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Case: Ethics and Airbus

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yen nguyen

on 18 December 2014

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Transcript of Case: Ethics and Airbus

Airbus
is an aircraft manufacturing division of Airbus Group (formerly European Aeronautic Defence and Space Company)
Based in Blagnac, France, a suburb of Toulouse, with production and manufacturing facilities mainly in France, Germany, Spain and the United Kingdom.

Introduction of Airbus Company
Summary of the cases
Answers to the questions

Case 2-4
Ethics and Airbus

Introduction
Introduction
of
Company
Content
Question 1: In each of the cases who benefits and who suffers from the alleged ethical and legal lapses of Airbus?
Class: IB2012C- group 3
:
1. Trần Thị Hồng Nhung
2. Nguyễn Thị Loan
3. Phan Thị Xuân
4. Nguyễn Thái Ngọc
5. Nguyễn Thị Nhã Yến
6. Nguyễn Thị Khánh Linh
Summary of the cases
In 1997, Sabena approved an order of 17 Airbus A320s, which it did not need.

Boeing and Airbus compete against each other, even by offering bribes.

The NSA found that Airbus offered bribes to a Saudi official to get contract in modernizing Saudi Arabian Airlines' fleet
Kuwaiti Kickback?
Both Boeing and Airbus competed for Kuwait Airways Corporation's order.

KAC chose Airbus but it seemed like Boeing would be chosen, even when Boeing offered $100 million cheaper package.

KAC's chairman, Ahmed al Mishari was involved in the corruption.


India Ink
Mounties and Banks
Syrian Scandals
Airbus lobbies to relax anti-bribery rules
- In 1984, IA had pad a deposit for 12 Boeing757s.
- In 1986, IA ordered 19 Airbus A320s.
- Although Boeing offered to supply 35 its 757s with a discount of $5 million per plane, IA refused.
- In 1988, Airbus win Boeing to get the order of 34 aircraft to Air Canada.
- There was an investigation to find out who was behind that bribery in 1993.
- After 3 years, RCMP found out that: former prime minister, Brian Mulroney was involved. However, Brian was not sentenced.
- In 2001, Karlheinz Schreiber who was a middlemen between Brian and Airbus was arrested. The case in 1988 was re-investigated.
- This is only one case of Airbus led to convictions.
- Consequently, Syrianair had experienced "big fiance loss".
Difference between Boeing & Airbus Marketing
BOEING
:
Competitive price and quality & influence power of US government.

Reason:

1. Long history in the market.

2. Big customer based, achieve cost efficiency.

3.Many countries relied on U.S Government.
AIRBUS:

Offer high " commission" to middleman and politicians

Reason:

- Middleman is able to influence or even make decision for the state politicians.

Question 5 : Had France had adopted the OECD convention on bribery ahead of these transactions, would the firm's behaviors differed? Why?

The firms would have behaved in many different ways.
Question 4: Do you think that Boeing and Airbus behave differently in marketing their aircrafts around the globe? How and why?
- Airbus gives out bribes and kickbacks to get orders

- Boeing often comes in at low bid

=> result is Airbus gets contracts .

Question 5: Suggestions

-Eliminating middleman

-Establishing agents with standardized
minimal

-Improving the technology and performance

-Creating a good image and brand building

Different behaviors of the firm
-Airbus will have to toe the line in all its international business

-Airbus's reputation and scandal in the Air Cannada could have been advoied

-Airbus would have to report to the ethic committee in all international

-No reason to attack Airbus's business practices using middlemen and lobbyist

-Airbus sales dropped badly and lost millions of dollars.

=>Airbus will always be the second successful airlines after Boeing.



Question 3 : What steps might Boeing take to defend itself from this sort of competition ?
• Ensure All the Aircraft is build with quality and value for price.

• Transparent in all the business deal and prevent unfair dealing.

• Develop more advance aircraft which is more efficient, faster and reliable.

• Uses US Government to coercive influence decision making of buyers (purchases of aircraft for exchange of US services)

• Uses spy intelligence methods to obtain information of Airbus lapses and use the info to threaten the purchaser of disclosing the unethical deals.

• Uses GATT to come up with the OECD convention on anti-bribery.
Question 3 : What steps might Boeing take to defend itself from this sort of competition ?
Respond in order to maintain its public relation to the market as well as to the general public.
Ensure that Airbus has developed a strategy that shows how the company is improving in respect to management aspects.
Ensure that the picture has been cleaned. In order to have the image of the company changed.
Staff at Airbus should
Question 2: How should the public relations staff at Airbus respond to the articles appearing in The Economist, The Guardian and Reuters News?
Develop a strategy on how to deal with the competition.
- ECGD had proposed exporters had to disclose the identifies of middlemen.
- Airbus and other big companies against ECGD's idea.
References

http://www.forbes.com/2006/05/23/unsolicited-advice-advertising-cx_meb_0524boeing.html

http://www.reuters.com/article/2014/09/04/us-airbus-group-orders-idUSKBN0GZ0VX20140904

http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing#Subsidies
http://maivang.nld.com.vn/thoi-su-quoc-te/nhung-chuyen-bay-dem-cua-airbus-149146.htm
Difference between Boeing & Airbus Marketing
1.Airbus -> bad reputation.

2.The Canadian government -> people lost their trust on them.

3.The middlemen-> involve in corruption.

4.Other airlines and state governments -> purchase and large payments made to Airbus
Who suffers from Airbus lapses in ethics
for your listening
Full transcript