Solutions to Issues Faced by Volkswagen

This report addresses the solutions to the issues faced by Volkswagen, including re-designing ethical framework, corporate social responsibility, green innovation, good will marketing, low-cost strategies, and quality control.

DIPLOMA OF BUSINESS
MANAGEMENT

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Contents
Introduction...........................................................................................................................................1
Reasons for these issues........................................................................................................................1
Solution to issue....................................................................................................................................1
Conclusion.............................................................................................................................................3
References.............................................................................................................................................3

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Introduction
For a company it is critical to manage the factors that might have impact on the operations
and growth of the company and also ensure the way in which they are dealing with the issues
that exist within the organisation. Volkswagen which is facing issues such as fines due to
emission laws and there is also decrease the sales of the car due to image failure after
emission scandal of Volkswagen (Markowitz, et al. 2017). Apart from these they have also
faced fines from different governments due to product quality. This part of the report will
address the solutions to the issues that are faced by the Volkswagen.
Reasons for these issues
Some of the reasons why they had to face such issues are as follows:
 Lack of environment friendly business policy: The policies of the company do not
support designing cars that are more environment friendly as their major focus was to
make profits.
 Lack of strong management: It is seen that in the case of scandal that no individual in
the management opposed such incident to take place (Terry-Armstrong, 2016). They
did not implied corporate governance rules while managing their operations.
 Poor marketing: Post such scandal, the company needed to do more aggressive
marketing to save their image but they did not. This is major reason that is some of
the countries like Germany Sales decreased.
Solution to issue
There are many things that could have been done by the company so as to find out the ways
in which they can deal with the issues faced by Volkswagen. Out of which some of the ways
are:
 Re-designing and implementation of ethical framework: At the decision making level,
it is critical for the management to make sure that they apply all the ethical
consideration defined in the company policy and the challenges that might confront
their business model. Re-designing of the ethical standard within the organisation also
means that it is followed strictly. There should be an ethics committee within the firm

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that must not be under the management of the firm. They should have the
responsibility to scrutinise the decisions on the basis of the ethics (Plute, 2018). This
committee should also have the responsibility to give full freedom to all the
employees so that they can work as a whistle blower. There are people from different
parts of the world and it is critical for the management to ensure that they have an
ethical perspective towards doing their operations.
 Corporate Social Responsibility: In today’s time corporate social responsibility is
something on which most of the firms are relying upon. It is an excellent management
approach to not only ensure sustainability but also improve the image of the firm.
CSR in the areas like innovation for the society that could create an image in the
market that firm is really working towards better tomorrow will help the firm in
achieving the objectives they want to address (Li, et al. 2018). They can improve their
image within U.S. market by providing more jobs to the local people especially the
ones that belongs to lower section in the society.
 Green Innovation: Green technology is something where most of the firms have
shifted towards and it has forced the firms to make sure that they innovates their
products not only in terms of the demands of the market but also for removing the
blots like higher carbon emission. The initiatives such as Zero carbon emission from
their vehicles can help them to tackle the challenges that is faced by them. In the time
when the skills are the biggest facilitator of Innovation, it has become essential for the
management to have a culture of research and development within the organisation
which can bring new innovations and can facilitate companies in their growth (Healy,
2016). Development of the alternative fuel engines could help the firm in making their
mark in the industry as a company that learns from their past.
 Good will Marketing: This Company needs to do image marketing. Supporting causes
that are related to the society especially in the areas of environmental sustainability
can boost firm’s image in all parts of the world. This can be done in different parts of
the world all at a same time. With the help of digital marketing campaign this can be
easily done by the firm (Welch, 2019). Company needs to do marketing in terms of
the things that they are doing well for the society. In the marketing campaign, they
need to highlight the improvements that are done by them from learning from their
mistakes.
 Lost cost strategies: Under the shadows of global recession, the global automobile
market has seen a downfall hence it has become critical for the management of the

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Volkswagen to ensure that they lower down the prices of their products (Valentini and
Kruckeberg, 2018). This can be done by the company by implementing the low cost
strategies. This can be done by shifting the production units in the countries that is
having lower production cost.
 Quality control: It is also essential that Volkswagen moves towards TQM so as to
ensure that at no levels of the product life-cycle quality is compromised. The quality
is also required for ensuring that firm deals with their customers without making
many mistakes. Since already Volkswagen has faced so many charges in the past
hence they need to ensure that they do not face such incidents in the future. Lean
manufacturing will also help the company to manage quality while ensuring effective
utilisation of resources (Rhodes, 2016).
Conclusion
From the above based report it can be concluded that Volkswagen has faced issues such as
image failure due to environment related scandals. These arise due to lack of management’s
will power and lack of policy towards doing environment-friendly business. The sales came
down due to poor marketing done by the company post scandal. Things that can be done by
the company so as to act as a solution to the issue are Re-designing and implementation of
ethical framework, Corporate Social Responsibility, green Innovation, good will marketing,
and Lost cost strategies and Quality control.

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References
Healy, B., 2016. Germany: Volkswagen emissions problems spread. Green Left Weekly,
(1085), p.20.
Li, L., McMurray, A., Xue, J., Liu, Z. and Sy, M., 2018. Industry-wide corporate fraud: The
truth behind the Volkswagen scandal. Journal of cleaner production, 172, pp.3167-3175.
Markowitz, E.M., Chapman, D.A., Guckian, M.L. and Lickel, B., 2017. A corporate scandal
that hits close to home: examining owners’ responses to the Volkswagen diesel emissions
scandal. Environmental Communication, 11(6), pp.740-755.
Plute, K., 2018. Automotive Crisis: Volkswagen's Emissions Scandal & Response
Strategies (Doctoral dissertation, West Virginia University).
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), pp.1501-1518.
Terry-Armstrong, N., 2016. The Volkswagen Scandal-The high cost of corporate
deceit. Busidate, 24(1), p.9.
Valentini, C. and Kruckeberg, D., 2018. “Walking the environmental responsibility talk” in
the automobile industry: An ethics case study of the Volkswagen environmental
scandal. Corporate Communications: An International Journal, 23(4), pp.528-543.
Welch, J., 2019. The Volkswagen recovery: leaving scandal in the dust. Journal of Business
Strategy, 40(2), pp.3-13.