Business Ethics & Values Case Study: United Airlines Wrongdoing In 2017

MBA – Ethics & Values Case Study

Case #1:

United Airlines Wrongdoing

In 2017, two security officers from United Airlines forcibly removed a passenger off an overbooked united flight. A video footage of a bloodied passenger went viral all over the internet showing a 69 – year-old David Dao’s head smacking against an arm rest during the altercation with united securities. The video, taken by another passenger on board, showed Dao’s sweater hitching up to his chest to reveal his stomach and glasses askew as security dragged him flat down the aisle and off the flight.

Dao, who was traveling with his wife, refused to get off the plane to make room for crew members on the overbooked flight.

Without showing any genuine sympathy toward the humiliated passenger, United CEO Oscar Munoz only said “this is an upsetting event to all of us here at United”. Adding salt to the open wound, Munoz had called Dao “disruptive and belligerent” in a letter to employees.

Dao’s lawyer Thomas Demetrio who later settled with United for undisclosed amount of damage said “for a long time, United has bullied us. We need United to treat us with respect.”

Following the settlement, United announced that it changed its removal policy and it will no longer ask law enforcement officers to remove customers from flights unless it is a matter of safety and security. A second new guideline also was implemented where United crew members seeking last minute seats would have to make other arrangements instead of unseating passengers.

See video


Case Analysis:

  • What are the relevant facts in this case?
  • What are the ethical issues?
  • Who are the primary stakeholders in this case?
  • What was United alternative solution?
  • Why Dao did not leave peacefully?
  • Did Dao violated the Airline rules and regulations?
  • Could United resolve the issue differently?
  • Was it unethical issue or bad judgment?


Case #2

Starbucks and the Practice of Ethical Leadership

One year after becoming CEO of Starbucks, Kevin Johnson faced an ethical issue when two black men were arrested in a Philadelphia Starbucks. Both men sat down in Starbucks store  without ordering anything. The store manager was annoyed that they used the store without buying any Starbucks items. He immediately asked them to leave. Both men refused to leave claiming that they were waiting for a third friend. The manager called the police they were instantly arrested. See video

In his apology statement shortly after the arrests, Johnson said, “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently. The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did before the incident.

Case Analysis:

  • What are the relevant facts in this case?
  • Who is involved?
  • Did the manger violate Starbucks policy?
  • What the manger should have done differently?
  • Why both men did not leave peacefully?
  • Was it really a racist case or bad judgement?
  • How was the reaction of CEO?
  • Was the CEO genuine in his reaction or it was public relations move?
  • What are the ethical issues in this case?



To Ship or Not to Ship

Rachel works as a Quality Assurance Engineer at a large electronics company. She is responsible for the final testing of her company’s computer servers.

Rachel’s company has a contract with another company which makes the chips. The business model for this product is to release a new generation server approximately every six months, meaning Rachel has a limited timeframe to conduct her Quality Control tests.

Because there is such a short amount of time between the release of each next new product, the Quality and Assurance department cannot perform every possible test on the servers to ensure they are defect free. Rachel will not ship a product if there is any possibility that the server could malfunction and cause physical harm to the customer. However, she will ship a product that has a  higher likelihood of failure resulting in data loss for the customer, because she knows that if she doesn’t, her company’s competitor will.

  • Is this an ethical way to conduct business?
  • How Rachel can determine when to ship or not to ship?
  • Who is at fault here? Rachel or her company?
  • Is it an integrity breach or business as usual?
  • Should Rachel stand up and confront her boss about this unethical shipment?
  • Does competition justify her shipping decision?
  • Is it a fair practice not to apply quality assurance in this case?
  • Why not?



Covering a Bank Overdraft

Jon Corzine, CEO of MF Global, was accused by US government of breaking the law in  2015. The government charged him with “directing one of his managers, Edith O’Brien, to transfer $175 millions of customer money to cover a bank overdraft that threatened to sink  the company. However, Corzine’s lawyer claims his client “never directed Ms. O’Brien or anyone else regarding which account should be used to cure the overdrafts.” He added that  his client did not explicitly asked O’Brien to do so nor he was informed of that specific transaction. Corzine’s lawyer explained that his client did not intend to use the money permanently, rather it was a temporarily transfer for a short period of time. O’Brien said that she had to do something to please her boss and rescue the company from falling down financially. She did not dispute the fact that Corzine never explicitly ordered her to take the funds from customer accounts. She admitted that she knew what she was doing was wrong, but she had no choice because customer accounts were “the only place where we had the

$175 million” needed to cover the overdraft. MF Global has subsequently declared bankruptcy.

Case Analysis

  • What the factual issue in this case?
  • Did Corzine act appropriately to save his company?
  • How would you characterize his behavior ethically?
  • Did O’Brien followed a managerial order or intentionally broke the law?
  • Covering the overdraft is an internal transaction that no one should care about it – no?
  • Is it ethical to use the money temporarily and return it later?
  • What other choices did Corzine or O’Brien have?
  • Is it a bad judgement or unethical behavior?



Sharing Medical Information

Marcus Paul is a computer engineer who has recently developed a web application to help users keep track of their medical information, doctor’s appointments, and prescriptions.

The application stores sensitive medical information including drug prescriptions, lab results, etc. As the developer, Marcus and his company have access to this information. In 2016, John Trau, the Director of the Marketing Department, requested Marcus to supply him with customer-specific information so he can better target ads and app suggestions to the users. Marcus understands that he is part of a company, but also feels that the privacy of the app users should be protected. Marcus refused to supply Trau with the medical information, claiming that he should be responsible to those who use his technology. Trau insisted that there is no company policy preventing him from using data to  improve external communications and market the company’s services and products. The top management agreed with Trau and directed Marcus to submit his data. Marcus refused again. The company fired Marcus for not sharing the medical information with the Marketing Department.

Case Analysis

  • What the factual issues in this case?
  • Does Marcus have the right to refuse management decision?
  • Who would be responsible if data was used for marketing purpose?
  • Why users should care if company use their medical information?
  • Why Marcus feels that he is responsible for the data?
  • Is this an ethical use of information or a violation of the user’s privacy?

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