From 2018 to 2019, we have witnessed two crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302, resulting in 346 deaths. Both crashed jets were Boeing 737 Max, a minor upgrade of the best-selling fleet Boeing’s 737 designed in the 1960s. The crashes were attributed to the malfunction of the maneuvering characteristics augmentation system (MCAS). It was a stopgap measure designed to compensate for an anomaly that resulted from the mismatch between the outdated 737 platform and a larger new engine. Boeing could save billions of dollars in engineering costs by basing the Max off of the existing platform.
The 737 Max was reportedly rushed to the market in the face of the existential threat from the A320neo. Boeing’s 737 and Airbus’ A320 are the two main players in the massively profitable market for narrow-body passenger jets. Both manufacturers are locked in a race to make their airplanes cheaper for airlines to operate.
To fix the anomaly would trigger additional manufacturing costs, regulatory approval, and loss of orders. Instead, Boeing deployed representatives around the world to shore up confidence in the Max after the first Lion Air crash. Between November 2018 and March 2019, Boeing announced new orders from multiple airlines, and it even managed to talk Lion Air out of canceling its $5 billion order.
After the Ethiopian Airlines crash, regulators around the world began to ground the airplane. The United States didn’t follow suit, however, and was the last country to ground 737 Max. Boeing CEO Dennis Muilenburg reportedly called President Trump to assure him that the 737 Max was safe to fly. The company was also reportedly a major political force in Washington and a large US government contractor. It spent about $15 million on lobbying in 2018 and took in over $23 billion in government contracts in the 2017 (the second largest government contractor in the US).
a. What assumptions of capitalism has been manifested in the 737 Max case? Pick any three assumptions of capitalism discussed in the course and explain how they help to understand the case. (500 words max)
b. How are the debates around CSR, shareholders/stakeholder, short-term/long-term, and corporate power reflected in this case? Pick any two debates discussed in the course and describe in detail how they are relevant to this case. (750 words max)
c. Could something like this happen again? What measures can be taken to prevent it? Use measures/approaches discussed in the course to support your argument. (500 words max)
• If a student wants to point any comments from any source, the source must be clearly pointed on the paper as per APA format.