Mitsubishi’s Unethical Act:
Mitsubishi is a Japanese automobile car manufacturing company venturing in multiple industries. Mitsubishi has been in recent news about the automobile scandal involved in. Because of the scandal involvement, the current president Tetsuro Aikawa is forced to step down from his position. Japan’s two largest automobile manufacturers, namely Mitsubishi and Suzuki were involved in the scandal. Both manufacturers are under scrutiny for using illegal software to test fuel efficiency after the German manufacturer Volkswagen was also held under suspicion for the same (for using an illegal software to increase its mileage). It was reported that Mitsubishi’s sales were declining after it first accepted that it falsified its data for increasing mileage in four of its models.
Some of these violations impact the public perceptions and loyalty towards organization involved. Mitsubishi lost a good number of its customers in Japan as well as outside the country because the news spread to the rest of the world. This meant that less Mitsubishi vehicles would be purchased by consumers due to the uncertainties brought about by the testing software in use. High-end vehicles sales were significantly affected by the ordeal to an extent the company reduced its production rate to avoid losses. At present, the company is regaining its market share but it has spent a lot of capital in re-building the image that was damaged some years back. Thus, it is engaging in more promotional activities to woo clients to continue buying their products as well as clearing the air on the stalemate. Some of the vehicles in the production line that were deemed to fall short of specification were reexamined to facilitate quality.
This data manipulation took place in four models of Mitsubishi and they were also in its minicars and some versions of the Pajero and RVR sports cars. All the falsified cars were sold and used only in Japan. Both the automobile manufacturers violated the designated testing protocols and the following are the violations made:
- Resistance testing should be performed externally in outdoors but the manufacturers performed internally.
- The resistance for all the components should be tested on a whole but the firms performed individually and added them together to showcase the greater resistance achieved.
Because of the reported scandal, the stock price of Suzuki fell down by 9.4% in Tokyo after an earlier drop of 15%. However, contrastingly, Mitsubishi’s stocks rose by 4% since last year.
Management Concept Related To:
The company’s behavior is related to the concept of unethical behavior of an organization. Employees value the firm and its reputation to be of utmost priority. Because of the unethical behavior of the firm, all its stakeholders are affected, namely external and internal. In this case, internal stakeholders are employees, board of directors and external stakeholders are suppliers, customers, and stockholders. Employees are considered to be the primary stakeholders because they are the group of people who will be laid off in case of loss of reputation. A firm’s value is not only to increase profits on a yearly basis but also to create a reputation, improve customer satisfaction, brand awareness, and increase the return on equity for its shareholders.
The related business costs due to ethical issues are serious. As the gravity of ethical issue increases, business costs also increase. In this case, as the gravity of an ethical issue is greater, the business related costs are higher. In this case, the costs are employee attrition rate, losing customers, investors, and other strategic partners. In order to promote ethics in an organization, the firm should take necessary steps like rewarding the people following ethical behaviors, and conducting training programs for the employees and the management to illustrate the importance of unethical action.
There are diverse roles that were neglected by the institution attributed to this case. First, quality management seemed to be at the lower edge in the sense that managers concentrated on the volume of sales they made within a particular period. This would mean that pressure was amounted on employees to produce as many units as possible. This led to deliberate mismanagement of testing activities, an action that would later result in serious problems. It is also an indication of accountability and responsibility nature of leaders in the business entity. At this point, there is a need to input quality systems that will be checked both internally and externally by players in the industry. This will guarantee consumers that they access quality products that will serve them for a long time. By doing this, the firm is assured of making profit as well as increasing customer traffic into their business premises.
Upon reading different articles, an important takeaway is that, firms should never involve in an unethical behavior. Though the prime goal of an organization is to increase its value, which everyone assumes to be profit. I feel that increasing value is creating customer satisfaction and delivering quality products. In this case, though there was a management pressure to speed up the development cycle and improve the fuel economy, the president or the board of directors should have followed other efficient methods to achieve the results.
Secondly, the two manufactures should not have engaged in such an unethical act as they were aware of the fact that a German manufacturer, Volkswagen, had been in a similar scandal with dire consequences. The management should not allow the president to simply step down from the position but rather charge him for involving in such an unethical act.
I find that organizations, especially Mitsubishi, should be more vigilant to counteract the negative image that is prevalent in the market. This is to prevent further damage into the sales that are already on a declining trend. To keep the organization safe from unethical dealings, the board of directors should be concerned and determined to pursue social ethics by engaging employees in an integrity program. This program is geared to raise the bar for managerial and social ethics amongst employees. Employees’ behaviors should be restricted to the standards on which they will be judged. The program should be carried out in a consistent manner to ensure that at any one time, the organization is able to track employees’ behaviors. This significantly affects efficiency and effective service delivery at individual and entity levels.
Finally, the key most takeaway is that no organization can be let go scot-free upon involving in an unethical act. Any such unethical involvement might cause the firm to lose its reputation and share price.