Management Theory and Practices - Report
Added on 2020-05-28
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Management Theory and PracticesManagement Theory andPracticesEthical Dilemma
1Management Theory and PracticesIntroductionEvery organization is very particular about its reputation in the market. None wants to have a badimage. But there are times when the company faces dilemma and has to go through a rough time.Volkswagen diesel emission case is definitely a good example of Ethical dilemma because due tothis dilemma, the company had to bear lots of money to the EPA and to the consumersworldwide (Kansas City, 2016). Ethical dilemma in business is the situation when there liesconfusion between any two decisions and the organization cannot seem to make any, be it moralor immoral[ CITATION Pro16 \l 1033 ]. Utilitarianism and Kantianism are the two theories whichexplains Ethical Dilemma as a different perspective. Volkswagen’s case comparison with thetheories are done in this report. Companies must implement rules and regulations to ensure thatthese types of dilemmas are not faced by them. Compliance policies in all the organizations areimportant.Company that faced ethical dilemmaVolkswagen (VW) is known to be the largest automobile making company. This German brandhas made its mark in the world by selling the best cars with great designs and engines. InSeptember 2015, the EPA (Environmental protection agency) found that VW had a softwaredevice attached with their carengines whichcontrolled the emission of Nitrogen Oxide and thecar tests were being approved so that the cars can finally go out on the roads. While actually theircars were releasing 40 times more Nitrogen Oxide and it was creating pollution in theenvironment. VW believed that producing diesel cars would be good, which was just 5 percentof the US market till 2007 (Lynch & Santos, 2016). These were done in all types of cars, be itbeetles, Audi A3, Jeta, Golf and Passat. EPA then issued notice for violating “Clean Car Act”and VW agreed that 11 million cars worldwide (Slide Share, 2018) and 5 lakhs in US undergothat software in between 2009 to 2015 (Kansas City, 2016). Earlier when this discrepancy cameinto picture, VW people said that it was due to a technical mistake but later they also agreed thatthey were at fault and that all this was done deliberately. Thus, VW had to pay $10 Billion to the
2Management Theory and PracticesUS consumers as compensation, $2.7 Billion as a remediation fund and for cleaner vehicleprojects they paid $ 2 billion to EPA. In another 44 countries, $600 Billion were paid to settle allthe claims (Kansas City, 2016). The company was also charged for attaching that software to thecars of 3-literdiesel engineslike Audi and Porche. Although, VW did not agree to this but thetruth was that this technology affected over 10,000 automobiles. (Hotten, 2018). Then again inNovember 2015, VW said that their cars were some “Irregularities” found in their cars when thetests were run again and that it could impact over 80,000 cars in Europe but later after moreinvestigation that said that it only impacted 36,000 cars. This act broke Volkswagen’s customerstrust and it was not simply acceptable by them. The company should not just maintain its imagebut also should think about its consumers. Good business minds never would hurt theircustomers as it’s said that customers always come first. They also offered a small amount of$1000 as penalty and assistance for free on the roadside (Kansas City, 2016).It later came intopicture that some senior executives including the CEO were also involved in this fraud (Slideshare, 2018).Theory 1: UtilitarianismThis theory basically comes under those managerial ethics which acts when there is somethinggood to be done for a huge number of people (Barrow, 2015). The main thing that a companycan do morally is to keep their customers happy rather than keeping their self interest in mind(My assignment help, 2018). This is a definition of a good business company. According to thefounders, Jeremy Bentham and John Stuart Mill, utilitarianism is the amount of goodness done inan action rather than producing any excruciation for others. Volkswagen did put their owninterest first and produced the cars that spread environment pollution and nothing good couldcome out of this treachery. VW even after knowing the negative impact of their doings boughtthe cars on the road after fooling the laboratory tests. They made good profit by selling hugenumber of cars but could not stand out in the eyes of their consumers. Overall, Volkswagen losttheir goodwill in the market after denying the accusations and then not full heartedly beingapologetic to their customers. Hence, the concept of this theory does not apply to this case as
3Management Theory and Practicesthere was nothing good in this whole act of treachery. Rather, Volkswagen should not haveattached the software and let the diesel emitting cars face the laboratory tests. Environmentpollution created by the VW cars was harming the citizens of the country and that is not at all anethical way of doing things. Going by ethics would have meant a lot to the customers and theywould have trusted the brand forever by this act. Utilitarianism helps the organization inunderstanding that a customer comes first. If they are satisfied with the outcome, then the brandis also safe to play in the market. However, this theory also suggests a punishment so that thisshould not repeat again in future but VW had to bear more than this punishment. They faced abig loss and the stocks came down like anything. The demand for their diesel cars also wentdown in a huge manner. The stakeholders were not at a very good position as well as thecustomers in this case as none of them were benefitted by this act. (Fowler S, 2017).Theory 2: KantianismKantian Ethics theory was founded by Emmanuel Kant (Arnold, 2012).The theory basicallystates that any action that is done by the company should only create growth for it and thisgrowth should keep increasing as long as the company is good enough to face its competitors inthe market (Neil, 2013). In this case also, the company made lots of profit by pushing out theirpollution producing cars on the roads and earned the title of the second largest automobile sellingcompany but they forgot their moral ethics on the whole. Not just the customers but the habitatthat we live in i.e. environment was at stake. On moral grounds exploiting the environment isunethical. Also, consumers should know the real standards of the cars the company wasproviding them with. Hence, the consumers were also cheated. This behavior is also immoral.When the act of fraud is done by any company, not just the higher authorities like the CEO or thefounder but the managers and executives are also at fault (My assignment help, 2018). They alsoknow about the wrong doings of the company and by its owners yet they stand still and donothing about it. The technical managers those who developed the software for the companywere also equally at fault. The image of the organization depends on the one’s who take out newideas to promote it and also the hampering of it belongs to the same set of people. These leaders
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