Transantional Management: Volkswagen Emission Scandal Case Study

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TRANSANTIONAL
MANAGEMENT

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Table of Contents
Introduction................................................................................................................................2
Summary of the ethical issue.....................................................................................................2
PESTLE examination.................................................................................................................3
Organisational Culture...............................................................................................................5
Exploration of the ethical issue..................................................................................................6
Conclusion and Suggestions......................................................................................................9
References................................................................................................................................10

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Introduction
This report outlines the case of Volkswagen emission scandal in America happened on
September 2015 and that cause nearly €2.5bn loss to the company in October 2015. The
report will address ethical issue faced by Volkswagen and its associated consequences and
how the company respond to the emission scandal. It also includes the suggestion of various
alternative strategies that can help at that time in dealing with such scandal. However, before
moving towards the whole case, it is important to know some background information of the
company related to its organisational culture and the analysis of external environment of
individually Germany and United States to reveal various likenesses and dissimilarities amid
the nations.
Summary of the ethical issue
The Volkswagen (VW) is a German automaker delivers its vehicle all over the globe and it is
ranked second by the Forbes as the largest car manufacturer in the world 2018. The company
revenue in 2018 was stood at US$278 billion and presently the company operates in 153
nations with having 122 production plants in 20 European countries (Raul, 2019). As per
their annual report, the total number of employees in company was noted as 3, 02,552. In
terms of selling of products, the company designs manufacture and distribute commercial and
passenger vehicles, engines and motorcycles. The company also presents various sorts of
services like financing, leasing and management of fleet.
Considering its rich history, the company was incorporated in 1937 and at that time the
company manufactures and produces its passenger vehicles under numerous brands including
Bugatti, Porsche, Skoda, and Bentley. At that time, the company also manufactures the cars
that were named and renowned as Beetle. For more than two decades, the company retained
highest market share in Europe with extending its output of production to 4.7 million vehicles
in Europe in 2017 out of 10 million sold internationally (Winton, 2019). There is also a 4.2
per cent increase over 2017 as in 2018, the company sold over 350, 000 cars in the US. It
was the company second year of sales increases afterwards sales dropped following the diesel
gate scandal, where a US research exposed massive fraud in its diesel emission reporting. In

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addition, one of the biggest winners of the US automobile market was Fiat Chrysler which
leads to rise in annual sales by 8.5 per cent in 2018.
However public prosecutors in Germany fined the company with €1bn for the issues
associated with 2015 diesel emission scandal. This also adds up to various fines from other
countries including the US with involving the loss to the company with call off various
vehicles. Volkswagen has earmarked costs of about 26 billion euros associated to prepared
engine-control software in as many as 11 million diesel cars globally (news18.com, 2018).
This scandal caused Volkswagen a fine of $20 million in relation with civil settlements in the
US. The scandal was started to happen when Volkswagen deployed emission software on
more than a half million diesel cars in the U.S. and the aim of the company was to make
crossway through passing various parameters set by the Environment Protection Agency. The
cars produced at that time was fully compliant with all national emission levels in the test
mode, however, later on, EPA cites catch their tricks and cite them for emission violations
and then the company was accused of altering software in the 3-litre diesel engines fitted to
some of VW models (Hotten, 2018). However, at that time, all such claims are denied by VW
and this has affected at least 10, 000 models.
PESTLE examination
Here below is the PESTLE analysis of Germany and United States stating various similarities
and dissimilarities between the two countries in relation with various relevant facts and data.
 Political Factors – Germany has maintaining good alliances with France and some
other countries since 1990. On the other hand, US also has a stable political
environment like Germany and becomes great choice for foreign direct investment.
Germany is the major contributor to the European Union budget and widely
recognises as nearby and robust allies of US in Europe. In relation with taxes,
Germany people willingly pay taxes that makes Americans blanch. On the other hand,
in US, people do not know what high taxes really are and the highest sales tax in the
US is below 10 per cent. Diesel or Gasoline fuel costs more than double as much in
the US as due to taxes (Dyreng et al, 2017). With regards to this, other fees and taxes