In theory, entrepreneurs and corporations will always do what is desirable and right to their customers and stakeholders. Many companies focus on existing principles, values, and laws to ensure that their processes are admirable. Ethical businesses also implement and promote appropriate action plans and initiatives that can maximize customer satisfaction. However, the real world has continued to record numerous cases of malpractices and dilemmas. This is because corporations and individuals fail to act ethically. When such predicaments occur, organizational leaders have to make difficult decisions or choices to restore the confidence of different customers. In the recent past, ethical issues or misbehaviors have become common in the corporate world. A good example of such scandals is an event that took place in April 2017. This paper gives a detailed analysis of this dilemma that involved United Continental Holdings, Inc. The discussion goes further to analyze the impacts of this incident and how it influenced the organization’s relationship with its key stakeholders.
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Ethical Dilemma Summary
United Continental Holdings, Inc. is one of the largest airline holding companies in the United States. It is currently headquartered in Chicago, Illinois. The corporation operates and owns the famous United Airlines, Inc (simply called United). This airline is one of the most profitable in the global aviation industry. It competes directly with Delta Air Lines and American Airlines. Its presence and operations across the Asia-Pacific region are what make this corporation successful. Unfortunately, the company has been grappling with an ethical dilemma after an unimaginable event occurred in April 2017 (McGirt). This scandal occurred when a video went viral showing a passenger (by the name David Dao) being forced out of an overbooked plane belonging to this organization.
According to many stakeholders and customers who watched to video, the removal of this passenger was bloody and forcible. Passengers across the world were disgusted and shocked by this incident. Within less than six months, the leaked video had been viewed by over five billion people across the globe (Blumenthal). This act was detestable and against the ethical code of conduct for airline operators and companies (Martin). The leaders and managers at United Airlines realized that the dilemma was serious and had the potential to disorient the company’s performance and affect profitability. Within a short period, the company recorded reduced revenues and lost most of its customers. This was a clear indication that this event had far-reaching consequences and implications.
As indicated earlier, this incident fueled protests across the globe. Many airline customers were disgusted because the act was unethical. They also believed that they were at risk of receiving similar treatment. As a result, they took to different social media platforms and networks to show their feelings about this occurrence. Following this incident, the chief executive officer (CEO) of United Airlines Inc. by the name of Oscar Munoz released an apology (Martin). He was sympathetic and indicated that such an event would never be repeated in the future. According to Blumenthal, this kind of pronouncement was received negatively by many people in the Asia-Pacific region and across the world.
Additionally, the CEO was keen to indicate that the passenger would be identified and re-accommodated. However, many individuals argued that such an apology was infuriating and uninspiring (Blumenthal). According to them, the company had acted unethically and inappropriately. Its leaders had also failed to take responsibility and address the issue effectively. This development affected the company’s performance and profitability within less than a week (Martin). This is a clear indication that the corporation’s response or reaction to the ethical dilemma was inadequate or incapable of restoring the confidence of its passengers.
Effects on Different Stakeholders: Position and Reaction
The operations of a given organization can affect the welfare of many stakeholders both indirectly and directly (Jamnik 87). Similarly, the occurrence of scandals or unethical practices can have negative implications for different customers, shareholders, and community members. The above incident was observed to have significant impacts on various stakeholders. The first group to be affected was the company’s customers or passengers. Their position was that the organization had acted indecently. It had also failed to honor and support the welfare and rights of one of its passengers. Consequently, many customers were unhappy and unwilling to use its services (Blumenthal). This was one of the reasons why the company recorded reduced revenues after the dilemma. This group’s position was that the airline had become impolite and incapable of meeting the needs of its passengers (Piacenza). These individuals reacted immediately by protesting and showing their anger. They posted their grievances on various social media networks.
The second category of stakeholders was that of employees. With United Airlines being one of the most admired corporations in the Asia-Pacific region, the scandal changed the situation forever. This was the case because many people were unhappy or unpleased with the services associated with this organization. Their position was that the corporation’s workers had behaved inappropriately and indecently. McGirt indicates that many passengers became skeptical and unwilling to relate positively with the airlines’ employees. They also went further to accuse the Chicago Department of Aviation’s officers of acting in an unethical manner. In terms of reaction, they argued that the department’s top leadership had to be reconstituted. Additionally, they asserted that it was appropriate for the officers to be fired or punished for the malpractice.
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The lawmakers in the United States are usually keen to promote and develop policies that foster values such as equality and integrity. This scandal was a clear indication that United Airlines, Inc. had failed to engage in ethical practice. As crucial stakeholders, different lawmakers in Washington grilled Munoz because the situation had been handled inefficiently. The U.S. Senate came up with a panel to examine the nature of this dilemma and give its way forward. The involvement of these stakeholders was a clear indication that the company had committed an unethical act (McGirt). The position of these lawmakers was that the immoral incident was capable of denying many people their liberties and freedoms. According to them, the airline company could have addressed the incident in a better manner and compensate the victim. Their reaction was that new laws were needed to prohibit similar events and punish airline companies that engaged in inappropriate behaviors.
Another important stakeholder in this matter was the Chicago Department of Aviation (CDA). Many passengers indicated that this agency had failed to develop a superior or powerful code of conduct to ensure that its employees acted ethically and treated all passengers with dignity. Following an investigation commissioned by this department, the officers who dragged the passenger were fired on 18 October 2017. This department’s position was that the misbehavior was inappropriate and against the outlined code of ethics. The decision to sack these officers would discourage other officers from engaging in similar malpractices. Several months after this scandal, the Aviation Department went a step further to reexamine the existing procedures and policies.
The main goal was to come up with new regulations to dictate the behaviors and actions of different employees (Sasso). By so doing, the department would win the trust of many people and ensure that such an event never occurred again. Martin acknowledges that the occurrence was a rare opportunity for the department to evaluate its performance or effectiveness and develop better strategies. The approach would ensure that it was prepared for various challenges facing the industry. This major stakeholder in this saga indicated that the officers had acted indecently. This was the reason why CDA reacted by proposing and implementing new regulations to prevent similar dilemmas (Jamnik 88). The expectation was that every employee in the department would act ethically and focus on the needs of different passengers.
The company’s shareholders were hit the most by this ethical dilemma. Within 2 days, the shares of United Continental Holdings, Inc. fell by more than 4 percent (Blumenthal). The situation worsened as many people became aware of this scandal. Martin indicates that the parent company’s market value dropped by over one billion US dollars in less than 48 hours. This was a clear indication that the event harmed the profitability of the company’s shareholders. The position of this group of stakeholders was that the company had to compensate the passenger appropriately. In terms of reaction, it was also necessary for the topmost leaders to act quickly, apologize, and restore the company’s image. This strategy would change the situation and make it easier for the corporation to achieve its potential.
The facts of this dilemma show that United Airlines, Inc. and its parent company (United Continental Holdings, Inc.) did not respond efficiently or ethically. To begin with, Oscar Munoz asserted that the organization was going to re-accommodate David Dao who had been forced out of a flight. This comment alone did not meet the threshold for an appropriate resolution strategy. Many people believed that United Airlines might have engaged in similar malpractices in the recent past (Blumenthal). This means that the mistreatment might not have been disclosed by the company. The good news was that the video had not been shared on social media by an unknown user. The decision to re-accommodate the individual was misinformed and wrong. It also failed to take into consideration the pain suffered by Dao.
A proper action plan should have focused on convincing measures such as compensating the individual and writing a formal letter of apology (Jamnik 89). The corporation must have gone a step further to assure every passenger that such an event was unethical and against the established code of ethics. Martin argues that the statement that the airline was going to re-accommodate the passenger was contemptible and untimely. This was the reason why many people and passengers across the globe used different social media platforms to show their displeasure with the company.
Another important issue to consider is that the Chicago Department of Aviation (CDA) fired all the officers involved in this detestable operation. According to this agency, every employee was expected to uphold the existing regulations and treat all clients equally and with dignity. This kind of malpractice is what forced the department to punish the individuals (Blumenthal). I believe that this move was appropriate and was capable of deterring different workers or officers from engaging in similar malpractice. This initiative would eventually transform the image of the department and restore the trust of different customers. However, the agency failed to prosecute these offenders.
United Airlines Inc. had an opportunity to consider several responses and actions in an attempt to deal with this ethical dilemma. To begin with, the company could have initiated a strategy or plan to compensate the targeted passenger. This decision would have encouraged more people to support the corporation’s business model (Jamnik 92). The initiative would have increased the confidence of different passengers. The potential outcome would be increased profitability and performance. The action plan would have also attracted more passengers.
In collaboration with CDA, United Airlines, Inc. could have initiated proceedings in an attempt to prosecute every wrongdoer. Those responsible for this act would be punished and fined heavily. Consequently, the corporation would have addressed this dilemma from an ethical perspective. The probable consequence of this strategy is that the company would have discouraged different officers and employees from engaging in misbehaviors that can tarnish its image. More customers would also be happy to be associated with the corporation (Jamnik 92). Additionally, the level of conviction in the Chicago Aviation Department would have swelled immediately.
These two parties (United Airlines, Inc. and CDA) could have gone further to devise an evidence-based plan to prevent similar predicaments in the future. They should have also instituted or launched an inquiry to understand if similar malpractices had occurred before. Consequently, the trust of different stakeholders would have been restored. The approach would have also addressed most of the challenges that emerged after the event such as reduced stock price (Sasso). Additionally, more passengers would be happy to seek quality services from the company and achieve their potential. With the use of these alternative responses, the company would have dealt with the problems that emerged. The corporation would also be in a position to achieve its goals and support the changing needs of its passengers.
Piacenza reveals that the relationship between the company and its key stakeholders changed negatively after the scandal. The first group of stakeholders is comprised of the corporation’s passengers. After the dilemma, many customers were unhappy with the way one of their own had been treated. Consequently, they uploaded their United Airlines’ cut-up credit cards. This move discouraged many individuals from seeking services from the corporation (Sasso). The move led to reduced profits and performance within less than two days.
The company realized that its shareholders were unpleased with the situation. A strained relationship ensued after the airline’s market value declined by one billion US dollars within 48 hours (Sasso). Consequently, these shareholders compelled every top leader to deal with the situation and reclaim the organization’s image. However, the damage had already disoriented most of its processes and aspects. The declining stock price after the event encouraged many investors to establish new partnerships with companies that were promoting ethical practices and behaviors.
Following this ethical dilemma, the country’s lawmakers were keen to ensure that the company’s top leadership explained why such an event had taken place. This requirement resulted in a negative relationship between the corporation and these policymakers. The situation worsened after the organization failed to compensate the passenger. This is a clear indication that companies must always promote ethical principles and ensure that their employees stick to outlined codes of ethics (Jamnik 96). This practice can minimize similar conflicts and make it easier for different organizations to achieve their potential.
The above discussion has revealed that moral conduct or behavior must never be taken lightly by business corporations, employees, and entrepreneurs. This ethical dilemma recorded at United Airlines, Inc. was a clear indication that the organization was not keen to support or promote the needs of its passengers. The incident occurred at a time when the company was being celebrated by many people in the region and across the world. Unfortunately, the event transformed the situation within less than two days. The corporation stock price plummeted and many passengers expressed their displeasure on different social media platforms. The company’s approach or attempt to resolve the dilemma was below par. Although the Chicago Department of Aviation fired its officers for abusing David Dao, many analysts indicated that such a move was inefficient. This case should, therefore, be studied carefully by companies that engage or promote unethical practices. This kind of misbehavior can affect the performance of many corporations and make it hard for them to achieve their aims.
Blumenthal, Paul. “United Airlines Is No Angel.” Huffington Post, 2017, Web.
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Jamnik, Anton. “The Challenges of Business Ethics: The Basic Principles of Business Ethics – Ethical Codex in Business.” RIC, vol. 3, no. 3, 2017, pp. 85-100.
Martin, Hugo. “United Airlines’ Passenger-Dragging Incident Hasn’t Hurt the Bottom Line.” Los Angeles Times, 2017, Web.
McGirt, Ellen. “United Airlines: We Need to Talk.” Fortune, 2017, Web.
Piacenza, Joanna. “The United Scandal that Wasn’t.” Morning Consult, 2017, Web.
Sasso, Michael. “United Airlines Dodges U.S. Fine for Passenger-Dragging Scandal.” Bloomberg, 2017, Web.