Volkswagen Emissions Scandal and Ethics

The assignment requires students to analyze the Volkswagen emissions scandal, including the impact on US public health, and discuss the ethical implications for business leaders. It also explores responsible management education and the role of gender and age in business students' values and CSR attitudes.

Business Ethics and
Responsible Management

Table of Contents
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
A. Ethical dimensions.................................................................................................................1
B Choose TWO ethical theories and demonstrate that you can apply these to the case to show
how your chosen theories lead you to a view on the ethics of the case......................................3
PART 2............................................................................................................................................6
A What makes an ethical leaders................................................................................................6
B How to manage high ethical standard by manager..................................................................6
Organisational values and methods of compliance.....................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business ethics and responsible management consider different kinds of ethics concern
for individual's moral judgement for right and wrong things. In this consideration, decisions are
taken within the business that made by individual or groups and it is also influence by the culture
of company. It creates significant benefits to a business and develop corporate social
responsibility as well (Quarshie, Salmi and Leuschner, 2016).
Present study based on the case of consumer deception in which ethical behaviour has
been identified and focused to create appropriate link with several judgements. For gaining
insight information of the present report, it covers about the present case which consider
effective judgement and make solution for the problem. Furthermore, it contains ethical theories
and demonstrate to show leading with different ethics of the case.
PART 1
A. Ethical dimensions
Ethical dimensions of the issue
Volkswagen the group of America deceived consumers with false advertising that
promoted clean diesel (Barrett and et.al., 2015). Thus, they were later discovered as to be fit
emission defeat devices that is illegal. The complaint has also been filed in federal court in terms
of deceiving consumers by selling or leasing more than 550000 diesel cars that were actually
based on the claims that were absolutely false. They claimed that the car were having quality of
low emissions, environmental friendly, easily meet the value of emissions and would also
maintain high value in terms of reselling. The company has to offer the compensation to
consumers who bought the car or leased the car between year 2008 and 2015.
Factors included
The factors that were contributed towards the decision in terms of Volkswagen engineers
includes the following-
Pressure- The pressure was in intense manner from the top. The 25 page code of conduct
of Volkswagen on which the employees that were involved were trained in ethics, were seemed
as irrelevant when they were compared with the autocratic leadership style of management and
also towards the goals that was single minded in order to get succeed at any cost. Further, the
reputation of the company was at stake. In addition to this, the consequence of failure for the
1

economy and image of the German in terms of design and also in manufacturing sector would
become substantial.
Opportunity- There was the presence of the opportunity in terms of cheating. The
engineers of the cited company started receiving and coming up with new solution coincidentally
with the directive (Whiteman and Hoster, 2015). The diesel engine management system was sold
that helped in detecting about testing of the vehicles and also about emission controlling devices
that turns on. This was basically based on the understanding that it will be used for testing
internally as the use in vehicles was illegal that was sold to public. Thus, the cars in modern
world actually operates with about 100 million lines of the software code, that makes it easy in
order to hide the code of software that is cheating.
Rationalisation- It was known by the engineers that the defeat devices has been installed
by the Volkswagen that helped the company in cheating on the enacted emission standards that
were new in market. They rationalised that if they cheated then the punishment would be light as
at that time the punishment was merely a fine of $120,000.
As all three parts of dangerous triad are present, there arises a situation in which the employees
of a particular company begin to engage in behaviour that is unethical.
Company think the role of business in society
The company has to undertake some social responsibility that involves conducting
activities of business in accordance with the functions and principles that is easily recognised and
also accepted easily by the society (Russell, Gates, Keller and Watkins, 2016). Thus, on behalf of
business the managers of Volkswagen has to discharge various social responsibilities. This is
concerned with adoption of such a business policy, procedures and also the decisions that are
made so there is maintenance between social objectives and values. The main importance of this
is to bring harmonisation in terms of economic and social among the objectives that are in
multiple numbers and also among the resources that are limited. Thus, social responsibility is
discusses with respect to employees, shareholders, creditors, investors, customers, government
and also the society in large.
Key stakeholders
The shares of Volkswagen has been affected as they have lost third of their value and
about 22 million euros (Holland, Mansur, Muller and Yates, 2016). A litigation group of finance
is backed by the US hedge fund Elliot Management has contact with the top 200 investors of
2

Volkswagen that launches a claim in terms of damage claim in Germany as soon as February.
The Germ,an lawyer filed a lawsuit on behalf of retail investors. This unethical practice led the
Volkswagen led towards the slump in share value in dramatic way. The emission scandal wiped
the value of the company by billion dollars. This has led to the devastating series of critical
consequences towards its direct and indirect stakeholders. This is still going under the process of
investigation. This investigation is done by various authorities with the main aim of identifying
actual impacts in order to come out with the solutions that is suitable in finalising the case.
Recommendations
It is evident that the root of this scandal that is unethical goes back to the culture of
business and the structure of the company (Ewing, 2015). Thus, the business ethics that is
compliance based like approach of Volkswagen declines in order to treat the employees in
ethical manner and also the employees that faces dilemmas of loosing jobs or those taking
unethical actions, the cited company thus obtains the result in reverse manner. In addition to this,
the employees' action plays crucial role in terms of success and failures of business so it
becomes essential in order to value the employees and also to improve the workers' morale that
may lead in accomplishing any type of task in ethical manner. Thus, in the practices that are
value based there is no existence of hierarchy but the employees of the cited company may work
as a team in order to achieve the result that has been desired or expected. Moreover, it helps in
promoting the democracy in the company that means the executives have freedom in terms of
voicing their complaints to the head or senior of the company that might result in high
productivity.
Further, to avoid such type of scandal in occurring in the future, the Volkswagen is being
recommended that they must value their each and every members that are involved in the
company through the value based approach. In addition to this, it has also been recommended to
the selected organisation in ensuring the level of pollutants and emissions that they are under
control.
B Choose TWO ethical theories and demonstrate that you can apply these to the case to show
how your chosen theories lead you to a view on the ethics of the case.
The chosen case is based on Consumer deception case in Volkswagen, in deceptive
advertising also known as false advertising, refers to a manufacturer's use of puzzling,
misleading or stating untrue statements while promoting a product. The company and its
3

manufacturers accused the car makers of false and deceptive advertising. Researchers identified
that, vehicles emitted as much as 40 times the amount of allowable nitrogen oxide under US
standards at the time of real world driving conditions. It was also found that the company
mislead consumers purposely in one of the most egregious cases of false advertising, the auto-
mobile sector has ever seen (Sahni and Nair,2016). It has been determined that cases of
consumer fraud occur when a company is deceptive, creates false claims. However, there are
various theories that can be applied in this case of consumer deception, the major two theories
are described below:
 Deontology theory of ethics :- morality of conduct is treat by this theory, as being
independent of consequences. This doesn't mean that consequences are not important
instead the non-consequentialist position is that consequences are not sole determinant of
rightness. This theory set special emphasis on the connection between duty and the
morality of human actions. Furthermore, the theory makes use of rules to differentiate
right from wrong. The theory is considered to be simple to apply. It only requires that
people follow the norms and perform their duty. Under this duties may need a moral
agent to commit some act or omit some act. Therefore, it is essential to distinguish
between various types of duties.
This theory is an ethical framework that depends on the predefined sets of norms and
policies for the accurate functioning of a system in the environment. Hence, the theory is best
suited for implementing in the case of consumer deception as the theory is based on the checklist
which involves certain rules to be followed while performing a particular task. This theory can
also be applied in this case because these are the standards UK must establish that keeps
advertising and fraud companies from hurting others, because in the context of this theory's
belief, hurting others is not right. Further, it has been observed that ethics are difficult to define,
as what one person thinks is ethical and right, that might be very different in someone else's
thoughts (Vitell and Hunt, 2016). From a person's point of view, ethics could be defined as
his/her own introduced standards of right and wrong. This implies that, everyone's ideas
regarding what is ethical vary. In addition, there are situations where something people know is
wrong, like misleading consumers, suddenly becomes right to marketers. Therefore, the theory
can be applied to this case as minimum time is needed to decide between right and wrong.
4

 Utilitarianism theory – The Utilitarianism theory states that an individual needs to think
about each and very party involved in in a situation or event and it is important to
consider the effect of one's action on the parties(Vaughn, 2015). According to this theory
of ethics the organisations or businesses such as Volkswagen, needs to take care of every
stakeholder while analysing the positive and negative impact of their business activities.
The positive impact should be more as compared to negative influences in each and every
decision that is made so that it can be considered ethical by Utilitarian. In the emission
case in Volkswagen, the complexity becomes obvious. It can be stated that Volkswagen
was involved in an unethical behaviour and was proved to be practising bad business
ethics. The company admitted that it manipulated emissions test data and utilised illegal
defeat device in few vehicles. Volkswagen is one of the leading car manufacturers in the
world that too from a country known for its developed industrial and engineering
powers . It was a shocking and unbelievable news for its stakeholders that the company
has been involved in illegal practices. In context to utilitarian, Volkswagen would look at
the results or outcomes. More focus would be on the good results or the benefits rather on
the negative outcome. As per this theory the actions of the company are right if they tend
to produce happiness for the large number of customers, Higher performance vehicles
would certainly please the customers and healthy sales would help in pleasing each and
every employee (Russell, 2016). These results would be measured with higher
importance that the pain of those small number of individuals who will create respiratory
issues as a result, mainly when none of the laws are being breached. According to this
concept, Volkswagen may try to adjust their business actions with their values. A issue
with utilitarianism and problem Volkswagen would face with their changes practices is
that it focus on the ways to objectively measure these results. As a theory with no socio
political sympathy or commitments for specific groups of people, it does not consider the
severity of the health conditions of the minority. Hence, it may be a helpful theory for
Volkswagen on which to base their defence.
5

PART 2
A What makes an ethical leaders
Ethical leaders foster sense of community and team spirit within the business. When I
performed as ethical leader, I will be able to strive and accomplish goals. It is not only personal
goals that are concerned about but also genuine efforts also develop benefits in the entire
business. Ethical leadership must be implemented by each person in management position to lead
and foster in particular environment to maintain trust and respect with workers and executives
(Borglund, Frostenson and Helin, 2018). Firstly, I need to define and align morals that assists to
grow and treat others to be treated as supportive. Society get more progress with conventions
change and often causing value to shift. It is the biggest challenge ethics face in our culture. I
required asking myself what matters need to perform as individual and align it with priorities as a
leader.
Furthermore, hire people with similar ethics so that common goals and objectives can be
successfully established. With hiring process and maintain vision statement, better job ensure to
find and aligned with values for increasing experience. I need to perform in every race and
sexual orientation which includes different values so that it contain and create very diverse and
respectful work culture and team will be aligned around certain ideals. Different experience and
perspective also assists to make solution to challenges that helps to share value in critical
perspective (Doherty, Meehan and Richards, 2015). Along with this, I need to promote open
communication which is one of the important perspective of ethical leader. I believe that one of
the important responsibility for modern business is to create open communication within the
environment so that people can encourage and make several changes in policies with take stand
on current issues.
B How to manage high ethical standard by manager
As a manager, I need to perform several functions and operations that can be increasing
positive results and outcomes. With this regard, employees are getting pay, benefits and work
schedule with fair behaviour (Doherty, Meehan and Richards, 2015). Management is also
responsible for encourage such behaviour with reward and assess that these are pursuit or not.
Ethics programs assists to maintain moral course in turbulent times so that attention in the
6

business ethics also promoted with fundamental change. For both kinds of businesses profit and
non-profit, it must be successfully develop to make changes so that there is no clear moral
compass to guide leaders with complex conflicts to know what is right or wrong. Continuing
attention to ethics at workplace shows consistently that assists to perform functioning at
workplace (Haski-Leventhal, Pournader and McKinnon, 2017). Furthermore, I need to promote
cultivate strong teamwork and productivity that assists to align employee behaviours with
priorities ethical values that are preferred by leaders of the enterprise. An organisation also find
surprising disparity at workplace with ongoing attention and values. It also builds openness,
integrity and community. Critical ingredients of strong teams in workplace also communicate
several benefits so that staff members feel strong alignment between their values and
organisation.
Furthermore, I need to focus on the ethics program that can be support with growth and
meaning. As a result, confidence also successfully admit and deal to measure effectiveness at
workplace. Ethics program also suit to breach contract so that gap between stated corporate
culture and actual practice that create significant legal as well as ethical implications (Rasche and
Gilbert, 2015).
Organisational values and methods of compliance
In order to make ethical organisation and behaviour from unethical consideration, it can
be stated that preferred values and ensure organisational goals can be successfully build with
values. As a result, efforts are also made to record values and developing policies with
procedure. In this regard, overall efforts is very useful for several other programs that can be
consider at workplace and required behaviours to aligned with values. It includes quality
management, strategic planning and diversity management. Total quality management is
successful method that can be implement to include higher priority on certain operating values
such as trust among shareholders, performances, reliability, etc. (Borglund, Frostenson and
Helin, 2018).
Ethics management techniques are highly useful for managing strategic values to expand
market share, reduce costs, etc. Diversity is more important perspective that acknowledge
different values and perspective. This program also requires recognising and applying diverse
value and perspective in different activities on the basis of sound ethics management program.
Another method can be determine to create overall benefits of ethics programs that assists to
7

managing standards at workplace legitimized managerial actions, strengthens coherence and
balance of the organisation's culture. It assists to improve greater consistency in standards and
qualities of products (Hibbert and Cunliffe, 2015).
CONCLUSION
From the above report, it can be concluded that business ethics and responsible
management consider important role in the business. With this regard, significant outcomes can
be successfully build that assists to focus on the greater consistency in standards and qualities of
products. It helps to cultivate greater sensitivity that create impact of enterprise values and
messages. Furthermore, it summarised about things that make ethical leaders to gain more
desired level of results. In this way, open communication mainly implemented that assists to
focus on the managerial actions and activities.
8

REFERENCES
Books and Journal
Sahni, N. S. and Nair, H., 2016. Native advertising, sponsorship disclosure and consumer
deception: Evidence from mobile search-ad experiments. Sponsorship Disclosure and
Consumer Deception: Evidence from Mobile Search-Ad Experiments (February 23,
2016).
Vitell, S. J. and Hunt, S. D., 2016. Personal Moral Codes and the Hunt-Vitell Theory of Ethics:
Why Do People’s Ethical Judgments Differ?. In Business ethics: New challenges for
business schools and corporate leaders (pp. 30-49). Routledge.
Vaughn, L., 2015. Doing ethics: Moral reasoning and contemporary issues. WW Norton &
Company.
Russell, B., 2016. Contractualism, Consequentialism and the Moral Landscape: A New Pro-
Contractualist Picture of Ethical Theory.
Barrett, S.R. and et.al., 2015. Impact of the Volkswagen emissions control defeat device on US
public health. Environmental Research Letters. 10(11). p.114005.
Borglund, T., Frostenson, M. and Helin, S., 2018. Understanding Responsible Management
Education from the Inside: A Case Study of a Case Study in an Insurance and Savings
Company. Journal of Business Ethics Education. 15.
Doherty, B., Meehan, J. and Richards, A., 2015. The business case and barriers for responsible
management education in business schools. Journal of Management Development.
34(1). pp.34-60.
Ewing, J., 2015. Volkswagen says 11 million cars worldwide are affected in diesel
deception. The New York Times. 22.
Haski-Leventhal, D., Pournader, M. and McKinnon, A., 2017. The role of gender and age in
business students’ values, CSR attitudes, and responsible management education:
Learnings from the PRME International Survey. Journal of Business Ethics. 146(1).
pp.219-239.
Hibbert, P. and Cunliffe, A., 2015. Responsible management: Engaging moral reflexive practice
through threshold concepts. Journal of business ethics. 127(1). pp.177-188.
9

Holland, S.P., Mansur, E.T., Muller, N.Z. and Yates, A.J., 2016. Damages and expected deaths
due to excess NO x emissions from 2009 to 2015 Volkswagen diesel
vehicles. Environmental science & technology. 50(3). pp.1111-1117.
Quarshie, A.M., Salmi, A. and Leuschner, R., 2016. Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and
business ethics journals. Journal of Purchasing and Supply Management. 22(2). pp.82-
97.
Rasche, A. and Gilbert, D.U., 2015. Decoupling responsible management education: Why
business schools may not walk their talk. Journal of Management Inquiry. 24(3).
pp.239-252.
Russell, K., Gates, G., Keller, J. and Watkins, D., 2016. How Volkswagen got away with diesel
deception. New York Times. 5.
Whiteman, G. and Hoster, H., 2015. Vehicle emissions: Volkswagen and the road to
Paris. Nature. 527(7576). p.38.
10