Al Henderson
MKT 370
Case Study 2-4 Airbus

1. In each of the cases described who benefited and who suffers from the alleged ethical and legal lapses of Airbus? Competitors like Boeing benefited in the short term due to their Airbus lapses, but in the cases who was the winners and losers are as followed. In the Kuwaiti Kickbacks the one who gained from the benefit was Kuwait Airways Corporation (KAC) Al Mishari, and ALAFCO’S El Fekih Airbus for the first few planes purchased alone with Airbus who also suffered, because in the end they were the one who lost the deal. Both Airbus and Boeing competed for Kuwait Airways Corporation order. KAC choose 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. Indian Ink Rajiv Gandhi benefited and his Indian Airlines Mishari and Airbus for the first few planes purchased associated and of course Airbus Ind. Airbus also suffered in this case as well Mishari’s plans to bypass the formal deal when the Indian Government has declined the government approval by forming ALAFCO has purchase 43 Airbus planes worth $2 billion. In 1984, Indian Airlines (IA) had pad a deposit for 12 of Boeing 757s and in 1986, IA ordered 19 Airbus A320s. Although Boeing offered to supply 35 of its 757s with a discount of $5 million per plane, IA refused the deal. Mounties and Banks Karlheinz Schreiber Airbus Senior benefited, because Airbus denied paying off the VP in France, some people in Shell company Syrian officials which are the subsidiary of the International Aircraft Leasing. Who suffered was by Air Canada as it took a long time for foreign affairs, and former transport minister when the investigation took place. In 1998, Airbus wins 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 he was not sentenced. In 2001, Karlheinz Schreiber who was the middleman between Brian and Airbus was arrested, but in 1988 the case was re- investigated. In the Syrian Scandals Airbus benefited because the purchase was Mounties and banks made for $240 million. Syrian Air suffered in this case because it had incurred a big financial lost. This is the only case of Airbus that led to convictions consequently Syrian air had experience big finance losses. Who suffers from Airbus lapses in ethics are Airbus because of the bad reputation, The Canadian Government because the people will lose their trust in them, the middle man because he is involved in the corruption, and other airlines and state government who purchase and made large payments to Airbus.
2. How should the public relations staff at Airbus respond to the article appearing in the Economist, the Guardian, and Rueters News? The staff at Airbus should respond in order to maintain its public relation to the market and the general public. Airbus should ensure that they develop a strategy that shows how the company is improving in management aspects. They also should make sure with the guarantee that the image has been cleaned in order for the company to have better appearance. It all boils down to it they want to be ethical and make not as much, or be unethical and make a lot of money.
3. What steps might Boeing take to defend itself from this sort of competition? Boeing should develop a strategy on how to deal with its competitors. Make certain that all the aircraft that they build have quality and value in price. They also should be transparent in all their business deals in addition to prevent unfair dealings. Proceed to develop a more economical and advance aircraft, which is more cost effective, faster, and resourceful. Uses the US Government to coercive influence decision makers of buyers (purchase of aircraft for exchange of US services). They also need to use spy intelligent methods to obtain information of Airbus lapses, in order to threaten the purchaser of disclosing the unethical deals. The U S Government also should step up and help Boeing win some of these contracts as well.
4. Do you think that Boeing and Airbus behave differently in marketing their aircraft around the globe? How and why? Boeing main objective to market its aircraft by coming to the table with low bids to get the business, while Airbus gives out bribes and kickbacks in order to get the deal for their aircrafts. Since Airbus used corruption to get its bids and the enticement was just too good for the airlines and governments to turn down, and that’s why they were able to get all those contracts.
5. Had France adopted the OECD convention on bribery ahead of these transactions, would the firm’s behavior have differed? Why? The behavior would have been different because it would have eliminated the middleman, and establish agents with ethical standards. They should have improved the technology and performances, alone with creating a good image and brand building for the company. If France had adopted the OECD earlier these middlemen would not have had resort to bribes Syrian Air into buying Airbus planes.