Ethical Issues at Volkswagen

Running Head: ETHICS IN MANAGEMNT 1
Ethical Issues at Volkswagen
Name
Institutional Affiliation

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Table of Contents
INTRODUCTION...........................................................................................................................3
Background of the Ethical Issue..................................................................................................3
Problem
Statement................................................................................................4
Characteristics of the Ethical Problem...............................................................4
Extended Consequences and Mixed Outcome.............................................................................5
Uncertain Consequences...........................................................................7
Personal Implications and Multiple Alternatives.........................................................................9
Analysis under a Theoretical Framework based on Economic, Legal and Ethical
considerations......10
summary.....................................................................................................................................11
Recommendations to Solve Ethical Problem.............................................................................10
References..................................................................................................................................13

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Introduction
Ethics are the moral principles that are presumed to govern people’s behavior or the
way that a certain activity will be conducted. Business ethics on the other hand refers to the
study of proper policies of business. These proper business policies include the potentially
controversial issues for example insider trading, corporate governance, fiduciary
responsibilities, discrimination, and corporate social responsibility. In business ethics, it is the
law that guides businessmen in most of the times while other business set their basic
frameworks that are ethically proper for their business. This frameworks must however be
accepted by the public and have the moral principles of how the business behaves since the
principles that guide human beings and their actions are also applicable to businesses.
Background of the Ethical Issue
The Volkswagen group is one of the largest automakers in the world. Headquartered
in Wolfsburg, Germany, the company has been for a long time the testament of Germany’s
engineering marvels. However, in recent years, the company's well-known brand name has
been tarnished by several actions that violated the trust the company had with its various
stakeholders (Mansouri, 2016). The company was involved in an emissions scandal. The
scandal along with how the company reacted to the issue revealed well-established flaws in
the company's organizational structure as well as its corporate culture (Siano et al., 2017).
This paper examines the ethical issues that were faced by the company and how it impacted
various issues surrounding multinational issues and environmental protection.
Ethical refer to moral principles that govern the behavior of certain parties. While
ethics applies to the actions of individuals, when these individuals are acting on behalf of an
organization, their actions will be seen as a reflection of the organization's stand on ethics
(Siano et al., 2017). Ethics differs from legal requirements as there are often no formal ways
of enforcing ethical issues. More so, an organization can choose to have or not have an

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ethical code of conduct. More so, legal actions can be unethical and unethical actions can be
legal. As such, legality is not always an accurate determinant of whether an action is morally
right.
Characteristics of the Ethical Problem
i) Extended Consequences and Mixed Outcome
To understand the ethical issues that threatened such a large corporation, it is vital to examine
the motivation behind the events and the specific actions that led to the crisis faced by the
company. At the time the scandal unfolded, Martin Winterkorn was the chief executive
officer. He had been the CEO since 2007 (Rhodes, 2016). Martin had the ambitious objective
of unseating Toyota as the world’s largest automaker and in the process sells at least ten
million automobiles annually. At the same time, this objective would do well in helping
Germany recover from the devastation of the 2008-2009 financial crises (Rhodes, 2016). To
drive these sales, the company decided to place greater emphasis on the United States market.
To meet these supply objectives, the company's engineers had to deliver powerful, fuel-
efficient cars whose emissions would pass America's stringent pollution regulations. The
company aimed at increasing the number of vehicles it sold to the United States threefold.
The company set out to increase sales in the diesel segment despite the segment
holding just 5% of the US vehicle market in 2007 (Rhodes, 2016). Diesel engines, if designed
to be fuel efficient enough can be desirable as they are often powerful. Nevertheless, these
engines can generate more pollutants than their petrol counterparts. To achieve the feat of
developing a diesel vehicle that was efficient enough to pass US regulations and at the same
time powerful enough to attract a significant market share would require the company's
engineers to overcome a significant obstacle (Blackwelder, Coleman, Colunga-Santoyo,
Harrison, & Wozniak, 2016). The engineers had to work under the watchful eye of
Winterkorn. Winterkorn was known to keep the company under tight control. He was known