Lockheed Company's Unethical Behavior and Recovery | Free Essay Example

Lockheed Company’s Unethical Behavior and Recovery

Words: 1499
Topic: Business & Economics
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Abstract

This paper attempts to analyze the case study of Lockheed Martin, a large weapon and aircraft manufacturing company that was involved in a series of unethical behaviors throughout the 1950s and 1980s. The paper follows the company’s development into a powerful domestic and international competitor forced to function in a corrupt environment where bribery was the primary way to ensure business success and gain new customers. The essay also reviews the company’s need to establish the code of ethics under and enforce it during the 1980s.

Company Description and Background

Before turning into a huge corporation with global reach, Lockheed Martin went through multiple stages of development, most of which faced periods of failure and fallback. Lockheed Martin has nearly a century long history and is one of the world’s leading manufacturers and sellers of weapon, aircraft, surveillance devices, and detection systems. Its story began during the World War I when the Loughead brothers first began to build airplanes and sell them to hobbyists (Terris, 2013).

They operated within an emerging niche of the military weaponry market, but their airplanes were not created in time to become involved in the war (Terris, 2013). Over the decades, the company perfected its models to eventually build the Lockheed Vega, one of the first legendary airplanes of the time and the leading machine in the market. Before the start of the Second World War, the company has experienced several ups and downs; however the need for its products grew rapidly as the United States became the partakers in the global conflict, and as a result, the company expanded very fast increasing its productive capacity and the number of employees by approximately 500% (Terris, 2013).

During the post-war years, as the demand for the company’s production dropped, the company has focused on its new mission to lead the domestic weaponry market through the Cold War and withstand the global competition. Unfortunately, the latter task was not easy to fulfill, and the company found itself facing a new challenge of finding clients and buyers willing to purchase their product that was not the best in the global market.

Unorthodox” Practices

Attempting to approach potential clients, the marketers of Lockheed failed to promote their aircraft and turned to the so-called “unorthodox” practices. Unable to take over the stronger and larger competitors, Lockheed had to find alternative ways to push their production. Since the Lockheed airplanes were rejected in the domestic market, the company addressed the foreign buyers in such countries as Indonesia, Japan, The Netherlands, Italy, and Saudi Arabia.

The company’s marketers approached the customers through the series of illegal connections and activities selling the Starfighter airplanes. Besides, some of the contracts with the foreign government were facilitated through bribes that were not recognized as illegal practices in the 1950s and 1960s (Terris, 2013). That way, while the native buyers purchased only a few hundreds of the airplanes, the clients from abroad bought several thousands of Starfighters. In other words, the shady strategy of the Lockheed marketers paid off and benefited the company saving it from a major disaster and possible bankruptcy.

A similar situation occurred when the company decided to enter the jumbo jet market. Forced to compete with two powerful manufacturers and their much more superior models, the DC-10 and Boeing 747, Lockheed lost the battle for the domestic market that was not big enough to support too many competitors. As a result, the company, once again, found itself fishing for the clients in the overseas markets. Lockheed was highly motivated to sell their jumbo jet model called L-1011 as its development took a lot of investment and needed to pay off (Terris, 2013).

The Japanese market became one of the main targets of Lockheed and its vice-chairman Carl Kotchian. This leader managed to change the mind of the leaders of the largest Japanese airlines and make them switch from the DC model they were inclined to purchase. The tool that helped Kotchian to push his aircraft in Japan was active bribery (Terris, 2013). All in all, he managed to sell 20 jets which made him a hero of marketing at Lockheed.

Corrupt Environment and Unconscious Unethical Behaviors

The illegal activities surfaced later and became a cause of a massive scandal. In fact, the similar behaviors of the other aircraft manufacturers were revealed as well; however, the case of Lockheed became the illustration of unethical competition and the synonym of bribery and corruption (Terris, 2013). Two senior executives of the company were forced to resign to their surprise. The leaders did not feel as if they breached any serious rules and did that much damage.

In the case study, Terris (2013) asks a question whether or not it is unethical to rely on bribery in the field that is already corrupt and where this kind of behavior is the only way to compete for all the participants. Overall, the author notes that the parties that were hurt by the unethical behavior of Lockheed were their competitors who were involved in the same corrupt activities all along. Any other style of behavior would not have been productive in the complicated system with tight entanglements between the corporations, the governments, and the middlemen who facilitated the transactions (Terris, 2013).

Discussing the activities and choices of Lockheed throughout the 1950s and 1970s, one is to keep in mind that their character should be evaluated from the point of view of general ethics and morals, but not from the perspective of any particular field or market and the habits common within it. That way, bribery might have been a norm and the only way to achieve a positive result for a business at that time, but bribery as a concept is unethical.

Another example of unethical behavior was the scandal that recently occurred at Volkswagen when the car manufacturer decided to install software that would cheat during emission tests of the vehicles and generate the false data showing that the cars were less harmful to the environment. The reason for this action was the company’s pursuit of a higher position in the market. Overall, this practice did not endanger the lives of the drivers and passengers in the cars. It simply made them purchase vehicles that produce more NOx than they were thought to.

Just like in the Lockheed case, no one was hurt but the competing manufacturers, yet, the behavior is still considered highly unethical because it is based on lies and cheating. Moreover, Bazerman and Tenbrunsel (2011) note that committing unethical deeds business executives often do not think of their behavior as a breach of morals simply because they view it as “purely a business decision rather than an ethical one” (para. 3). As a result, unethical behaviors occur unconsciously as they are not outlined as such in any business codes.

The DII

Struggling to recover from too many corrupt projects that endangered the future of the company, Lockheed, along with the other leaders of the competing businesses within the defense industry decided to create a pact called Defense Industry Initiative (DII). This initiative concerned the principles of conduct and ethics and was accepted in 1986. Its main objective was to remove the ethical tension from the industry uniting all the competitors under a promise to play fairly (Terris, 2013). The new policy increased the accountability of the companies and obliged them to enforce ethical management from within and share their most successful practices with one another.

The DII made Lockheed to develop and put into practice its own organizational code of ethics as a necessity to identify the wrongdoings and prevent the association of the whole company with the misdeeds of particular rule breakers (Terris, 2013). Naturally, the new standards were disobeyed almost right away as after the Lockheed Martin merger, the company became involved in another overseas bribery scandal which forced it to reevaluate its code of conduct and become especially thorough in order to win back the clients from the Pentagon.

Dilbert to the Rescue

The leadership of Lockheed Martin faced the urgent need to strengthen the ethical behaviors of the employees as lectures had not proved effective. As a result, the CEO Augustine encouraged the people in charge of the company’s ethics program to think outside the box and apply new practices to defeat the cynical attitude of the workers. As a result, the managers came up with the comic strip about Dilbert and Dogbert that addressed the most common workplace issues using the beloved characters and humor to appeal to the workers. Further, to make the ethics standards even more acceptable and accessible, the company launched a tabletop game specifically developed to help the players address various ethical challenges. This interactive approach also involved the characters from Dilbert comics strip turning the game into a fun-based learning activity.

Reference List

Bazerman, M. H., & Tenbrusel, A. E. (2011). Ethical Breakdowns. Web.

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