Lockheed: Surviving Despite a Century of Industry Dominance - Essay Sample

Introduction

In the world we know today, the companies that have a story that dates back more than a century and still dominating the industry are few. Some companies have just been exceptional in the quality of the services that they are producing and hence that is the reason they still enjoy a good share of the market for over a century. However, Lockheed is one company that barely survived in the 1950s after the end of the Second World War; it means that many the demand for warplanes went down, at around 1956, Lockheed had produced a model known as the F-104 Starfighter. However, the demand for the model was low because the model was characterized by a mixture of new technology and old ones (Terris, 2013, p. 56). So the company was in a position where it could be closed because of the decrease in sales in the American market, the company officials decided to enter into unorthodox sales methods or what we call in modern language the unethical methods, intending to revive the company that was dying. Around the world, Lockheed had a connection of middlemen and willing partners who had access to government officials in the foreign countries; these people were convincing in their governments to the extent that they could sway their government's decision to buy the planes from Lockheed.

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Lockheed, on the other hand, had enough money to splash on the government officials and all the middlemen to convince them to help their governments buy Lockheed's Starfighter. In the Netherlands, Lockheed managed to convince and get the favor of Prince Bernhardt, who had married into the Dutch royal family. The prince also who received payments through a variety of willing partners and intermediaries. In Japan, Lockheed worked closely with Yoshio Kodama, who was a secret agent in the Japanese government. Indonesia was also not left behind, Lockheed managed to make contributions to Widows and Orphans Fund in association with the Indonesian Air Force. In Italy, Lockheed managed to compromise the politicians through their political parties. The same happened in Saudi Arabia where Lockheed was one of the major supporters of the Saudi Arabian President. In the end, Lockheed managed to sell more than 2000 starfighters outside the United States of America. The United States Air Force only bought 300 starfighters. Through these unethical practices is how they managed to avoid a quite inevitable downfall.

Apart from that, Lockheed participated in similar unethical conduct in the 1960s. They entered into the Jumbo jet production known as the Tri-Star, Boeing was already in the market, and they were producing the best in the industry at the time. There were many competitors in this new market, and the United States government had made an early observation, so Lockheed failed to get the support of the United States government and the domestic market in general. So Lockheed had to go back to their unorthodox method to save the company from bankruptcy because they had already invested too much in the project. They had to sell Tri-Star to get back on track. Lockheed was forced to look abroad as the united states of American market had failed them. The company's vice-chairman, Carl Kotchian went to Japan to try and get a deal that would save the company (Terris, 2013, p. 59). He used the help of Kadama Yoshio as before and managed to pour money into the Japanese politicians, they took the deal and decided to buy goods from Lockheed, and that is how they managed to bounce back to the track. After seventy days of transactions, Carl Kotchian went back to Lockheed as a hero, a hero that saved the company from extinction through the unethical methods of bribery in foreign countries.

On the Issue of Overseas Bribes

What do I think about a condition where secret and back door deals are the way the game is played if everybody is on the same playing field? After Carl Kotchain was discovered, he wanted to show that what they had done in Japan was okay. It was clear that in the United States that bribery was not illegal as long as it would happen outside the United States to convince the outside world to purchase American goods and services. So in the 1950s, it was legal to bribe officials from other countries to buy your America products as long as it was not in American soil or on American companies. So Carl Kotchain was trying to show that what he was doing was not unethical. Also, in the 1950s and 1960s, Lockheed did not have a have an ethical code of conduct program.

However, according to my view, I think that Lockheed broke the ethical code of conduct by trying to beat the competition through bribing foreign officials. What if all the companies followed the same truck, what will the world market look like? It will be a market based on who has more money to bribe and not on who is producing the best and most quality products. So Lockheed broke the code of conduct by bribing foreign governments to buy their products. Also, it should not matter where the bribery took place; it does not matter whether it is in the United States or outside; ethics apply to all countries around the world. The companies that were affected in this case were from the United States; all the competitors were from the United States, so all of them were affected by the bribery. Apart from that, going through the back door kills competition and innovation. People will be producing substandard products because they have enough money to bribe the market to buy their products.

Why Was the DII So Important?

So why was the DII so crucial to the eventual achievement of Lockheed Martin's ethics program? The American defensive industry, including Lockheed and all the other major players in the industry, made a pact. Moreover, this pacts was the Defense Industry Initiative on Business Ethics and Conduct (DII). According to this pact, all the players within this industry would follow the code of ethics because all the other players had promised to do the same. It was essential to succeed in Lockheed Martin's ethics program because it incorporated the bigger portion of the industry. They had six essential principles which were, the contractors swore to follow to codes of ethics, to reassure internal broadcasting of violations, to share ethics best practices with their competitors, to train employees in the codes, to implement systems to monitor compliance and to be answerable to the public.

Norman Augustine's and Dilbert's Contribution

Norman Augustine' contributed a lot to the merger that saw the birth of the new Lockheed Martins. Augustine who was the CEO of Lockheed from 1996, was very strict to the code of conduct, he was a man who had a passion for personal integrity. However, Augustine never contended with Lockheed Martin's ethics program; he felt that it was all about fulfilling the needs of the federal government. He told the lawyer in control of the program by the name Carol Marshall, propose something better. An idea came to her on how Dilbert's comical bulletins were all over the walls and had gotten the attention of most of the employees. The employees focused more on the comics than they focused on the code of ethics program. So they decided to use comic strips or the Dilbert's strips to pass across the message on ethics to employees. That is how Norman Augustine and Dilbert made their contribution to the ethical program.

Conclusion

In conclusion therefore, it is quite clear that Lockheed has a big history in the corporate world. It is quite evident that there is a lot that we can learn from this history for a company that survived through unethical deals after the world wars. One of the major takeaways is that ethics is not restricted to boundaries, it is not restricted to the United States only, it is a matter that is global, so companies have to adhere to the code of ethics and play in a fair play ground.

References

Terris, D. (2013). Ethics at Work: Creating Virtue at an American Corporation. Lebanon, NH: UPNE.