Question

Read the Case Scenario

Kobe is one of the largest steelmakers in the world and the third largest steelmaker in Japan with more than 200 subsidiaries and 62 affiliated companies in Europe, Asia, and North America. On April 1, 2018, Kiroya Kawasaki stepped down as CEO and President of Kobe Steel in the wake of an investigation after the company admitting to widespread falsification of quality data about metal supplied to automobile companies such as Toyota, Honda, Mazda, Subaru, Nissan and Ford. Kobe Steel had been falsifying quality data for as many as 10 years and was aware the company was selling substandard metal (aluminum, copper and powdered steel) that was used in making molded part to companies around the world.  

Steel making is crucial to Japan’s economy and reputation for precision manufacturing providing a competitive edge over China and other countries that offer cheaper alternatives. However, this latest scandal continues to chip away at Japan’s already marred reputation. In 2016, Suzuki Motors and Mitsubishi admitted to cheating on test that exaggerated the fuel economy on its vehicles and Takata recalled tens of millions of vehicles for faulty airbags forcing the company into bankruptcy.  

Noted by a corporate watchdog, Japanese companies have been considered diligent about quality control but due to time, competitive pressure or other factors, when cheating occurred, it went unchecked. Also, Japanese companies tend to discourage thorough examination or criticism from employees or independent examiners.

At Kobe, employees were supposed to test products to ensure design standards outlined in specific customer contracts were met. Kobe Steel admitted that in some cases the test were not carried out and in several instances employees deliberately altered inspection certificates or recorded false results to make it appear tests were carried out to meet quality standards. Kobe also admitted that employees at several factories altered inspection certificates on copper and aluminum products between September 2016 and August 2017. The altered records made it appear that its products met manufacturing specification set by its customers.   Two known incidents of data falsification related to tensile strength, which is vital to the resistance of a material breaking under stress and powdered steel used in molded metal parts. Kobe sent the quality data to its customer who in turn approved shipment of the goods to customers.

After admitting to widespread tampering of quality data, authorities in Japan and the United States started investigating Kobe.   With at least five decades of data fraud, more than 600 customers were identified as affected by Kobe’s actions. Kobe Steel supplies manufacturing parts for automobiles, trains, aircrafts, electronics and other metal products. During the internal review, Kobe confirmed findings of data falsification stating that the problem spanned four percent of the company’s output between September 2016 and August 2017. Affected products included the following products that were shipped to approximately 200 companies:

• 19,300 tons of flat-rolled and extruded aluminum products
• 19,400 units of aluminum casting and forgings
• 2,200 tons of copper products

At the time, Kobe Steel declined to reveal the names of the companies affected but indicated it had not received any complaints from customers using the affected products.

In October of 2017, Kobe Steel established an Independent Investigation Committee (IIC) that reviewed the company’s shipments between September 2016 and August 2017. The company recognized misconduct that covered the act of fabricating inspection data that did not meet customer specifications and public standards and the shipping and delivering of products to customers as if the products conformed to customer specifications and public standards.

Findings of the report revealed the involvement of executive officers in the misconduct but stated the involvement was limited to the Aluminum and Copper Business. Two executive officers were aware of the misconduct but did not report the issue to their boss who was the Head of the Aluminum and Copper Business. Another executive who was aware of the misconduct made the decision as a basic policy to gradually eliminate the production and shipment of nonconforming products. He also decided to instruct staff to improve manufacturing processes and to stop accepting part of the orders.  

The report also showed former executive officers were directly involved with misconduct before becoming executive officers and failed to stop or correct the misconduct. The misconduct extended beyond the Aluminum and Copper Business to other division and Group companies.

Answer the Following

Answer the following requirements using both the course material and case scenario facts to support the reasoning and conclusions made. You may use additional research but are limited to two additional articles related to Kobe Steel. All source material must be cited and referenced.

• Identify and discuss the ethical issues related to the Kobe Steel scandal.
• Identify the stakeholders involved in the Kobe Steel scandal. Be thorough and specific.
• Discuss the potential implications of Kobe Steel’s actions on each stakeholder or stakeholder group. Give examples.
• Discuss how corporate culture played a role in Kobe Steel’s misconduct.
• Explain how a utilitarian would view the misconduct actions of Kobe Steel.
• Explain how Aristotle would view the actions of Kobe Steel’s employees.
• Using Kant’s ethical theory, explain how the new CEO should address the quality issues and unethical behavior of the employees to ease the minds of the company’s stakeholders.

Answer 1

1. Kobe Steel is one of Japan's third biggest steelmakers. In a rising outrage the organization concedes that they distorted information with a few vehicle organizations, for example, Nissan, Ford, Toyota, Honda, Mazda, and Subaru. This outrage is still on the ascent discharging new data this past fall. (2017) The outrage starts with the nature of the items being made. Kobe performed wellbeing examines looking the information on Copper and Aluminum quality just as strength for vehicles, airplanes, and rockets. Thus, a portion of the representatives of Kobe were avoiding the wellbeing checks and adulterating the information. The information was discharged to the organizations, and transported to clients. This stance security dangers since they are delivering items for transportation organizations. These items could fizzle, make fatalities, mishaps, and make significantly even more an outrage. Passage utilizes the aluminum for the hood of specific cars. It hasn't been discharged in the event that they have had security issues with it, anyway Ford is being careful of Kobe to ensure their organization. In an organization in Tokyo, a power plant had inappropriately affirmed copper funnelling made by Kobe. This is an intense organization in question in such a case that something turned out badly with the power plant, it could cause a blast, gas spill, and undermine the organization as well as regular people, and individuals around the organization. What's more, Kobe is dependable on the grounds that their organization should guarantee wellbeing checks and assurances. An inner examination is as of now continuing for Kobe Steel to discover precisely why the best possible affirmations and tests weren't being performed. The organization is confronting an incredible misfortune as of now. Their stocks have dropped 40% since the beginning of the misrepresented information embarrassment. The organization hasn't discharged various benefit they have lost, yet they have stood up to their joining forces organizations and are paying for review harms to the flying machines and vehicles. This embarrassment began off as a little one, just with copper and aluminum, and it in the long run worked into steel items also. The information was arranged to have positive reports on security checks. It has been said to go for more than ten years. Having organizations going additional miles and completion what Kobe steel ought to have done.

2. Partners, for this situation, are people influenced by Kobe Company Scandal. The principal partner is the Kobe Steel organization. This is on the grounds that it is the one punishable and it began the outrage. Partners at Kobe steel may incorporate Kobe CEO Hiroya Kawasaki and the employeeswho neglected to do information checks. The influenced organizations incorporate engine organizations like Toyota, Ford, Nissan, Mazda, Honda and Subaru (Report on Kobe Steel Group's offense, 2018 p.7). The customers of those organizations are likewise partners since they could be using faketransportation that might be dangerous to their wellbeing. The general population related with the influenced organizations are likewise partners. The Kobe Steel organization has been in task for roughly 112 years. This implies there are a few representatives and families relying upon the organization for survival salary. The outrage could make the organization shut down thus influencing numerous individuals.

3. One of the potential ramifications of Kobe Steel's Actions is that outrage ascending from it could harm its notoriety. The shoppers could lose trust in the organization, and this implies low profitability for the organization. Also, the organization may confront insolvency while paying for the harms brought about by the outrage subsequently its conclusion. On the off chance that the organization is in the end shut, employees and their families' pay will be influenced. For instance, if a representative who is the sole provider in his family loses his employment inferable from the organization conclusion, he won't probably deal with his family obviously. The items made via vehicle organizations may stall, cause mishaps, fatalities and harm the organization's notoriety. For example, the Ford organization utilizes aluminum to make certain autos (Cheong, 2017, passage 3). Selling vehicles made up from frail aluminum discolour the organization's notoriety, lose clients consequently prompting poor productivities. Besides, the general population utilizing such autos might be harmed by mishaps. Power plant organizations utilizing improperly approved copper channelling may likewise be influenced. On the off chance that the plant is at any blame, there could be a blast or gas spill. The organization may lose its properties, and the representatives may continue wounds or even kick the bucket. Further, the general population dwelling around the organization may likewise be influenced in that their properties possibly harmed and they may likewise get harmed or lose their lives all the while.

4. Corporate culture assumes an essential job in each effective business. Achievement in business isn't just about gathering objectives, vision, mission, methodologies and arrangements of the association. It additionally includes putting into thought moral and legitimate issues in universal business. Kobe Steel organization had a culture that set benefit over quality, and this prompted the offense. By endeavouring to augment the organization benefits, Kobe Steel Company made mischief itself and its clients by carrying on in a dishonest way. The organization culture made it choose to experience information check rapidly without making inquiries and producing the wellbeing check information. The organization disregarded the moral guidelines of wellbeing check and wound up breaking the resolutions with respect to the steel, copper and aluminum security check. The organization additionally ruptured contracts with various associations.

5.The utilitarian moral model hypothesizes that the rightness or misleading quality of an activity is reliant on its results. This suggests a moral activity is the one that makes the best great numerous individuals. For this situation, a moral activity is the one that accomplishes most extreme bliss for some individuals in the organization. On the off chance that activities advantage more individuals and satisfy them, at that point utilitarianism is accomplished. For this situation, the representatives were upbeat about not doing the execution examination and having less work to do while being paid for it. Be that as it may, the outcomes of their activities influenced in excess of 500 ventures contrarily. The Kobe Steel organization's notoriety was additionally harmed attributable to the outrage that ascended from the activities .Moreover, guiltless representatives were set in danger of losing their positions if the organization winds up being shut. The outcomes of the activities likewise put the regular folks in danger of mishaps and fatalities because of utilizing vehicles made up from aluminium whose quality and wellbeing was endangered. The activities made more damage than anything else numerous individuals, and they are in this way unscrupulous activities.

6. As indicated by Aristotle, moral ideals is a proclivity to act in the correct way. From this model, making the best choice is found out through training and propensity yet not through guidelines and sane reasoning. Aristotle concentrates on an individual's characteristics in moral or unscrupulous activity. For this situation, the laborers who did not complete security checks properly and faked information about well being and quality of organization items had exploitative character characteristics activities (Report on Kobe Steel Group's offense, 2018 p. 4). This is delineated in their childishness. They delighted in having less work despite the fact that they were completely paid. The representatives did what benefit them without taking a gander at the outcomes that may trail that.

7. Theory around the character attributes in a moral or non-moral way. The character attributes of these representatives who did not play out the correct security check and distorted information were not acting in a moral way which appears through with their self-centeredness, accomplishing something that just profited them in light of the fact that at the time they didn't have a craving for finishing their employment. They don't have legitimate working abilities, and hardworking attitude, and have no inspiration to succeed in light of the fact that they conveyed their organization to a gigantic embarrassment that has adversely influenced numerous individuals.