ethics. They did not comply with the primacy of the interest of public, neither they were
looking forward to enhancement of public life but only towards their own monetary gains.

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• Management Responsibility
The responsibility of the management was at prime importance in this level, but they
failed to have an ethical approach to their work. Firstly, they were not complying with
honesty, they did not work diligently for the stakeholders, the captains lacked professional
development or professionalism, so were that of the people in the decision-making bodies
(Liu 2019). The people behind the Boeing 737 MAX aircraft introduction to the market were
only looking for monetary gains. Rather unethical conducts for monetary gains.
Conclusion
Therefore, in conclusion it must be pointed out that the people within the organization
for development and launch of the Boeing 737 MAX aircraft were only looking for their
monetary gains by competing against the archrival Airbus, as they promised a fuel-efficient
vehicle in the market. The company did not follow the several areas of professional ethics,
corporate governance and compliance or even wanted to ensure the primacy of public interest
or enhancement of the lives of their customers through the development of Boeing 737 MAX
aircraft. The unethical conducts were even denied by the executives when the Boeing 737
MAX aircraft and its flaws resulted in two consecutive crashes.

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