Ethical Dilemma in American Airlines

Ethical Dilemma in American Airlines

Introduction

American Airline has been a golden player in the aviation industry of United States of America for good 90 years. Founded in 1934, the company is a subsidiary of the well-known AMR. However, despite the company's popular reputation and brand value, it recently filed for bankruptcy due to insufficient operational funds. This action of American Airlines resulted in major employee firing activities, including the deduction of Senior Managers from 14 to 10 people. In order to understand and evaluate the reasons for this serious setback, it is necessary to understand several operational activities and factors in depth.

Discussion

Stock Price Focus in Publically Traded Company

A Publically Traded Company is a limited liability organization which offers ownership to the general public through sales of stocks, shares, bonds and loans. Extensive research has been done on the actions of Publically Traded Company's Executives focusing on short term results and stock price booms. However, this short termism leads towards institutional corruption. It is not necessary that the manager's decisions would be completely unlawful; however, these decisions and actions would require major unethical activities in order to be successful (Salter, 2012).

Where few of United States' biggest corporations have lived up to the long term commitments made, private sectors' commitment towards long term results has weakened. This has happened as both corporate managers and executives of investment funds have been focused on financial performance over the upcoming quarters, rather than with the industrious quest for justifiable business performance. As mentioned earlier, the unethical behaviors related with senior management's short term stock prices focus include:

The Tempting Enticement of Financial Incentives

The management generally chooses to break industrial norms and laws when there is a financial incentive related to their activities. Majority of United States' Corporations provide Senior Managers with incentives on achievement of stock booms and corporate sales. These incentives in turn tempt the managers to give higher priority to current financial scenarios rather than the company's survivability and growth on the long term.

The major conflict of interest occurs between the public's interests who are in turn the owners of the company and management's interests who are trying to gain maximum incentives, in a short period of time. The unethical part comes in when the management betrays their job requirements and responsibilities for personal interests rather than their ethical liability towards the public.

Lesser Investments in Organizational Development

Many a times, a firm's managers choose not to invest into departments such as Research & Development because the investments would incur enormous costs. However, the major reason behind this is to maximize the current Earning per Share of the Organization or to at least keep it stable. This laziness in investing keeps the stock prices higher in the present period of time; however, the Organization suffers on the longer term because developmental departments ensure the survivability chances of the Organization with respect to competition.

Unfair Employee Firing

Many records can be found in the past regarding huge organizations including eleven of the most popular public limited companies ...