BMGT 496 – Project 1: News Event

Purpose:  In the first assignment, you have the opportunity to see ethics in play in a real world scenario.  You will read the case scenario and answers the questions in a narrative format. Use headings for each question.  Headings are not the question.  You are required to use the course material to support your reasoning and the conclusions made.

Outcomes met by completing this project:

1. identify ethical issues that arise in domestic and global business environments using an understanding of ethical concepts and of legal and business principles

Instructions

Step 1:  Write the Introduction

Create the introductory paragraph.  The introductory paragraph is the first paragraph of the paper and tells a reader the main points covered in the paper.

Step 2: 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.

Sources:

Boudette, N. E. (2017, October 17).  Kobe Steel scandal is now subject of Justice Department inquiry.  Retrieved from https://www.nytimes.com/2017/10/17/business/kobe-steel-justice-department.html

Cheong, S. (2017, October 30). The Kobe Steel scandal flows through the entire supply chain.  Insight Factset.  Retrieved from https://insight.factset.com/the-kobe-steel-scandal-flows-through-the-entire-supply-chain

Kobe Steel says under investigation over data tampering scandal (2018, April 25).  Retrieved fromhttps://www.reuters.com/article/us-kobe-steel-probe/kobe-steel-says-under-investigation-over-data-tampering-scandal-idUSKBN1HW0BI

Report on Kobe Steel Group’s misconduct (2018, March 6).  Kobe Steel Ltd.  Retrieved fromhttp://www.kobelco.co.jp/english/releases/files/20180306_en.pdf

Shane, D. (2018, March 6).  Kobe Steel chief is resigning over fake data scandal.  CNN Money.  Retrieved from https://money.cnn.com/2018/03/06/news/companies/kobe-steel-ceo-resigns-japan/index.html

Soble, J. (2017, October 13).  Kobe Steel scandal grows to include subsidiaries.  The New York Times.  Retrieved from https://www.nytimes.com/2017/10/13/business/kobe-steel-scandal.html

Soble, J., and Boudette, N. E. (2017, October 10).  Kobe Steel’s falsified data is another blow to Japan’s reputation.  The New York Times.  Retrieved fromhttps://www.nytimes.com/2017/10/10/business/kobe-steel-japan.html

Step 3:  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.

Step 4:  Review the Paper

Read the paper to ensure all required elements are present.  Use the grading rubric to ensure that you gain the most points possible for this assignment.

Proofread the paper for spelling and grammatical issues, and third person writing.

· Read the paper aloud as a first measure;

· Use the spell and grammar check in Word as a second measure;

· Have someone who has excellent English skills proofread the paper;

Step 5:  Submit the paper in the Assignment Folder (The assignment submitted to the Assignment Folder will be considered the student’s final product and therefore ready for grading by the instructor.  It is incumbent upon the student to verify the assignment is the correct submission.  No exceptions will be considered by the instructor).

How to Set Up the Paper

Create a Word or Rich Text Format (RTF) document that is double-spaced, 12-point font.  The final product will be between 4-6 pages in length excluding the title page and reference page.  Write clearly and concisely.

Completing the Paper

In order to complete this project, you will want to first read the module, Learn How to Support What You Write, as this assignment requires you to use the course material and research to support what you write.  Also,

· Read and use the grading rubric while completing the exercise to ensure all requirements are met that will lead to the highest possible grade.

· Third person writing is required.  Third person means that there are no words such as “I, me, my, we, or us” (first person writing), nor is there use of “you or your” (second person writing).  If uncertain how to write in the third person, view this link:  http://www.quickanddirtytips.com/education/grammar/first-second-and-third-person.

· Contractions are not used in business writing, so do not use them.

· Paraphrase and do not use direct quotation marks.  Paraphrase means you do not use more than four consecutive words from a source document.  Instead put a passage from a source document into your own words and attribute the passage to the source document.  Not using direct quotation marks means that there should be no passages with quotation marks and instead the source material is paraphrased as stated above.  Note that a reference within a reference list cannot exist without an associated in-text citation and vice versa.   You may not use more than four consecutive words from a source document, as doing so would require direct quotation marks.  Changing words from a passage does not exclude the passage from having quotation marks.   If more than four consecutive words are used from source documents, this material will not be included in the grade and could lead to allegations of academic dishonesty.

· You are expected to use the case scenarios and weekly course material to develop the analysis and support the reasoning.   There should be a robust use of the course material and case scenario facts.  Material used from a source document must be cited and referenced.  A reference within a reference list cannot exist without an associated in-text citation and vice versa.  Changing words from a passage does not exclude the passage from having quotation marks.   If more than four consecutive words are used from source documents, this material will not be included in the grade and could lead to allegations of academic dishonesty.

· Use in-text citations and provide a reference list that contains the reference associated with each in-text citation.

· The only book you may use is the course eBook.

Business Ethics. (2016). Title of Chapter, Washington, D.C.: The Saylor Foundation     https://resources.saylor.org/wwwresources/archived/site/textbooks/The%20Business%20Ethics%20Workshop.pdf

This project only allows you to use the course material plus two additional articles related to Kobe Steel.  You may not use a dictionary or Wikipedia.

· Provide the page or paragraph number in every in-text citation presented.  If the eBook does not have pages, provide the chapter title and topic heading.

Self-Plagiarism: Self-plagiarism is the act of reusing significant, identical or nearly identical portions of one’s own work.  You cannot re-use any portion of a paper or other graded work that was submitted to another class even if you are retaking this course.   You also will not reuse any portion of previously submitted work in this class.  A zero will be assigned to the assignment if self-plagiarized.  Faculty do not have the discretion to accept self-plagiarized work.