Business, Society & Ethics: Cases for Stakeholders & Public Policy | 17th Edition Guide by Anne Lawrence

Case 1-9 j




Case 1: j




FAILUREjBYjDESIGN:jBOEINGjANDjTHEj737jMAXjTEACHING

jNOTE



Thisjcasejillustratesjthejfollowingjthemesjandjconceptsjdiscussedjinjthejchaptersjlisted:

Theme/Concept Chapter

ConflictjofjInterest 5

OrganizationaljEthics 6

BusinessjGovernmentjRelations;jGovernmentjRegulation 7

ProductjSafety 14


CasejSynopsis

OnjMonday,jOctoberj29,j2018,jLionjAirjFlightj610jcrashedjintojthejJavajSeajinjIndonesiajshortlyjaf
terjtakeoff,jkillingjallj189jpeoplejonjboard.j ThejaircraftjwasjajnearlyjnewjBoeingj737jMAX,jdeliver
edjtojLionjAir,jajlow-
costjregionaljcarrierjandjonejofjBoeing’sjmajorjcustomers,jjustjfourjmonthsjearlier.j ThejMAXjwasj
Boeing’sjnewestjaircraftjandjthejcenterpiecejofjthejcompany’sjstrategyjforjthejshortjtojmid-
rangejcommercialjmarket.j CEOjDennisjMuilenburgjfacedjanjurgentjanjurgentjtask:jtojdeterminejw
hatjhadjgonejwrongjandjwhyjwithjBoeing’sjnewestjandjso-
farjsuccessfuljnewjmodel.jThejcasejpresentsjthejhistoryjofjBoeingjandjitsjexternaljcompetitivejenvir
onment;jthejevolutionjofjitsjstrategy,jgovernance,jandjethicsjpractices;jandjitsjrelationshipjwithjU.S
.jregulatorsjduringjthejdesignjandjcertificationjofjthej737jMAX.j Whatjorganizationaljandjenvironm
entaljfactorsjhadjcontributedjtojBoeing’sjdevelopmentjofjanjapparentlyjunsafejaircraft?j Whatjcoul
djBoeing,jgovernmentjregulators,jandjitsjairlinejcustomers

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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

,andjotherjstakeholdersjdojtojpreventjunsafejaircraftjfromjbeingjmanufacturedjandjsoldjinjthejfuture?


TEACHINGjTIP:jWHEREjTOjUSEjTHEjCASEjINjTHEjCOURSE

Thisjcasejisjintegrative,jinjthatjitjdrawsjonjmanyjthemesjinjthejtext.j Instructorsjmayjusejitjatjthejendj
ofjthejcoursejasjajfinal,jintegrativejassignment,jorjwithjthejstudyjofjChaptersj5jandj6j(EthicaljReason
ingjandjOrganizationaljEthics)jorjChapterj7j(BusinessjGovernmentjRelations).




TEACHINGjTIP:jVIDEO

InstructorsjmayjwishjtojintroducejthejclassjdiscussionjwithjajshortjvideojofjthejLionjAirjflight.jThejf
irstj4jminutesjofjthisj9-
minutejsegmentjdepictsjthejfataljflightjofjLionjAirj610,jinjwhichjajjournalistjridesjinjajsimulatorjwit
hjanjexperiencedj737jpilotjwhojrecreatesjthejflightjfromjthejperspectivejofjthejcockpit.j (Thejremain
derjofjthejclipjdepictsjthejEthiopianjAirlinesjcrashjandjisjnotjrelevantjtojthejcase.)j Viewersjmayjfindj
thejvideojclipjdisturbing,jevenjterrifying.

www.youtube.com/watch?v=OxPsxmU_ocI

TEACHINGjTIP:jSTARTINGjAjCASEjDISCUSSION

Onejwasjtojstartjajclassjdiscussionjofjthisjcasejisjtojaskjstudentsjtojhuddlejinjgroupsjofj2jtoj4.jGivejth
emj5jminutesjtojwritejonejorjtwojsentencesjbeginningjwith:j―OnejreasonjthatjBoeingjproducedjanj
unsafejaircraftjwas…‖j Theyjshouldjthenjhavejajrepresentativejwritejtheirjsentence(s)jonjthejboardjo
rjsharejonjajcommonjelectronicjplatform.jThejinstructorjmayjthenjcategorizejthejanswersjandjusejth
emjasjajjumpingjoffjpointjforjtakingjupjvariousjissuesjraisedjbyjthejdiscussionjquestions.

Samplejanswers:j OnejreasonjthatjBoeingjproducedjanjunsafejaircraftjwas…

ThejculturejofjBoeingjhadjshiftedjfromjajfocusjonjengineeringjexcellencejtojajfocusjonjshareholderjr
eturns.j Thejcompany’sjcapabilitiesjforjaircraftjdesignjhadjdeteriorated.

ThejFAAjdelegatedjmostjofjthejworkjofjcertifyingjthej737jMAXjtojBoeingjitself,jsojthejregulatorsjw
erejunablejtojexercisejeffectivejoversight.

BoeingjwasjunderjtremendousjpressurejbecausejofjcompetitionjfromjAirbus,jsojtheyjdecidedjtojupd
atejthej737jratherjthanjdesignjanjall-
newjplane.j Thisjcreatedjanjunsolvablejengineeringjproblem,jbecausejthejbiggerjmorejfuel-
efficientjenginesjtheyjwantedjtojusejdidjnotjfitjunderjthejwingsjofj737.




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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

,Boeing’sjtopjexecutivesjandjdirectorsjemphasizedjshareholderjreturnsjoverjengineeringjexcellence
.j Costjandjefficiencyjwerejmorejimportantjtojthemjthanjthejqualityjofjthejaircraft.

Boeingjhadjspentjsojmuchjmoneyjonjstockjbuybacksjandjshareholderjdividendsjthatjtheyjdidjnotjha
vejenoughjleftjoverjtojinvestjproperlyjinjR&Djandjaircraftjengineering.

Boeingjhadjajcodejofjethicsjbutjdidjnotjseemjtojenforcejit.j Itjignoredjworrisomejsurveyjresultsjandjd
idjnotjlistenjtojseriesjwarningsjfromjseniorjmanagers.

ManufacturingjofjthejMAXjwasjrushed,jpossiblyjleadingjtojdefectsjinjaircraftjdeliveredjtojcustomer
s.

ThejFAAjbasicallyjallowedjBoeingjtojcertifyjthejsafetyjofjitsjownjplane.

Boeing’sjstrategyjwasjtojacquirejotherjmanufacturersj(e.g.,jMcDonnelljDouglas)jandjkeepjupdatin
gjtheirjoldjmodels,jratherjthanjtojdesignjnewjaircraft.j Overjthejyears,jtheyjlostjmuchjofjtheirjenginee
ringjknow-how.

InstructorjTip:j ―C‖jstudentsjmayjanswerjthisjquestionjbyjdescribingjcharacteristicsjofjthejunsafejpl
anejorjitsjdesignjflaws.j Forjexample,j―OnejreasonjBoeingjproducedjanjunsafejaircraftjwasjrelyingj
onjjustjonejsensor.‖j ―A‖jstudentsjwilljunderstandjthejdistinctionjbetweenjthejproblemjitselfj(anjuns
afejdesign)jandjthejcausejofjthejproblemj(e.g.,jorganizationaljculture,jregulatoryjfailures,jexternaljc
ompetition).j ThejinstructorjmayjneedjtojpointjoutjthatjthejquestionjasksjforjthejreasonjBoeingjprod
ucedjanjunsafejplane,jnotjthejreasonjthejplanejwasjunsafe.j(Questionj1,jbelow,jaddressesjthejreason(
s)jthejplanejwasjunsafe.)


DiscussionjQuestionsjandjAnswers


1. WhatjwerejthejimmediatejtechnicaljcausesjofjthejcrashjofjLionjAirjFlightj610?

Basedjonjinformationjinjthejcase,jstudentsjwilljconclude:jAjfaultyjanglejofjattackjsensorjfedjerro
neousjdatajintojthejplane’sjcomputers,jtriggeringjthejmaneuveringjcharacteristicsjaugmentationjsys
tem,jorjMCAS.j Thejplane’sjcomputerjreliedjonjonlyjonejsensorjatjajtimej(ajsinglejpointjofjfailure),j
andjthejaircraftjdidjnotjhavejanjactivejcockpitjalertjforjdisagreementjbetweenjthejtwojsensors.j Once
jMCASjwasjactivated,jitjrepeatedlyjforcedjthejnosejofjthejplanejdown,jdestabilizingjthejaircraft.j Th
ejLionjAirjpilotsjhadjnotjbeenjtrainedjonjajsimulator,jwerejunawarejofjMCASjandjitsjcapabilities,ja
ndjtheirjflightjmanualjdidjnotjincludejrelevantjinformation.j Eventually,jthejpilotsjlostjcontroljofjthej
aircraftjandjitjcrashedjnosejdownjintojthejsea,jkillingjalljonjboard.

2. DescribejthejculturejofjthejBoeingjorganization.j Howjdidjthejcompany’sjculturejaffectjt
hejdevelopmentjandjproductionjofjthej737jMAX?




3
©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

, Thejtextbookjdefinesjcorporatejculturejasj―ajblendjofjideas,jcustoms,jtraditionaljpractices,jcompa
nyjrules,jandjsharedjmeaningsjthatjhelpjdefinejnormaljbehaviorjforjeveryonejwhojworksjatjajcomp
any‖j(Chapterj6).jThejtextbookjpointsjoutjthatjweakjethicaljculturesjcanjfosterjunethicaljbehavior.j
Tojhelpjstudentsjunpackjthisjquestion,jthejinstructorjmayjwishjtojelaboratejbyjpointingjoutjthatjcor
poratejorjorganizationaljculturejisjoftenjunderstoodjasjhavingjthreejlayers:jbasicjassumptions,jvalu
esjandjnorms,jandjartifactsj(Schein,j2004;jChatman,j2014).
Basicjassumptionsjarejdeeplyjheldjvaluesjaboutjthejorganization’sjpurposejandjreasonjforjexistence
.j Normsjarejunwrittenjexpectationsjforjappropriatejbehaviorjthatjreflectjthesejvalues.jArtifactsjarejv
isiblejorganizationaljpracticesjthatjcommunicatejvalues,jsuchjasjrituals,jstories,jandjlanguage.

Onejwayjtojorganizejthisjdiscussionjisjtojpromptjstudentsjtojfilljinjajboardjgrid,jshowingjhowjthesejt
hreejlayersjofjBoeing’sjculturejchangedjfollowingjthejcompany’sjacquisitionjofjMcDonnelljDougl
asj(1997).

Boeing’sjOrganizationaljCulturejBeforejandjAfterjthejAcquisitionjofjMcDonnelljDouglas

Level Past Present
BasicjAssumptions BoeingjisjajtrendsetterjinjaircraftjtechnolBoeingjisjanjaircraftjmanufacturer.
ogy.j Thejpurposejofjthejcompanyjisjtojde j Thejcompany’sjpurposejisjtojcrea
signjbetterjplanesjthatjflyjhigher,jfaster,jf
tejthejbestjvaluejforjitsjcustomersja
arther. ndjthejhighestjpossiblejreturnsjforj
itsjinvestors.
Shareholderjvaluejisjprioritized.
ValuesjandjNorms Corejvaluesjarejquality,jinnovation,jand Corejvaluesjarejefficiency,jprofitabi
jsafety.j Engineeringjexcellencejis lity,jandjlowjcost.jShareholderjvalue
valued.jInvestmentjinjresearchjandjdevel jisjprioritized.
opmentjisjprioritized.
Artifacts StoriesjaboutjWilliamjBoeing’sjattentio Commonjslogansjwerej―We’rejinj
njtojquality,jinnovation,jandjsafetyjwerej business‖jandj―We’rejmanagingj
partjofjthejcompany forjvalue.‖
folklore.j Thejcompanyjwasjdescribedja
sjanj―associationjofjengineers.‖


Summary:j Overjtime,jBoeingjculturejhadjshiftedjfromjajfocusjonjquality,jinnovation,jandjsafetyjt
ojajfocusjonjefficiency,jprofitability,jandjshareholderjvalue.j Thisjaffectedjthejdevelopmentjofjthej
737jMAX,jasjitjledjtojdecisionsjtojre-tooljanjoldjmodelj(thej737)jratherjdevelopjthanjajnew,jclean-
sheetjmodel,jtojkeepjcostsjdownjandjspeedjupjdeliveryjtojkeyjcustomers.j(ThejdecisionsjmadejbyjB
oeingjduringjthejdevelopmentjofjthejMAXjarejfurtherjexploredjinjthejresponsejtojQuestionj4,jbelo
w.)

3. DescribejthejethicsjpoliciesjandjpracticesjofjBoeing.j Whatjethicaljsafeguardsjwerejinjp
lacejtojpromotejsafety?j Evaluatejthejeffectivenessjofjthesejsafeguardsjduringjthejdevel
opmentjandjproductionjofjthej737jMAX.




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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.