Boeing 737 Crash

ANGLIA RUSKIN UNIVERSITY, East India Campus

1934166/1
Word Count: 2004
Date: 15.12.2020
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Table of Contents

Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Definition of Ethics......................................................................................................................4
Brief Summary of the Case Study...............................................................................................4
Significance of Reputation to an Organization within the Sector...............................................5
Analysis...........................................................................................................................................5
The Presented Case......................................................................................................................5
Boeing's Reputation.....................................................................................................................6
Impact of Unethical Behavior on the Tourism Industry..............................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................9
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Executive Summary

The case under discussion is when Boeing's737 max malfunctioned and crashed. This crash
proved to be a huge loss for the grieving families who lost approximately 200 loved ones in this
crash. As the nation mourned this huge loss, authorities were busy finding out what happened in
this flight and why were the authorities unable to foresee this. Boeing, however, was confident
that the pilots in the plane were at fault here as they must not have followed the instructions.
Boeing tried their best to contain this matter to the best extent. Still, unfortunately, they were
unable to do so as both the Lion Air and the Indonesian investigators both blamed being for this
malfunction. The Indonesian authorities, along with the airline, claimed that Boeing had not
provided the airlines and the Pilots with sufficient training or information to tackle this situation.
While these companies battled to find out the person at fault, neither of these companies
attempted to compensate the ones who lost their loved ones in this horrific incident.
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Introduction

Definition of Ethics
In the most basic term, ethics are the principles based on which a person/entity decides
what's right and wrong (Menon and Alexander, 2017). In business, ethics can be characterized as
the ability to implement and follow a policy which is appropriate for conducting business. In
which no one is being harmed or taken advantage of because of the existence of this business.
The general law of the country or the constitution provides a guideline of the laws and ethics of
businesses (Bondi and Scibilia, 2019). Business ethics is fundamentally important to ensure a
certain level of trust between the company that is doing business and the customer/consumer
with whom the business is being done.
An example of ethics in business could be that a portfolio manager working for a firm
need to give equal importance and consideration to the portfolios of family members and other
clients. Ensuring these kinds of treatments ensures that the public gets fair treatment from firms
(Bowie, 2019). As the firms became more aware of the consumer-based society, which was rising
in the markets, they started to focus on social issues to keep a good rapport with the consumers.
As social issues have become the hallmark of the century, firms have started to show their
concern on social issues, environmental issues and taking corporate social responsibility (Kolk,
2016).

Brief Summary of the Case Study

In 2018, a Boeing 737 max crashed in Indonesia. An incident which tragically took the
lives of 189 people on board. Another Incident in March 2019, took the lives of 157 people when
Ethiopian Airlines flight crashed. Both the airlines were using Boeing 737 max aeroplanes which
were manufactured by Boeing. As a result of these incidents, Boeing began to lose the trust of
their customers. It's a share in the market and its value in the eyes of investors. Boeing's
chairman and CEO originally refused to take any responsibility for this malfunction. Still,
investigators pointed out that both the crashes occurred due to a malfunction in the software and
censor. There also had been concerns regarding the airspeed and the altitude of the plane. The
Black box recordings revealed the commotion in the aeroplane's cockpit. The flight pilots tried
their level best to regain control of the aircraft, but they were unable to do so. Till the aircraft are
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re-evaluated and updated, the Federal Aviation's Administration has grounded Boeing's Jets. The
authorities, however, are estimating that Boeing will be back in the air after finishing the
software upgrades (Nuseir and Ghandour, 2019).

Significance of Reputation to an Organization within the Sector

Reputation is critical in any business in today's world. It not only ensures that the
customer keeps coming back to you (Skinner et al., 2016). But it also ensures that you stay ahead
of your competition in the marketplace. Almost every organization operating in today's time
invests a substantial amount of money and time in keeping their reputation intact. Small and
Medium Enterprises, along with various start-up, benefit from different reputation management
strategies. There are, however, numerous strategies through which a company can build its
reputation. An example of a strategy can be to invest in digital platforms. As social media is
becoming a huge source of information for the customers and investors, therefore, it will be
highly advisable for an organization to invest in search engines such as Google and Facebook.
You may also improve your image by building local business profiles and listing to boost your
business's ranking. In the case provided, Lion air did not maintain a good reputation in the
industry. While investigating the crash, the investigator found that there was a lack of
documentation by the airline. The flight and maintenance logs were not up to date. Due to these
missing logs, the flight crew was not aware of the problems which were caused earlier (Bowie,
2019).

Analysis

The Presented Case

A Boeing 737 max of the lion air flight 610 went down taking the lives of 200 people
who had boarded that plane. This incident caused terror in the country, which heavily relied on
its tourism. The tourists, along with the locals, had lost all faith in the airlines. This had a huge
impact on Boeing, which was the manufacturer of the plane 737. The stock prices of Boeing
crashed instantly, and everyone demanded the CEO to resign from his position immediately.
Boeing however, in this case, remained confident and blamed the Pilots who must not have
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followed the instructions that were provided by the manufacturer. However, as the black box
from the flight was recovered, the investigating authorities discovered that the pilots tried their
best to manually override the miss calibrated sensor, but they were unable to do so. As a result of
this design-oriented flaw, 200 people on board which included the flight staff, the crew and the
passengers lost their lives (Kolk, 2016).
The entire blame for the crash quickly fell upon Boeing after this discovery (Palliam,
2018). Boeing was blamed for the introduction of automated systems without educating the
Pilots or briefing the airline. It regarded on how to manually override this software in case of any
sort of malfunction. During the investigation, another Boeing 737 in Ethiopia crashed because of
Malfunction in MCAS which was triggered by wrong information from a faulty sensor. This was
a common problem in both the crashes and the pilots were unable to manually take control of the
aircraft. The detailed report shared in by the Investigators from the Indonesian National
Transportation safety committee also pointed out that Lion Air was not properly maintaining the
plane as the logs from the flight were found to be missing in the investigation (Palliam, 2018).

In review, many agencies like NASA accused Boeing of the fact that they had not fully
stress-tested the design of system because of this, they had not appropriately accounted for pilot's
reaction in case of any failure in the system. Another message from one of the Boeing pilot
recently resurfaced. He had raised his concerns about the system even before the planes were
approved to fly. However, no heed was given to his opinion as he was quickly sidelined. In a
situation like this, neither Boeing nor the airline was ready to take the blame, and they both
blamed each other monumental mishap (Menon and Alexander, 2017).

Boeing's Reputation
Boeing had faced numerous setbacks in trying to get their Max 737 in the air again after
these problems immersed in the plane. Boeing even fired one of their top executives Kevin
McAllister so that they may be able to mend their broken image in the eyes of its consumers.
Kevin was also at the centre of the discussion as the company responded to the allegations which
put forth. Many of the top executives also had a fear that it won't be easy for them to get back
from this massive setback. The public had undoubtedly the loss of faith in them. Their
relationship with several airlines was also dented as they would now prefer to go with Airbus,
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which was Boeing's biggest global competition. “The relationship at the moment is rocky,”
Michael O’Leary, chief executive of Ryanair, said in an interview. “Given that we are their
largest customer in Europe, we are deeply disappointed. Our view is that Boeing has not
addressed this as seriously as was warranted.”
Other airlines were also starting to show their concerns with trusting Boeing. This
mistrust was quickly reflected in Boeing's quarterly report as they saw a huge drop in sales and
its revenue (Bondi and Scibilia, 2019). As per Boeing, they claimed that their earnings fell by
43%. Boeing lost about 1.26 billion dollars in this haphazard situation. Because of this crash,
Boeing bearded a cost of 8 billion dollars. The stock price for Boeing wasn't far behind in this
downfall. The price of Boeing’s stocks had dropped by 15% after the crash. The customers and
investors have become restless as they lost hundreds of millions of dollars. Boeing's fleet was
grounded, and each day the company went further and further into a loss. The customers and the
investors inquired about the status of the plane form the company, but the company was unable
to provide them with consistent updates.

Impact of Unethical Behavior on the Tourism Industry

The tourism industry is considered as one of the most revenue-generating industries in
the entire world. For many countries, it is a significant contributor to the GDP and the economy
of the country. Indonesia is also one of those countries which rely heavily on its tourist industry
to attract a large amount of money to their economy. Due to an incident, the tourism industry is
bound to take a massive hit as people are now scared for their life. People who're coming in to
spend their vacations and honeymoons do not want to come to a place where their safety isn't the
primary concern of the authorities. In cases this these, people turn to other countries to spend
their vacations in peace. As a result, tourism declines in a country, many people lose their jobs,
and that country is likely to fall into an economic depression (Menon and Alexander, 2017).
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Conclusion
Boeing suffered a major blow after this incident, but the airline Lion Air was also to be
blamed for this incident. Lion Asia operates domestic and some international flights in the UAE,
East Asia and Australia. It was banned from flying in the European region until 2016 as it had
major safety and management issues. Lion Air has had a history of maintenance and safety
issues. It can primarily be because of its business model which focus on operating at a minimal
margin and therefore attracting a large number of flyers.
This is perfect for a tourist who is travelling on a budget and needs to get from one place
to another. Lion Air's prime focus is to cater to the masses, and in this process, they often neglect
the safety regulations which have been set by the governing bodies. This is the prime reason why
Lion Air could not operate in the European region post-2016 as the flight regulations in Europe
are quite strict. However, Indonesia is a developing country that does not include such stringent
Flight laws. Lion Air took advantage of this and neglected the safety regulation. In 2013, Lion air
flight 904 also crashed in the sea near Bali Airport. Although all 108 passengers survived the
crash, this could've been a disaster as well. Another incident in 2004 with flight 538, when the
flight landed and broke in Oslo City. Twenty-five people lost their lives in this incident. Since
lion air has had a history of neglecting the safety of its passengers, staff and crew, they should be
heavily penalized and strongly urged to change their business model as they cannot keep on
repeating incidents like the ones stated above.
Therefore, it is important for the authorities to take these flight regulations seriously and
for the airline companies to follow them strictly. The lives of hundreds of people are in the hands
of these airlines, and the airlines can ensure the safety of their customers by following the safety
precautions. Moreover, neither Boeing nor Lion air took responsibility for this crash. Ethically,
they both should share the responsibility for this at they both were at fault as a plane crash is
never an incident based on a single event. It's a chain of events which if gone unmonitored can
prove to be fatal. Both the companies being socially responsible should assume responsibility
and join hands to provide aid to the families who lost their loved ones.
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References

Bondi, S.A. and Scibilia, J., 2019. Dealing with the caretaker whose judgment is impaired by
alcohol or drugs: legal and ethical considerations. Pediatrics, 144(6).
Bowie, N.E., 2019. International business as a possible civilizing force in a cosmopolitan
world. Journal of Business Ethics, 155(4), pp.941-950.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-
34.
Menon, C. and Alexander, R., 2017. A safety-case approach to ethical considerations for
autonomous vehicles.
Nuseir, M.T. and Ghandour, A., 2019. Ethical issues in modern business
management. International Journal of Procurement Management, 12(5), pp.592-605.
Palliam, R., 2018. Legal and Ethical Issues In Business.
Skinner, M.W., Hedlund Hoppe, P.A., Grabowski, H.G., Manning, R., Tachdjian, R., Crone, J.F.
and Youngner, S.J., 2016. Risk-based decision making and ethical considerations in donor
compensation for plasma-derived medicinal products. Transfusion, 56(811), pp.2889-2894.