Unethical Measures by Volkswagen: A Case Study

This paper discusses the unethical measures taken by Volkswagen in relation to the fraud of developing faulty engines and the consequences it had on stakeholders. It analyzes the incident through the ethical theories of deontology and utilitarianism and provides recommendations for the company.

Running head: BUSINESS ETHICS
BUSINESS ETHICS
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Introduction:
The aim of this paper is to discuss the unethical measures taken by one of the reputed
international car brand namely Volkswagen relating to the fraud of developing faulty engine.
The company has successfully managed to cheat the EPA or Environmental protection
agency through the device that can fraud the carbon emission at the time of test. This
unethical initiative taken by the company not only affect the brand name and reputation but
also the live and interest of the stakeholders. The customers who have already focused the
defected cars cannot use them anymore, the shareholders are have faced huge financial loss,
the dealer of the Volkswagen cars also face problems in the market and most importantly the
employees who have been unknowingly engaged themselves in the production of such
defected engines have lost their jobs. This particular incident now can be analyzed through
two most important ethical theories like deontology and utilitarianism. Both their theories are
assisted with the ethical decision making procedure and how the individual or the
organization can make ethical decision in their business. This paper will be discussing the
background of the incident, analyses two different theories relating to ethics and provided a
refection bearing recommendation that what the company can do in this particular situation.
Background:
The unethical issue is related with one of the most reputed car manufacturing
companies Volkswagen that has subsidiaries in different markets of the world. For the last
four years the company has been dealing with the aftermath of its internal scandal that dented
the company in far reaching way. Volkswagen has always been a reputed company that
promotes itself to be the people’s car and attracting them through its low gas emitting
capabilities. It was only in 2015, when the company faced the consequences of unethical
business decisions. As mentioned before, the company had been accused for fraud the in the

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emission test in the USA (Jung & Park, 2017). This went against the Environmental
Protection Agency or EPA had discovered that the company has used a software that can
detect EPA’s parameter (Li et al., 2018). This particular software was attached in the
Volkswagen cars which allowed them to change their performance for matching the emission
levels in the federal.
This issue was only revealed when a small research team from the University of West
Virginia aimed to test the carbon emission in the three international cars namely, BMW,
Mercedes Benz and Volkswagen but found out an unbelievable method of chatting carbon
emission (Markowitz et al., 2017). The company had been equipped with the vide variety of
diesel vehicles with defeat device. For complying with the emission standard by the US
authority, each and every diesel car manufacturers are expected to install a software that will
clean the diesel exhaust. In the case of Volkswagen, this particular software, it was using,
enables when the car underwent the emission testing but used to shut off in the case of
normal driving conditions for improving the fuel economy as well as performance
(Markowitz et al., 2017). This has affected the diesel cars of Volkswagen to emit 40 times the
accepted and legal amount of nitrogen dioxide into air that affect the environment more than
expected.
According to Jung and Park, (2017) the further testing and discovered that the
fourteen particular cars make models were equipped with this particular duping software that
mad the company to recall more than 11 million of its vehicles for defective engine software.
More than 10 million vehicle from Europe and 580000 cars from the US were to undergo this
process. Since the scandal went public, the company has been talking appropriate steps as
well as actions for correcting mistakes at their best whole coping with the problems doe to
save its image.

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Explanation:
In order to understand the unethical behaviors by Volkswagen in cheating its
customers, employees and all the other associated stakeholders, two most important yet self-
contradicting theories name utilitarianism and Kantianism can be discussed. Utilitarianism is
a part of consequentialism which states that the consequences of any action are the standard
of right and wrong. The basic concept of this theory relates to the good and bad effect
produced by the act whether resulting after the act has been performed or during its
performance. It is related to the process of resulting well for all and how the actions can be
positively utilized be the associates.
On the contrary Kantianism is completely different ethical theory of Utilitarianism.
This particular theory is based on the concept that the morality of actins must be based on the
process whether the action is right or wrong under the series of regulations rather than the
consequences of the actions (Ponthiere, 2016). This is described as the duty or the obligation
of the individuals or organizations whre the importance is put on the actions and its
righteousness rather than the consequences of the actions. According to Cholbi (2019), it
abides by the predefined set of rules so that the individuals can function effectively in the
environment.
Analysis and Evaluation:
From the perception of the utilitarianism, the company’s actions are completely
opposite to what the utilitarianism actually believes, over the course of the entire unethical
actions. No good was happened to any of the stakeholders (Scharding, 2019). Therefore in no
way any good has been done by Volkswagen through this particular actions of fraud the
Environmental Protection Agency bur affected its revenue, employee motivation, customer
purchase decision and finally the company image. The consumers are now faced with the
question to what should be done with the defective cars, employees lost their jobs as billions

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of dollars will be spent on the rectification of the problems which must never exist and to the
experts, this actions and their consequence faced yet is just the tip of an iceberg (Rhodes,
2016). the only good what may happen to the company is the focus on the compliance
regarding the products. This particular mishap in Volkswagen can help in the reinforcement
of the importance of compliance, auditing the company file and risk management (Wines,
2017). However, till now, the company has been only tangled in the situation. Most probably
the most important consequences can relate to the possibility of an accident caused by the
failure or defect of these cars which are being recalled. This accident can not only affect
greatly to the people associated in this accident but also the company (Ponthiere, 2016). The
theory of utilitarianism relates that this incident of unethical decisions by the company led
this to the lawsuits which ensured that this accident or unethical decision by the company has
amounted it millions of dollars which is quite a large amount faced by the company.
From the perception of the ethical theories of deontology by Immanuel Kant, the
company not only affected the lives of the customers but all of its employees. Unlike
Utilitarianism, Volkswagen has worked exactly opposite to the Kantian ethics as this has not
treated people properly with respect and equal capable to live autonomous lives. The
company has directly lied to the consumers, employees, shareholders and their dealer. This is
an incredibly immoral action taken by the company firm the Kantian ethical perspective. The
company never allowed the right of the stakeholders to know what exactly they are being
heading to. It did not allow its people to know what exactly they are doing with the software
and for that matter with the entire production system (Rhodes, 2016). The company has all of
these stakeholders who entirely believed the data published by the company and the reputed
image of Volkswagen which could not have been further from truth. According to the point
of view of the utilitarianism theory, the major consequence that has affected the company is

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the customer dissatisfaction. This incident has not only affected the image of the company
but also hurt the interest of the owners, managers and the employees also.
According to the scholars of Kantianism like Murphy, Laczniak and Harris (2016),
Volkswagen had followed the dishonest means to enhance its profit as the customers did not
have any idea that they are buying a defective or misfit piece from such a well reputed
company. In addition to this the dishonesty allowed the stakeholders to keep only buying
their stock and the employees kept of working for the profitability of the company. They are
engaged in developing the faulty cars in the company and the car dealers of Volkswagen
continued to attract customers and selling them the defected cars as they did not think about
such an unethical decision or action can be made by such a big brand. This is completely
against the ethical theories of Kant as the business organizations must provide their
customers with all the information related to business so that they can make a right decisions
relating to purchase. It is the duty of the business corporations to do this right thing not only
for increasing their profit marketing but also for the doing the right thing.
Volkswagen’s actions to address this recalling issues is not only unethical but against
the legal process of the country. According to the theories of Kantianism, the company
unethically had keep their sales as well as business going without taking the consideration of
their rights to make own decisions. According to Wilson (2017) in addition to this, the
company has not yet come out of the situation because it has continued to share the
information that their cars are safe both to their stakeholders as well as the consumers. They
are promoting that the products are reliable as part of their sales and promotion strategies.
Volkswagen intentionally proving their consumers with the inaccurate information is still up
for debate. The information they are providing has been preventing the customers from
making them a fully rational decision.

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Personal reflections:
From the above analysis it can be deducted that the company through have acted in an
unethical way has not shown any hint of regret to its stakeholders. There is not official
statement from the part of the company that can reduce the grievances of the stakeholders. Bu
the company has been promoting itself to be one of the most ethical company in the world
where it has been publishing a brochure aiming to let the stakeholders know what the
company is doing in both the product as well as process. It is creating more issues among the
stakeholder and the company is getting more entangled in its own business process. In order
to cope up with the change, Volkswagen first need to bring transparency in the business
proves that will connect the stakeholders with the operation of the company. In addition to
this, Volkswagen definitely needs to follow all the methods of good governance where the
employees will be empowered rather than suffer due to the fraud by the company itself.
Conclusion:
Therefore, it can be concluded that what Volkswagen had done with their cars bearing
special duping device to fraud the Environmental Protection Agency relating to the carbon
emission of the vehicles, is complete unethical. This not only has affected the fame of the
company as well as its revenue, employee motivation, customer purchase decision and trust
of the stakeholders associated with the business of Volkswagen. According to the theory of
utilitarianism, the unethical practice by Volkswagen is not supporting the interest of ant of its
stakeholders but affecting the lives of the customers as well as the employees. Therefore,
utility of such decision cannot be supported. On the other hand the deontological theory also
does not support the idea of cheating the customers and government through using the
defective engine software as this is not a right things and duty for Business Company such
reputed. Therefore, it can be stated that the company has undergone tremendous pressure
from all of the stakeholders but did not regret or urge for saving its face in the global market.

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By following the process of making the business method and information about the products
more transparent and staying focused on the good governance can help the company to
recover from this problem.

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