Volkswagen Emissions Scandal Analysis
VerifiedAdded on 2020/03/01
|10
|2747
|103
AI Summary
This assignment examines the Volkswagen emissions scandal, exploring the company's deception regarding vehicle emissions standards. It analyzes the consequences of this fraud, including financial penalties and reputational damage. The assignment delves into the ethical and regulatory aspects of the scandal, emphasizing the importance of corporate social responsibility and sustainable development. It also discusses potential solutions and recommendations for preventing similar incidents in the future.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
RUNNING HEAD: ISSUES IN INTERNATIONAL BUSINESS
1
ISSUES IN INTERNATIONAL BUSINESS
Student Name
Institute Name
1
ISSUES IN INTERNATIONAL BUSINESS
Student Name
Institute Name
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
ISSUES IN INTERNATIONAL BUSINESS 2
Executive Summary
From last ten years, the concept of CSR as well as sustainability has taken an important place on
the international corporate agenda with a rising number of companies’ engaging in an
accountable as well as sustainable business functions in order to develop social as well as
business values (Siano et al., 2017). At the same time, the ethical crisis by the companies likes
Volkswagen or Nike or Wal-Mart and many more with severe and intense corporate ethical
scandal happened and also garnered more and more attention from the media which further
damaged the trust of the public in companies and their CSR functions.
Executive Summary
From last ten years, the concept of CSR as well as sustainability has taken an important place on
the international corporate agenda with a rising number of companies’ engaging in an
accountable as well as sustainable business functions in order to develop social as well as
business values (Siano et al., 2017). At the same time, the ethical crisis by the companies likes
Volkswagen or Nike or Wal-Mart and many more with severe and intense corporate ethical
scandal happened and also garnered more and more attention from the media which further
damaged the trust of the public in companies and their CSR functions.
ISSUES IN INTERNATIONAL BUSINESS 3
Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Background information about Volkswagen...................................................................................4
Key issues in Ethics/ CSR and its impact on Volkswagen business...............................................5
Volkswagen actions to address the issues.......................................................................................6
Recommendation.............................................................................................................................7
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9
Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Background information about Volkswagen...................................................................................4
Key issues in Ethics/ CSR and its impact on Volkswagen business...............................................5
Volkswagen actions to address the issues.......................................................................................6
Recommendation.............................................................................................................................7
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9
ISSUES IN INTERNATIONAL BUSINESS 4
Introduction
The report will discuss in detail about the Volkswagen and ethical scandal which represents the
failures associated with corporate social responsibility. The organization has been deliberate
enough to set out on a specific design which works as a means to completely circumvent the
control of the emission with a stratagem also called at the top level with the focus on providing
the organization with an advantage which is unfair by nature over all competitors that was
known as the world’s top car manufacturer where the large part that is based on environmental
friendly cars. This scandal or the rejection or any ethical standards in manufacturing like
engineering that has led to lot of scandals like resignation of the CEO along with head of Audi in
R&D department and engine chief of Porsche (Rhodes, 2016). All these actions make it clear
that the CSR department of the company must have understood the current course of actions. The
chain of command further led to the growth of specific lines associated with software that can
put the engine into evaluation mode and later return it dirty mode are also based on record and
where all the evaluation must be also be documented well. It is important to understand here that
people who were responsible can be recognized and must be found at every level all across the
company.
Background information about Volkswagen
Volkswagen is one of the leading automobile companies in the world and it is also considered as
the biggest car manufacturing in Europe. The base of the company was established in Germany
in a city called Wolfburg and there are almost three lakhs and fifty thousand employees that are
able to manufacture almost twenty two thousand vehicles every day. The production sites are
situation in places like Europe, Africa, Asian and USA. The car business was segmented in two
groups Audi and Volkswagen from 2002. The first set of production consists of brands like
Bugatti, Bentley and Akoda in first brand group. The second set group of brand consists of
SEAT, Audi and Lamborghini (Smith and Palmqvist, 2016). The company also aspires to
increase the focal point for the business along with decreasing the cost of production and also
improves the level of profitability.
Introduction
The report will discuss in detail about the Volkswagen and ethical scandal which represents the
failures associated with corporate social responsibility. The organization has been deliberate
enough to set out on a specific design which works as a means to completely circumvent the
control of the emission with a stratagem also called at the top level with the focus on providing
the organization with an advantage which is unfair by nature over all competitors that was
known as the world’s top car manufacturer where the large part that is based on environmental
friendly cars. This scandal or the rejection or any ethical standards in manufacturing like
engineering that has led to lot of scandals like resignation of the CEO along with head of Audi in
R&D department and engine chief of Porsche (Rhodes, 2016). All these actions make it clear
that the CSR department of the company must have understood the current course of actions. The
chain of command further led to the growth of specific lines associated with software that can
put the engine into evaluation mode and later return it dirty mode are also based on record and
where all the evaluation must be also be documented well. It is important to understand here that
people who were responsible can be recognized and must be found at every level all across the
company.
Background information about Volkswagen
Volkswagen is one of the leading automobile companies in the world and it is also considered as
the biggest car manufacturing in Europe. The base of the company was established in Germany
in a city called Wolfburg and there are almost three lakhs and fifty thousand employees that are
able to manufacture almost twenty two thousand vehicles every day. The production sites are
situation in places like Europe, Africa, Asian and USA. The car business was segmented in two
groups Audi and Volkswagen from 2002. The first set of production consists of brands like
Bugatti, Bentley and Akoda in first brand group. The second set group of brand consists of
SEAT, Audi and Lamborghini (Smith and Palmqvist, 2016). The company also aspires to
increase the focal point for the business along with decreasing the cost of production and also
improves the level of profitability.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
ISSUES IN INTERNATIONAL BUSINESS 5
The PDM which is also known as product data management for this company will be able to
chain the team for engineering as well as operating at many locations that can enlarge all across
the place. From the perspective of IT, there is high scale of division on geographic location
which is actually apparent associated with information management, contact and accessibility.
Key issues in Ethics/ CSR and its impact on Volkswagen business
In 2015, the company has been featured as emission based scandal as a lot of mistakes that can
be understatement and the justice department of USA has also sued the company in the federal
court where the efforts taken by the company are questioned in order to restore the overall
credibility as well as accusing the organization based on impeding along with obstructing the
inquires and provide with incorrect information. The company also operating with staggering
eleven million diesel vehicles because the 2009 model with software known or termed as defeat
device utilized to cheat with number of tests in emissions when it was not evaluated and the
vehicles manufactured by the company emit forty times above the permissible limit especially
nitrogen oxide pollutants (Zhukova, 2016). This is why, scandal based on emissions that can be
disturbing case based on systematic fraud by the corporate that has harmed consumer’s health,
government and the well-being of people in the communities with Volkswagen has been
provided the license to function. The influence of such crisis lasts for a very long period of time
and the market value of the company is dropped by twenty three percent by the year 2015 and it
is also important to admit to cheating associated with diesel emission. The sales of the company
in USA have diminished almost twenty five percent by 2015. The total cost estimated in this case
of scandal is above eight billions of dollar. It is also very challenging to fix all the invisible as
well as long term harms for the company like the negative influence on trust of the brand along
with its reputation. Level of customer satisfaction, morale as well as loyalty of employees and
confidence of investors was also at stake.
In addition, there are number of externality influences and there is also deception which is also
perpetrated by the company and it also tarnish the goodwill of other competitors and
corporations are also associated with many unrelated industries however, the company has also
undermined the trust of people in the organization and raised the cynicism of consumers about
the concern of green washing and other concepts (Jung and Park, 2017).
The PDM which is also known as product data management for this company will be able to
chain the team for engineering as well as operating at many locations that can enlarge all across
the place. From the perspective of IT, there is high scale of division on geographic location
which is actually apparent associated with information management, contact and accessibility.
Key issues in Ethics/ CSR and its impact on Volkswagen business
In 2015, the company has been featured as emission based scandal as a lot of mistakes that can
be understatement and the justice department of USA has also sued the company in the federal
court where the efforts taken by the company are questioned in order to restore the overall
credibility as well as accusing the organization based on impeding along with obstructing the
inquires and provide with incorrect information. The company also operating with staggering
eleven million diesel vehicles because the 2009 model with software known or termed as defeat
device utilized to cheat with number of tests in emissions when it was not evaluated and the
vehicles manufactured by the company emit forty times above the permissible limit especially
nitrogen oxide pollutants (Zhukova, 2016). This is why, scandal based on emissions that can be
disturbing case based on systematic fraud by the corporate that has harmed consumer’s health,
government and the well-being of people in the communities with Volkswagen has been
provided the license to function. The influence of such crisis lasts for a very long period of time
and the market value of the company is dropped by twenty three percent by the year 2015 and it
is also important to admit to cheating associated with diesel emission. The sales of the company
in USA have diminished almost twenty five percent by 2015. The total cost estimated in this case
of scandal is above eight billions of dollar. It is also very challenging to fix all the invisible as
well as long term harms for the company like the negative influence on trust of the brand along
with its reputation. Level of customer satisfaction, morale as well as loyalty of employees and
confidence of investors was also at stake.
In addition, there are number of externality influences and there is also deception which is also
perpetrated by the company and it also tarnish the goodwill of other competitors and
corporations are also associated with many unrelated industries however, the company has also
undermined the trust of people in the organization and raised the cynicism of consumers about
the concern of green washing and other concepts (Jung and Park, 2017).
ISSUES IN INTERNATIONAL BUSINESS 6
The company has rigged or damaged the diesel engines to falsely test the emissions which are
shocking by nature. It is important to understand here that the business leaders may not be right
all the time but the case Volkswagen is on another level. The misbehavior by the corporate was
baffling and the business sustainability and CSR or business leadership became a big question
mark for the society. There is a popular myth in finances which says that the goal of the
company is based on increasing the overall value of the shareholder. The myth is also based on
believing that the present investors must care just about the price of the stock and it must not
impact the society. Most probably this myth was based on the company decision to install this
software called as defeat software from sudden market reaction where the share prices further
dropped where billions were wiped from the overall value of the company. Therefore, all kind of
unethical approach always destroys the overall value of share (Zhukova, 2017).
Volkswagen actions to address the issues
The company is still trying to cope up with the damage and the company can still salvage itself
from the issue but the action taken by the company is not taking the right steps. There are
multiple other examples which can be become a perfect example for the company like when
Nike faced public outrage and mass boycott against labor practices adopted by the company and
from that time the company has implemented worked on the image and it has turnaround
completely. The company has also settled and forced a proper code of conduct for number of
practices associated with labor and hire professionals from outside in order to audit the suppliers
and raise the level of transparency for the labor based practices by discussing the performance
for the yearly CSR activities. The company was later applauded for the current leadership that
partners with independent sectors for companies like Fair Labor Association to focus on industry
based changes or transformations in building sustainable chain of supply (Zhukova, 2017). The
company took an important step in rectifying situation, the company kept around six billion of
Euros to utilize towards fixing the automobile so that it can comply with the standard of
pollution. This also seems as a big amount of money and in real life, it is almost equal to half
year profit of the company. The company is also facing a lawsuit of three billion euro and could
possibly face a lot of prosecutions. In fact in US, the company is also facing many types of fines
which are raising the amount of compensation. It is also important to understand that the market
of Europe has taken almost forty percent of the profit of the company while US only account for
The company has rigged or damaged the diesel engines to falsely test the emissions which are
shocking by nature. It is important to understand here that the business leaders may not be right
all the time but the case Volkswagen is on another level. The misbehavior by the corporate was
baffling and the business sustainability and CSR or business leadership became a big question
mark for the society. There is a popular myth in finances which says that the goal of the
company is based on increasing the overall value of the shareholder. The myth is also based on
believing that the present investors must care just about the price of the stock and it must not
impact the society. Most probably this myth was based on the company decision to install this
software called as defeat software from sudden market reaction where the share prices further
dropped where billions were wiped from the overall value of the company. Therefore, all kind of
unethical approach always destroys the overall value of share (Zhukova, 2017).
Volkswagen actions to address the issues
The company is still trying to cope up with the damage and the company can still salvage itself
from the issue but the action taken by the company is not taking the right steps. There are
multiple other examples which can be become a perfect example for the company like when
Nike faced public outrage and mass boycott against labor practices adopted by the company and
from that time the company has implemented worked on the image and it has turnaround
completely. The company has also settled and forced a proper code of conduct for number of
practices associated with labor and hire professionals from outside in order to audit the suppliers
and raise the level of transparency for the labor based practices by discussing the performance
for the yearly CSR activities. The company was later applauded for the current leadership that
partners with independent sectors for companies like Fair Labor Association to focus on industry
based changes or transformations in building sustainable chain of supply (Zhukova, 2017). The
company took an important step in rectifying situation, the company kept around six billion of
Euros to utilize towards fixing the automobile so that it can comply with the standard of
pollution. This also seems as a big amount of money and in real life, it is almost equal to half
year profit of the company. The company is also facing a lawsuit of three billion euro and could
possibly face a lot of prosecutions. In fact in US, the company is also facing many types of fines
which are raising the amount of compensation. It is also important to understand that the market
of Europe has taken almost forty percent of the profit of the company while US only account for
ISSUES IN INTERNATIONAL BUSINESS 7
six percent of the current unit sales. Therefore, the challenges in the market are much more
crucial as per the agenda of the company. At the same time, standards for diesels in this
continent are not properly tested as well as enforced for USA. The company has provided so
many apologies; company has also announced a recall for all the automobiles with diverse
engines of TDI. The top managerial staff like CEO had to resign immediately and other
managers were also suspended after the scandal (Zhukova, 2017). The head office of the
company in Germany and other parts of the world were also raided and investigated. In addition,
it is also impossible to say that just a few people were the active part of manipulating the present
software. Most probably, the company has taken a bad or wrong decision which was later
accompanied by wrong strategy however; the scandal was very big to call it as an accident.
Companies also has an accountability to be more honest as well as open to owners should be
responsible for the stakeholders. At the same time, this was more than a simple issue for a simple
solution. This case consists for more complicated theories that also deal with the varied theories.
Recommendation
Following are the recommendations: -
1. Re-branding: in last so many years, the company has become an international brand and
it is one of the biggest car organizations all across the world. There are some companies
who also believe that scandal must be forgotten very soon and other directors of the
company have discussed the possibility of reinitiating the organization under new brand
name (Crête, 2016). When the company reinitiate with new name, this may further
improve the level and image of the brand to have an organization which is small and
more effective than the present group of Volkswagen. The concept of re-branding further
makes it easier for the organization to speed up the level of effectiveness program with
potential to save the image of the company. The concept of rebranding can be very
expensive by nature and it is also a risky business, since it can decrease the negative
publicity that has also caused by any kind of scandal. It is also important to understand
here the concept of rebranding must aim on so many exterior transformations however it
also changes in different aspect of the organization.
six percent of the current unit sales. Therefore, the challenges in the market are much more
crucial as per the agenda of the company. At the same time, standards for diesels in this
continent are not properly tested as well as enforced for USA. The company has provided so
many apologies; company has also announced a recall for all the automobiles with diverse
engines of TDI. The top managerial staff like CEO had to resign immediately and other
managers were also suspended after the scandal (Zhukova, 2017). The head office of the
company in Germany and other parts of the world were also raided and investigated. In addition,
it is also impossible to say that just a few people were the active part of manipulating the present
software. Most probably, the company has taken a bad or wrong decision which was later
accompanied by wrong strategy however; the scandal was very big to call it as an accident.
Companies also has an accountability to be more honest as well as open to owners should be
responsible for the stakeholders. At the same time, this was more than a simple issue for a simple
solution. This case consists for more complicated theories that also deal with the varied theories.
Recommendation
Following are the recommendations: -
1. Re-branding: in last so many years, the company has become an international brand and
it is one of the biggest car organizations all across the world. There are some companies
who also believe that scandal must be forgotten very soon and other directors of the
company have discussed the possibility of reinitiating the organization under new brand
name (Crête, 2016). When the company reinitiate with new name, this may further
improve the level and image of the brand to have an organization which is small and
more effective than the present group of Volkswagen. The concept of re-branding further
makes it easier for the organization to speed up the level of effectiveness program with
potential to save the image of the company. The concept of rebranding can be very
expensive by nature and it is also a risky business, since it can decrease the negative
publicity that has also caused by any kind of scandal. It is also important to understand
here the concept of rebranding must aim on so many exterior transformations however it
also changes in different aspect of the organization.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
ISSUES IN INTERNATIONAL BUSINESS 8
2. Joining an agency for independent verification: the company has an internal team to
evaluate emission of vehicles and the company must also partner with other agency for
independent verification in order to build the trust of the consumer. There are some
agencies where the company should consider partnering up and it includes the World
Business council for development in a sustainable manner along with associations like
Fair Labor Association, Federal Trade commission and many more (Zhang et al., 2016).
3. Posting a Bond: this method should also regain the trust of consumers is for the
companies to post a bond that make sure in the public that this kind of thing will never
happen again. It is also an indicator for trust and credibility for the people of the
company. The company can also state that if there is any kind of fraud done again by the
company or within boundaries of the company, they will have to pay compensation for it
to European Commission automotive industry (RAHUMAN, 2017). This will further
encourage the regulators of European Commission should be strict and the audit must be
thorough by nature. The money should also be utilized towards the R&D associated with
green automobiles with decarburization for so engines in a conventional manner and IT
infrastructure. The bond also requires to be established at with high amount so that
customers will understand that the company must regret the fraud or cheating the
standards for emissions. The company is big with so many assets and many popular
brands and therefore to finance the bond, the company should sell one of their brands.
Conclusion
This case of Volkswagen is an example on how any businesses must not be approached the
strategy of social responsibility and sustainable development. In order to deceive stakeholders by
paying treating sustainability and lip service with this phase is never going to provide a true or
right kind of value for the organization nor for the community. At the same time, it must be
engendered by major amount of cost and expenses. As per research where value of business is
developed when the social responsibility and sustainable development must be embedded in the
culture of the organization and strategies for the core business (Severinaite, 2017). When this is
done in right manner, the organization should also gain advantages from a more corporate image
which is favorable for the customer loyalty with high morale for employees and increased
learning for organization and effective core competencies.
2. Joining an agency for independent verification: the company has an internal team to
evaluate emission of vehicles and the company must also partner with other agency for
independent verification in order to build the trust of the consumer. There are some
agencies where the company should consider partnering up and it includes the World
Business council for development in a sustainable manner along with associations like
Fair Labor Association, Federal Trade commission and many more (Zhang et al., 2016).
3. Posting a Bond: this method should also regain the trust of consumers is for the
companies to post a bond that make sure in the public that this kind of thing will never
happen again. It is also an indicator for trust and credibility for the people of the
company. The company can also state that if there is any kind of fraud done again by the
company or within boundaries of the company, they will have to pay compensation for it
to European Commission automotive industry (RAHUMAN, 2017). This will further
encourage the regulators of European Commission should be strict and the audit must be
thorough by nature. The money should also be utilized towards the R&D associated with
green automobiles with decarburization for so engines in a conventional manner and IT
infrastructure. The bond also requires to be established at with high amount so that
customers will understand that the company must regret the fraud or cheating the
standards for emissions. The company is big with so many assets and many popular
brands and therefore to finance the bond, the company should sell one of their brands.
Conclusion
This case of Volkswagen is an example on how any businesses must not be approached the
strategy of social responsibility and sustainable development. In order to deceive stakeholders by
paying treating sustainability and lip service with this phase is never going to provide a true or
right kind of value for the organization nor for the community. At the same time, it must be
engendered by major amount of cost and expenses. As per research where value of business is
developed when the social responsibility and sustainable development must be embedded in the
culture of the organization and strategies for the core business (Severinaite, 2017). When this is
done in right manner, the organization should also gain advantages from a more corporate image
which is favorable for the customer loyalty with high morale for employees and increased
learning for organization and effective core competencies.
ISSUES IN INTERNATIONAL BUSINESS 9
ISSUES IN INTERNATIONAL BUSINESS 10
Reference
Crête, R., 2016. The Volkswagen Scandal from the Viewpoint of Corporate
Governance. European Journal of Risk Regulation, 7(1), pp.25-31.
Jung, J.C. and Park, S.B., 2017. Volkswagen’s diesel emissions scandal. Thunderbird
International Business Review, 59(1).
RAHUMAN, M.R.A.H., 2017. Corporate Social Responsibility: Does it Really Matter? Case
study on Emission Scandals of Volkswagen and Mitsubishi. International Journal for Innovation
Education and Research, 5(7), pp.24-39.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), pp.1501-1518.
Severinaite, I., 2017. From Greenwashing Machine to Mean Green Sustainable Machine:
Recommendations For Building Credibility in CSR Communications. Journal of Promotional
Communications, 5(1).
Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. “More than words”: Expanding the
taxonomy of greenwashing after the Volkswagen scandal. Journal of Business Research, 71,
pp.27-37.
Smith, J. and Palmqvist, J., 2016. Emission: Impossible–CSR Protocol: A quantitative study of
brand trust and the Big Five personalities.
Zhang, B., Marita, V., Veijalainen, J., Wang, S. and Kotkov, D., 2016. The Issue Arena of a
Corporate Social Responsibility Crisis–The Volkswagen Case in Twitter. Studies in Media and
Communication, 4(2), pp.32-43.
Zhukova, V., 2016. Volkswagen’s 2015 crisis. A new challenge for CSR and excuse for
consumers’ scepticism.
Zhukova, V., 2017. Volkswagen’s 2015 crisis. A new challenge for CSR and excuse for
consumers’ scepticism: Communication and actions that could reduce consumers’ scepticism.
GRIN Verlag.
Reference
Crête, R., 2016. The Volkswagen Scandal from the Viewpoint of Corporate
Governance. European Journal of Risk Regulation, 7(1), pp.25-31.
Jung, J.C. and Park, S.B., 2017. Volkswagen’s diesel emissions scandal. Thunderbird
International Business Review, 59(1).
RAHUMAN, M.R.A.H., 2017. Corporate Social Responsibility: Does it Really Matter? Case
study on Emission Scandals of Volkswagen and Mitsubishi. International Journal for Innovation
Education and Research, 5(7), pp.24-39.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), pp.1501-1518.
Severinaite, I., 2017. From Greenwashing Machine to Mean Green Sustainable Machine:
Recommendations For Building Credibility in CSR Communications. Journal of Promotional
Communications, 5(1).
Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. “More than words”: Expanding the
taxonomy of greenwashing after the Volkswagen scandal. Journal of Business Research, 71,
pp.27-37.
Smith, J. and Palmqvist, J., 2016. Emission: Impossible–CSR Protocol: A quantitative study of
brand trust and the Big Five personalities.
Zhang, B., Marita, V., Veijalainen, J., Wang, S. and Kotkov, D., 2016. The Issue Arena of a
Corporate Social Responsibility Crisis–The Volkswagen Case in Twitter. Studies in Media and
Communication, 4(2), pp.32-43.
Zhukova, V., 2016. Volkswagen’s 2015 crisis. A new challenge for CSR and excuse for
consumers’ scepticism.
Zhukova, V., 2017. Volkswagen’s 2015 crisis. A new challenge for CSR and excuse for
consumers’ scepticism: Communication and actions that could reduce consumers’ scepticism.
GRIN Verlag.
1 out of 10
Related Documents
Your All-in-One AI-Powered Toolkit for Academic Success.
+13062052269
info@desklib.com
Available 24*7 on WhatsApp / Email
Unlock your academic potential
© 2024 | Zucol Services PVT LTD | All rights reserved.