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Running head: ETHICS LEADERSHIP & DECISION MAKINGMANAGEMENT THEORY ANDPRACTICE[Document subtitle]
1ETHICS LEADERSHIP & DECISION MAKINGIntroductionThe ethical dilemma is a situation which requires a person to choose from two different optionsboth of which are correct morally but conflict each other. Ethical behavior is determined bycultural or societal norms. It requires three necessary conditions to consider a situation asethically dilemmatic. Firstly an individual must decide a course of action that is best among allothers. Secondly, there should be various courses of action to choose from. Thirdly, there mustbe some principle of ethics that is compromised as it is not possible for a perfect solution toexisting. The corporations face the ethical dilemma in their daily operations, and it is veryimportant for them to strategize their tasks so that their responsibility towards society remainsdiligent. For a long time, scandals have been around in top companies like WorldCom, worldonline and Enron is making decisions which may raise ethical questions. These scandalscontribute to Massive confidence loss and deterioration of trust in the integrity of businesses. Intoday's era companies are seeking ways to increase their profits and values. The recent scandal ofVolkswagen has proved that the ethics in business is of much high importance and should beaddressed to maximize the profits and the responsibility of organizations towards society. In thisessay, we will be critically analyzing the ethical dilemma faced by Volkswagen Company byapplying theoretical concepts from managerial ethics. Furthermore, we will be evaluating therelationship between decision making, leadership, and ethics and provide recommendations overhow leaders can ensure their morality and ethics in organizational decision making. Volkswagen’s Ethical DilemmaVolkswagen made its car appear less polluting than they are by cheating the emission tests. TheAgency of Environmental Protection in U.S. had discovered that half a million diesel cars of
2ETHICS LEADERSHIP & DECISION MAKINGVolkswagen were emitting up to 40 times more fumes which were quite toxic than permitted(Balbi, A. 2015). After the coming out of Volkswagen from the scandal, the company hasadmitted that the cheat had affected almost 11 million vehicles across the globe. This scandalwas initially discovered by NGO who performed on-road emission tests. After discovering this,the NGO contacted EPA which further investigated the matter. This scandal led to recall of carsat a massive level and to resign of Volkswagen Group CEO, Martin Winterkorn. The disaster bythe Volkswagen's diesel emissions gave a treasured lesson to companies regarding the ethicalityof their operations. The German automaker installed and devised a functioning code as a "deviceto defeat" to intellect when its vehicles were being tested for nitrogen oxide emissions. After thetest, the software was able to reduce NOx and torque emissions, and in normal conditions, thecar was guided by a program that may rise the fuel economy, torque and acceleration. Theepisode meant that employees at positions of authority at Volkswagen had devised this schemewhich was allowed to get successful over seven years till the time it was detected. The engineershadknowingly signed off code that showed yes and defeated theaim of regulations of Clean AirAct and EPA (Zhou, A. 2016). This disrupted the image of the company as corrupt ethicallyfrom roots, and yet, before this, no one could suspect that VW was more unethical than any otherlarge automotive company. However, the Company gave enough comments in defense againstthe allegations charged over them. For example, they emphasized that their employees areobeying the internal rules, regulations, and laws which apply to their environment of work andthey also act according to the values of groups and codes of conduct. Furthermore, they extendedtheir defense by adding that all the programs are audited by Auditing program approved byChairman of Board of Management. Also if anyone is not complying with the codes can face
3ETHICS LEADERSHIP & DECISION MAKINGstrict consequences which can extend up to termination of employment (Blackwelder, et al.,2016).The International Council for Clean Transportation, Nonprofit European organizations, andCentre for Alternative Fuels and Engine Emissions at the University of West Virginia were allshocked to see that Volkswagen was able to pass all the tests. After a deep analysis, it was foundthat even all cars were passing the tests for U.S. emissions, the engines were non-compliant.Volkswagen defended this argument by issuing a voluntarily recall suggesting that those issueswere just technical in nature which explained increased emissions. But EPA was not fooled withthis statement, and they declared Volkswagen that the models in 2016 were not certified ascompliant to the legal norms and they have to justify their answer. At last Volkswagen confessedabout their installing and designing of “defeat device” in over 4, 00,000 vehicles on U.S. roads.The company had to face Penalties by EPA of up to $ 38000 for every single vehicle which wasnot complying the rules and regulations. The stock of Volkswagen had dropped to 20%, and alsoits CEO resigned from the post. The U.S. Department of Justice has begun the investigationswhich may hold hearings on the issue. Volkswagen was caught because of their act being soegregious. There would be many companies in various sectors who might be cheating theagencies of regulations without knowing that. Many times the USDA and FDA have limitedresources which allow them to scan the plants of food only once or twice in a year.Theoretical Concepts from Managerial EthicsTo evaluate the Volkswagen predicament and its actions, various ethical opinions are debatedand applied. Amongst are Utilitarianism Theory, Virtue based theory and The Shareholder theory(the Friedman doctrine). Utilitarianism Theory assesses how ethical an action is on the
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