Boeing's Unethical Practices
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Case Details:
Case Code : BECG037
Case Length : 12 Pages
Period : 1997 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Boeing
Industry : Aerospace
Countries : USA
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Code of Ethics at Boeing
Over the years along with a strong focus on engineering excellence, Boeing focused on setting and following high standards of ethics across all its business units. In 2002, Boeing's Board of Directors (BoD) comprised of 11 directors out of whom 9 were independent directors. Boeing also had a comprehensive code of ethics (Refer Exhibit I).
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To oversee the implementation of the ethical code, the BoD appointed an Ethics and Business Conduct Committee. The committee comprised of the company chairman, CEO, chief operating officer, presidents and vice presidents of Boeing's business units.
The committee formulated policies and procedures related to ethics and it also oversaw the implementation of ethics program across all Boeing units (Refer Table I for the objectives of Ethics Program). The committee conducted companywide training programs to increase awareness among employees about Boeing values and code of ethics. It was mandatory for all employees to participate once every year in such a program...
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Accounting Lapses
Allegations of ethical lapses at Boeing made headlines in the media in late 1990s. In late 1997, a class action suit was filed against Boeing for its alleged violation of the federal securities laws.
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The plaintiffs alleged that Boeing had intentionally suppressed information about its manufacturing problems, which would have adversely affected the share price of the company during the first and second quarter of 1997, (Being's financial year ended in December) when merger talks with McDonnell Douglas were in progress.
In order to analyze its own manufacturing problems, Boeing constituted a special internal team in May 1997 and the team's conclusion was - "Our production system is broken." Instead of informing shareholders about its manufacturing problems, Boeing decided to withhold the information until the merger with McDonnell Douglas was completed in August 1997... |
Excerpts Contd... >>
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