Honda: "Explosive" Airbags (2008-2014)

Company Overview

Honda Motor Company logo

Honda Motor Company, Ltd. was founded in 1946 and established on September 24, 1948 in Itaya-cho, Hamamatsu, Japan by a man named Soichiro Honda. The company started out making motorcycles that were cheap to make and operate. Citizens were in dire need of an inexpensive, fuel-efficient mode of transportation, which is how Honda grew to become so popular (History). Today, Honda’s reputation has not plunged. According to Edmunds.com, “Honda’s lineup runs the gamut,” meaning the company’s vehicles are the best of them all. Honda’s reputation has been outstanding for many years. Although Honda has been known as one of the best, there have been several issues with many of its vehicles for years now. Since 2008, Honda has been recalling vehicles for many different reasons (Honda Recalls). From problematic electrical circuits to engine and suspension failure to the most recent airbag recall; you name the issue, Honda has recalled it. After seeing all of these problems, the company doesn’t seem so reliable.

Controversy

Honda Motor Company, Ltd. has slowly been losing its phenomenal reputation due to many recent issues within the company and the vehicles themselves. One of Honda’s biggest issues that it is currently facing began several years ago in 2008. The company began recalling many of its vehicles due to faulty airbags in 2008. Recalls continued in 2009, 2010, 2011, and 2013. The most recent recall occurred in June 2014. Honda Motor uses airbags in their vehicles made by the Japanese company, Takata. It was discovered that “a defective inflator could explode in a crash, sending shards of its metal casing into the passenger compartment” (Jensen). Takata claimed that the propellant inside of the inflator was not properly prepared when they installed it and was too powerful. They suggested that all of the vehicles that used Takata’s airbags should be recalled. Honda was one of eight automakers caught up in the recalls of Takata airbags (Woodyard). One person on consumeraffairs.com gave a complaint about the company regarding the airbags in June. He said that recently, a friend of his went to a Honda dealership for a Honda recall regarding an airbag. He dropped off the car and the service department said it was repaired and safe to drive. Later that week, he stated that without warning, the airbag deployed, causing him to lose control and sustain an injury. Honda paid for further repairs done by another company and his friend no longer trusts Honda. Complaints like this cause customers to lose faith in the company and alter its reputation. On November 20, US Air Force Lieutenant Stephanie Erdman spoke up as a victim of this airbag issue. In 2013, Erdman was injured in one eye when a defective airbag deployed in her car. “When Takata airbags on the driver’s side of the car deployed during a crash, the force of the explosion shredded the metal housing of the airbag and sprayed shrapnel into the cab, tearing holes in the airbag and harming the driver” (CBS News). Erdman sustained severe injuries to her right eye when the shredded metal embedded in it. She has undergone several surgeries – and is not finished yet, and also stated that her vision “will never be the same.” This issue is very dangerous and can be very harmful to occupants of Honda’s vehicles. Honda has won many awards for the safety of their vehicles in the past, so this airbag issue is definitely not a good look for the company. 

Stakeholders

"Explosive" Airbag from a Honda vehicle

There were many people affected by Honda’s airbag issue. The main stakeholders, in this case, were management, customers, stockholders, employees, and suppliers. Management was faced with a big decision in terms of what to do about the airbag issue. Any decision they made would have an impact on someone. Customers were the main people affected by the airbag issue. Their safety and lives were at risk and sustaining an injury from the deployment of the defective airbags could cause a great deal of harm, as it did for Stephanie Erdman. Stockholders were affected because after this issue arose, a lot of people lost faith in Honda; therefore those who were invested in the company lost money at the time. Employees were affected because it became harder and harder to sell the vehicles with Takata airbags when customers knew they were at risk, causing a decrease in sales. Lastly, suppliers were affected because those dealerships that sold Honda vehicles lost customers, therefore decreasing their revenue at the time the defective airbags were announced and thereafter. Although there were many stakeholders affected by the airbag issue, it was in everyone’s best interest to recall the vehicles because if a more serious injury would have come of this issue, Honda and its stakeholders would have much bigger problems.

Individualism

Individualism is described through the eyes of Milton Friedman and Tibor Machan, who were both philosophers. It involves making business decisions that maximize profits while staying within the law. The rule for Individualism states: “Business actions should maximize profits for the owners of a business, but do so within the law” (Salazar 17). Before the airbag recall, Honda vehicles were highly recommended by American drivers due to their excellent reputation for reliability and quality, and the overall driving and owning experience. Since the airbag issue has occurred, Honda has slowly been losing their phenomenal reputation. Honda has always aimed to maximize its profitability. The company still aims to do so; however, it has grown to be more and more difficult seeing as though customers are slowly gearing away from Honda. As a requirement of the law, it was Honda’s duty to inform the public of this airbag issue. If Honda had kept the issue to themselves and a customer was injured due to this issue, the company would have received a lot more complaints as well as several lawsuits for withholding the information. With that being said, an individualist would have gone about the issue in the same way because although it doesn’t exactly maximize profits, it’s the best decision to make for the long run of the company’s profitability.

Utilitarianism

Honda headquarters in Minato, Tokyo, Japan

Utilitarianism originated with Jeremy Bentham and was popularized shortly after by John Stewart Mill. It is defined as “‘maximizing the overall good’ or producing ‘the greatest good for the greatest number’” (DesJardins 29). The rule for Utilitarianism states: “Business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action” (Salazar 19). As I stated earlier, the stakeholders, in this case, were management, customers, stockholders, employees, and suppliers. A Utilitarian would attempt to make all of these stakeholders happy and make the best decision for those people as a whole. If Honda did not inform its stakeholders of the airbag issue, no one would be happy in the long run because it would bring serious controversy to the company. If customers found out about the issue the hard way, stockholders would have lost even more money due to lawsuits, and employees and suppliers would have lost a significant amount of sales because customers would lose complete trust in the company. The decision that was made to recall the vehicles due to the defective airbag was “the greatest good for the greatest number.” The customers are the most important people in this case because they are what keep the company going. With that being said, a utilitarian would have made the same decision to recall the vehicles in order to “maximize the overall good” and provide the “greatest good for the greatest number.”

Kantianism

Kantianism, an ethical theory developed by philosopher Immanuel Kant, has to do with making rational decisions, honesty, and freedom. The rule for Kantianism states: “Always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all parties” (Salazar 20). There are four basic principles of Kantianism: act rationally, allow and help people to make rational decisions, respect people and their individual needs and differences, and be motivated by good will (PowerPoint 4). A Kantian would have made the same decision Honda management made – that is to recall its vehicles. Honda followed all four principles of Kantianism in deciding to recall its vehicles. The company acted rationally in making this decision because it allowed for other companies to follow in their footsteps and make rational decisions as well, they respected their customers and the customers’ needs when recalling their vehicles, and most of all they were motivated by Good Will and did what is right for the people. Kantians live by The Formula of Humanity. This states that one should “Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply a means” (PowerPoint 4). Honda stuck to this motivation and was honest about the danger of their airbags, attempting to keep the customers safe because it was the right thing to do, knowing that it could potentially harm the company. Overall, a Kantian would have made the same decision that Honda’s management made, simply because recalling its vehicles to protect their customers was the right thing to do. It is clear that Honda conformed to Kant’s principles.

Virtue Theory

Virtue Theory was formed by the Ancient Greek Philosopher, Aristotle. It involves character traits, such as courage, honesty, temperance, and justice, that aid to society. The rule for Virtue Theory states that one should “Act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits” (Salazar 22). Examining Honda’s management through Virtue Theory, Honda showed how virtuous it can be in recalling millions of vehicles. By making this decision, Honda showed that it has the four main character traits involved in the Virtue Theory. Its management definitely made a difficult decision to inform the public of the problem and recall many of its vehicles; however, they were courageous enough to make that decision, knowing that it could possibly endanger the company and its reputation. Honda was clearly honest to its customers, stockholders, employees, and suppliers when they told them the honest truth of what’s going on with the airbags in their vehicles. Honda management had to overcome and control the situation and their thoughts and feelings in making a decision that could potentially harm the company, showing its temperance. Lastly, Honda management made the right decision in recalling its vehicles that could bring harm to their customers. It was fair and just for Honda to inform their customers of the issue and to recall their vehicles because if they had let their customers continue driving their vehicles with defective airbags unknowingly and potentially bring harm to them, this would be unjust. Overall, when relating this ethical case to Aristotle’s Virtue Theory, it is clear that the company is in fact virtuous and demonstrates the four primary virtues. Honda made the right decision in recalling millions of its vehicles and clearly promoted wellness within the society in doing so.

References

DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill Higher Education, 2009. Print.

“Honda.” ConsumerAffairs. N.p., n.d. Web. 17 Oct. 2014.

"Honda." Edmunds. N.p., n.d. Web. 05 Oct. 2014.

"Honda Recalls." Honda Recall on Autoblog. N.p., n.d. Web. 05 Oct. 2014.

"Honda Worldwide | History | Limitless Dreams - An Outpouring of Passion." Honda Worldwide | History | Limitless Dreams - An Outpouring of Passion. N.p., n.d. Web. 05 Oct. 2014.

Jensen, Christopher. "Honda Expands Takata Air Bag Inflator Recall." The New York Times. The New York Times, 08 July 2014. Web. 05 Oct. 2014.

Salazar, Heather The Case Manual. Print.

""They Did Nothing": Airbag Defect Victim Lashes out at Takata, Honda." CBSNews. CBS Interactive, n.d. Web. 20 Nov. 2014.

Woodyard, Chris. "Honda Expands Recall by up to 1 Million Cars." USA Today. Gannett, 08 July 2014. Web. 05 Oct. 2014.

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