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Unformatted text preview: Memo To: Professor Joan’gecgtt From: Mitsuhiro Hamakawa CC: Professor Christine Bauer-Ramazani
Date: December 10, 2004 Re: Ethics Memo for Mitsubishi Introduction The left front tire of a Mitsubishi truck came off in Japan. A family tragedy was caused by the tire. It turned out that
the tire was defective. The purpose of this memo is to describe the situation and the stakeholders, to state the ethical
dilemma and core ethical values, to argue the possible solutions, to discuss what Mitsubishi actually did and what
Mitsubishi should have done, and to express my opinion. The situation While a truck driver was his Mitsubishi truck on a city road on January 11“” 2002, one of the tires suddenly
came off and hit a family. It injured two children and killed their mother. Car accidents caused by a defective tire
had occurred before this accident Therefore, Mitsubishi had inspected its cars and trucks in private and already been
aware of this defect. Stakeholders Stakeholders are the people who were affected by this accident. There were six stakeholders in this accident. One
group of stakeholders was the victims, the family in this case, because they were accidentally injured by the defective
tire. The second group of stakeholders was the drivers and customers of Mitsubishi because they might have caused
such an accident unintentionally. The third group of stakeholders was employees of Mitsubishi because they would
work over time, have their pay reduced, or lose their jobs if their company lost trust from customers. The fourth
group of stakeholders was the investors of Mitsubishi because their stocks could decline, and they might lose their
proﬁts for the same reason as the employees’ case. The ﬁfth group of stakeholders was the suppliers of Mitsubishi
because the demand for parts would decline or vanish if Mitsubishi stock decreased or if Mitsubishi went bankrupt.
Finally, the relatives of all stakeholders, who are stated above, are also stakeholders. If the concemed parties ﬁom an
accident got injured or died, or if the concerned parties from their companies lost theirjobs, the relatives would grieve
as well as suffer from a monetary problem. Ethical dilemma An ethical dilemma is a situation in which we should choose right or wrong. On the one hand, if Mitsubishi had
published the defect, they should have repaired it, and it would have cost a lot of money. In addition, the publication
might ruin Mitsubishi’s reputation, and its future proceeds might decline. HOWever, nobody will get injured. On the
other hand, if Mitsubishi had concealed the defect, it would not cost them anything, and Mitsubishi would maintain
their reputation and proﬁt. However, somebody might get injured, ﬁnd the defect, and sue Mitsubishi for criminal
neglect. Core ethical values There are six core ethical values: trustworthiness, respect, caring, civic virtue and citizenship,justice and fairness, and
responsibility. In this dilemma, trustworthiness, caring, and responsibility were involved. Customers and drivers
trust that Mitsubishi produces reliable automobiles. In this case, Mitsubishi was aﬁaid that they would lose its
trustworthiness by publishing the defect. In addition, Mitsubishi should care about users by providing alter-sales
service. Mitsubishi should have recalled and repaired the defective automobiles if they had been aware of the defect.
Furthermore, responsibility has two meanings in this dilemma. One is that Mitsubishi had to inform drivers and
customers of the information about the defect. Another is that it should have recalled the tires and repaired the defect. The possible solutions Mitsubishi could choose four possible solutions:
Mitsubishi publishes the defect, and then they recall its automobiles and repair ﬂre defect.
0 Mitsubishi publishes the defect, but they do not recall its automobiles and do not repair them.
0 Mitsubishi does not publish the defect, ignores the defective automobiles, and repairs the defect on new cars. 0 Mitsubishi does not publish the defect and continues to manufacture its automobiles with defective tires. What Mitsubishi actually did More than 50 accidents caused by defective tires had already occurred before 1994, so Mitsubishi inspected secretly
and found the defect in 1994. However, Mitsubishi had been concealing the defect and manufacturing automobiles
with defective tires for ten years. Although dozens of car accidents caused by the defective tires happened ﬁom 1994
to 2004, Mitsubishi did not publish the defect. On January 11"“ 2002, the defective tire caused three casualties;
nevertheless, Mitsubishi continued to hide the defect. Aﬂzer this accident, the police searched Mitsubishi car factories
for two years and found the defect in the second search on January 27"“ 2004. Finally, Mitsubishi confessed to
knowing about the defect. ‘ What Mitsubishi should have done Mitsubishi should have published the defect, repaired it, and stopped manufacturing possibly defective automobiles
because it is the right thing to do according to the following core ethical values: caring and responsibility. Also, if
Mitsubishi concealed the defect, and it came out later, it would cost much more than if Mitsubishi published the
defect right after they found the defect; at worst, Mitsubishi might go bankrupt. My feeling about this situation Mitsubishi is one of the four largest Japanese ﬁnancial conglomerates, and all my family cars are Mitsubishis.
Japanese employees for Mitsubishi are trustworthy, so I also believed in Mitsubishi. Therefore, I am disappointed in
the company. Although Mitsubishi has been inspecting all kinds of Mitsubishi automobiles for free, I, as well as a lot
of Japanese, do not trust the company anymore, even though its employees are still trustworthy. Defects might occur
in any other companies, but I believe that quick reaction to the defect is important to prevent customers ﬁom leaving.
Rather, customers left the company because of concealing the defect. I hope that other companies learn from this
lesson and never cause this kind of trouble. In the future, I will act as I think Mitsubishi should have if I run into the
same kind of ethical dilemma. Conclusion Anyone can cause an ethical dilemma anytime, and it will affect the stakeholders. The best solution is that people
having a dilemma choose an option according to the core ethical values. Therefore, Mitsubishi should have taken
actions according to core ethical values, recalled its tires, and repaired them. 0 Page 2 ...
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This note was uploaded on 01/11/2012 for the course ACCOUNTING FI504 taught by Professor Joe during the Spring '10 term at Keller Graduate School of Management.
- Spring '10