Boeing's Grounding: A Deadly Blow to Business - Essay Sample

Introduction

No other event has affected the business of Boeing Corporation in recent years more than the grounding of its new model of jets following deadly crashes. In October 2018, a Boeing jet belonging to Lion Air, an Indonesian airline, crashed few minutes after take-off killing all the passengers and crew members on board. The crash raised fundamental questions about the safety standards of the new jets. The safety concerns for the plane manufacturer were even heightened in March 2019 following the deadly crash of a 737 Max 8 jet belonging Ethiopian Airlines. Consequently, many airline companies grounded their jets as cautionary measures, resulting in massive losses for Boeing. The scandal has adversely affected the business of Boeing, and the situation is expected to impact how stakeholders transact business with the company.

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Stakeholders

Airline Companies

The airline companies are the most critical stakeholders in the situation because they take the position of customers for Boeing products. Each year, Boeing makes several deliveries to different airline companies both in the United States and other parts of the world. Without the airline companies as customers, Boeing can be driven out of business as the sole purpose of the company is to manufacture planes and sell them to airline companies. When the Ethiopian Airlines crashed, 737 Max 8 jets were grounded; hence the plane manufacturer lost consumption of its product, which could spell doom for its business.

Government/Regulators

Government agencies have the responsibility to ensure that goods that are manufactured in the United States meet the safety standards required to protect the interest of the America public and other citizens. Especially, the Federal Administration Authority formulates rules and standards for the manufacture and operation of planes. Authorities are crucial because they punish violators of set aviation safety standards.

Customers of Airline Companies

Our customers the most affected by the low quality of safety standards of planes? During the last two accidents, more than 300 people died in the two accidents involving the Ethiopian and Indonesian airlines. What is at stake here is the lives of passengers. If travellers perceive a given model aircraft as unsafe, they are likely to shun it completely. In the case of such circumstances, the airline companies can cancel jet orders placed with Boeing or scale down their needs for jumbo jets such as 737 Max 8, eliminating the need for airlines to do business with Boeing.

Software Suppliers

Boeing manufacturer's planes using raw materials obtained from various suppliers. The party that supplied the software that operated the aircrafts' sensors is essential in the equation as the current situation arises out of their actions. High quality standards of software improve the safety standards of planes and vice versa.

Shareholders

Shareholders are the owners of Boeing Corporation who have entrusted certain persons to make decisions relating to sound management of the company. The shareholders are essential in the situation because their interests determine the actions of Boeing that are meant to generate profits and create value for the shareholders.

Stakeholders Attributes

The stakeholders such as Government, Airline customers/travellers, Airline companies, Boeing shareholders and suppliers have various attributes that make them have the power and legitimacy to control the Boeing manufacturing companies.

The Government/Regulators/Federal Aviation Administration

The Government/ Federal Aviation Administration is the most critical stakeholder that has the power to control and allow all the companies to operate in a country. It is a stakeholder with the authority and legitimacy to regulate and oversee all civil aviation operating within the US and the operations and development of national Airspace system. As a result, they have a sole mandate to ensure that there is the safety of civil aviation. FAA has the power to ensure that all the customers or airline travellers are safe while travelling (Carroll & Buchholtz, 2017). At the same time, they can ban any airline or company manufacturing airline that risk the lives of its travellers and crews. FAA has a closer relationship with Boeing company. It ensures that Boeing installs and builds right visual and electronic aids that efficiently monitors and maintains quality air navigation facility. Furthermore, sustains other systems of the aircraft which are responsible for managing air traffic control and voice and data communication equipment, radar facilities, computer systems and other visual display facilities which are used at flight service stations. This, therefore, makes it a significant stakeholder responsible for ensuring that there is maximum airline safety.

Airline Customers/Travelers

Travellers are also critical stakeholders that are directly affected by the safety issue in the aircraft. They have the power to choose the kind of aircraft to use to travel. They also have the legal obligation to ensure they share their views far and wide about the situation. The customers should also discover any information that can increase their safety while using any aircraft. The customer should find someone within the company to find more information about what is going on with the Boeing planes.

Airline Companies

The current situation of Boeing 737 Max 8 jet affected Airline companies that buy and use it to ply travellers from one country to the next. Airline companies also have the power and rights to disown the claim for the cause of the accident and relate it to Boeing manufacturing company because the fault was from the control software (Carroll & Buchholtz, 2017). The airline companies can be willing to continue using Boeing 737 Max 8 jet, but when the customers or travellers are not ready to use it, they have to replace it with other kinds of airbuses. Regulators or FAA can also impose safety policies or standards that prevent the use of Boeing products.

Boeing Shareholders

Shareholders are the investors of a company. They have the power and legitimacy to stop financing the operations of the company when it is not profitable to them. Besides, they also have the authority to wind up the company when it risks the life of the people. The shareholders are also expected to relate with other stakeholders such as regulators and software suppliers to ensure they buy good airline software that does not risk the lives of travellers. The current situation of Boeing needs urgent responses of shareholders because their business can easily be driven out in the industry. They must engage other stakeholders in ensuring that they do not view the company negatively to lose customer loyalty.

Software Suppliers

The suppliers of Boeing are to ensure the company maintains high customer satisfaction and value of shareholders (Carroll & Buchholtz, 2017). It has the responsibility of supplying quality products that do not risk the lives of customers and also lower the reputation of airline companies using their products. It has the legitimacy to work closely with other stakeholders to improve efficacy and productivity of the design, manufacturing and administrative to ensure that all the stakeholders meet their interest. Based on the current situation of Boeing, the suppliers have the power to improve their software to ensure they do not have a reduction in their earnings.

Economic, Legal, Ethical and Philanthropic Responsibilities Boeing Owe Stakeholders

Economic Responsibility

Boeing manufacturing company owe the above stakeholders economical, legal, ethical and humanitarian responsibilities. The company must ensure that it generates sufficient revenue to the Government by paying both domestic and foreign taxes. Despite its current challenges, it must pay a fee to the Federal Government in time. To the software suppliers, Boeing must provide a market to the software suppliers by buying the software for use in their planes. As a result, it helps suppliers to receive high sales revenue which makes them generate high-profit margins at the end of every financial year. To the airline customers, it owes them safety responsibilities by ensuring that they do not lose their lives when travelling. Loss of life when travelling makes the country lose human capital which is significant for economic growth. The company also owe shareholders the responsibility of ensuring they maximize their profits and wealth. The shareholders meet their interest when Boeing is capable of paying them their dividends and also ensure that they do not lose their investment capital. Boeing company also owe Airline companies the responsibility of ensuring they have aircraft that can give the travellers the best travellers comfort and safety. They expect to get high quality product which cannot make them not to provide high quality aviation service.

Legal Responsibilities

Boeing company is also required by law to obey and observe all the regulations provided by the Federal Aviation Administration and other aviation regulators. They should comply with all legal policies and standards that the Government has put in place to regulate the Airline industry. It also must pay software suppliers for all the products or software they have provided to make the aircraft. Besides, they have a legal obligation to offer high quality aircraft and control software to airline companies that guarantees their travellers safety. To shareholders, they expect the company to use their finances in a manner that allow them to make huge profits. Finally, Boeing company has a duty of care to airline customers. It needs to take necessary care to ensure that it put measures and procedures that prevent airline customers from losing their lives unnecessarily due to their negligence.

Ethical Responsibilities

Ethically, Boeing company has a responsibility of protecting the environment. It owes the Government a duty of ensuring that it disposes of its waste products in a manner that does not pollute the environment. It is also ethical for Boeing to consider life first instead of profit. The company must not have allowed airline companies to use the aircraft control software after discovering it has some problems. Boing company is also required to pay the suppliers well to ensure they continue in business.

Philanthropic Responsibilities

These are responsibilities which the company voluntary provides to stakeholders. Boeing has a duty to participate in Government activities which are not imposed or required by the law (Von Schnurbein & Lock, 2016). It owes the community patriotic duty of paying school fees to needy students, employing local people, donating money to support some government activities such as building roads for the locals which both the Government, airline customers, shareholders and even airline travellers use. Finally providing free finances to support those who have involved in the airlines. These actions are to ensure the company have good relations with all the stakeholders including customers, suppliers and even local communities.

Conclusion

On the whole, Boeing's stakeholders include shareholders, airline companies, air travellers, software suppliers and the Government. The above stakeholders have various attributes that make the most important to Boeing Company. Boeing company also owe these stakeholders specific responsibilities which they are either required by law to fulfil or comply with. These responsibilities must be economical, ethical and philanthropic. To lift the company out of the current situation, Boeing's management must recall its delivered orders, demand more from software suppliers, and collaborate more closely with th...