B.F. Goodrich Partial SIMAC

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School

California State University, Long Beach *

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Course

400

Subject

Accounting

Date

Feb 20, 2024

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pdf

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Uploaded by jdd1201

Jennifer Diaz CBA 400 T/TH 11:00 02/01/2024 B.F. Goodrich Partial SIMAC B.F. Goodrich, a manufacturer of vehicle parts, had the obligation to design, test, and manufacture aircraft brakes for the A7-D aircraft, which was a new lightweight airplane the U.S. Air Force was developing. The managers promised that they would create a brake that would weigh less than 106 pounds, contain no more than 4 small braking disks or rotors, and be able to repeatedly stop the aircraft within specified distance. This contract would produce large income for the company so the managers were eager to de liver a “qualified” brake that would pass all the tests the U.S. Air Force required for A7-D no matter what. An experienced engineer, John Warren, was given the task to design the brake, while a newer engineer, Searle Lawson, was to find material to use for the brake and make sure it was qualified. Lawson discovered flaws in the design and told Warren about it, but Warren insisted there were no errors and he had to make it work. Lawson advised the project manager of the design flaws, but the manager dismissed his findings and told him to pass the test anyway, ignoring the safety risks. The ethical issue was that if they falsified the reports, it would financially benefit the company, but ran the risk of causing injuries or death to the pilots flying these airplanes. Shareholders and owners who had invested stock in the company had the opportunity to make a high return on their investment but were now at risk of losing money because of the company’s unethical misconduct. Employees were at risk of losing their jobs if they did not follow the manager’s instructions , so they felt pressure to do as they were told even if they personally believed that it was morally wrong to do so. Employees may feel that their personal moral beliefs are not being valued or taken into consideration by the company. Their work ethic and productivity would be poor, and they would be unsatisfied with the company. Employees may also be tempted to commit fraud in the future if they find out that the company is doing it too. B.F. Goodrich could lose the trust of current and potential customers because of their unethical decision. If customers learn that the company has falsified reports, they may lose trust in the company and decide to work with a different company. Prospective customers will seek out other companies who they can trust. Management must look closely at the costs and benefits. They face the question if this short-term profit is worth risking their reputation as a company. They will also have to decide whether the short-term profits they would make from the false qualification outweighs the risk of injuries to the pilots and the potential loss of customers’ trust in the long run, and if so, figure out how to gain customers’ trust back. The community is affected because B.F. Goodrich most likely employed the surrounding community locals and if they lost the contract, it would cause layoffs, which would create financial instability in the community. Future generations will learn from B.F. Goodrich’s actions and will lead to other companies in the future to evaluate the importance of safety over profits. Other stakeholders in this case could be prospective employees or companies who may have an interest in working with B.F. Goodrich, they may disagree with the ethical decision that was taken and may have doubts about working with them.

Vandivier was raised with the moral standard to tell the truth, so he felt that it would be morally wrong to falsify the report. But he also financial obligations toward himself and his family such as mortgage payments, which he would not be able to make if he told the truth because he would risk losing his job. So, he decided that his moral obligations to his family was greater than the moral obligation to tell the truth about the report. Lawson felt that he had a moral obligation to obey his employer, so he agreed to make the brake pass all the qualifying tests. When the test flights took place, both Vandivier and Lawson witnessed the brakes cause many near crashes when the pilots tried to land the plane. After seeing this, they both quit and notified the FBI of what had been going on. This was their way of dealing with their individual issues. B.F. Goodrich put profit above the safety of others, which led to a negative outcome. To deal with the corporate issues, B.F. Goodrich announced that it would be replacing the small brake with a larger five-disk brake at no extra charges to the U.S. When the truth got out about the falsified reports, the U.S. Department responded to a key systemic issue by changing the way it let companies test equipment in order to make fraudulent reports less likely.

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