Advance issues in accounting | Volkswagen
8 Pages1994 Words176 Views
Added on 2019-11-08
Advance issues in accounting | Volkswagen
Added on 2019-11-08
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ADVANCE ISSUES INACCOUNTINGStudent id
Corporate ethics definition:The System of laws & principles under which the corporate and business professionals must function in a way which is beneficial to the people of the society and country as a whole. It’s a broad topic which covers bribery, corporate governance, corporate social responsibility, insider trading, tax avoidance, corruption, political contribution, discrimination & fiduciary responsibilities. When ethical principles are followed trust develops between workers & management also between public & corporation leading to more productive workplace & viceversa. The case study will discuss a macro ethics issue related to Volkswagen diesel scandal of 2015. This study helps us to identify the possible ethical dilemma between the greater public need and researchers access to vehicle software code against the manufactures wish to keep the code proprietary (Wardord,2016). This study explains the utilitarian, individualism, virtue, justice & moral approaches to better understand the ethical dilemmas that arose in this case study.Volkswagen case Volkswagen is one of the world’s leading auto maker and it always had the aim of becoming the world largest by selling more number of cars than Toyota. The combination of imperious leadership and lack of proper control led to a scenario which proved fertile for bad decisions. Apart from this aim of becoming the world’s leading it also help Germany ameliorate the aftermath of great recession of 2008 by exporting more cars. By the year 2007, when Martin winterkorn, who became the CEO of the company, targeted U.S to take the company to new heights. For achieving this, VW had to increase its sales of motors to thrice then its present motor sale in U.S. Further to come to this position, the German giant had to do something which have never happened before. It had to produce cars which are not only powerful and superior than its competitors but also friendly to the environment. The organisation then aimed the U.S market which had very less diesel engine cars in comparison to gas & other engines . Martin winterkorn thought that diesel cars are more fuel efficient without any impact on power. But the diesel cars produce more pollutants than cars which are powered ongas (Lynch & Santos,2017). The company under the leadership of Winterkorn were very aggressive in its approach.
The seniors bullied the lower or sub ordinates and even fired the engineers or executives who did not obey them. The employee never had the courage to pass any bad news to Winterkorn, as he never welcomed them. They only approached him when they had some good news (lynch & santos,2017).The Cheat device:Once Winterkorn started with the company expansion plans, he approached Daimler, another player in the market whose Blue Tec discovered a substance called urea which greatly reduced the nitrogen oxide , one of the most toxic substance and main by-product found in car emissions. The Volkswagen technical & research team had a tough job ahead to work from scratch under the demanding leadership who insisted on success. The technical team finally found their way and created a cheat device with an aim of installing them to the cars which will be exported to U.S. The software had the function of detecting whether the vehicleis being tested indoors ( labs) because in labs not of its wheels were used. In labs only two ofits wheels were used. At that point of time it self-activates its emissions controlling devices while on road the same was not being replicated. So, during the test it passed the test while on road, where the cheat device automatically turned off and the emissions levels were muchhigher than allowed (lynch & santos,2017). Sometimes the levels were 35 times higher than permitted.This revolutionary device made researchers all over the world to think as the diesel engine cars which were used in U.S were less pollutant than that of Europe.Impacts of this scandal on the companyThis ruined the goodwill of the company and moreover made the consumers feel cheated whobought diesel engine by thinking that they were less pollutant. The company announced a sum of $9.6 billion only for the claims they were receiving from its regulators and consumers. The company lost $1.6 billion in its third quarter and operating profits in 2015 fell significantly. Its ordinary share value fell by 23% after the scandals were revealed. Lastlythere was a fall in the market value of the company which fell by 31 percent from its previous52.75 billion euros.
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