Management Problem Solving: CSR Issues and Recommendations for Volkswagen

Running head: MANAGEMENT PROBLEM SOLVING
Topic: Management Problem Solving
Name of the Student:
Name of the University:
Author’s Note:

1MANAGEMENT PROBLEM SOLVING
Executive Summary
The purpose of the report was to highlight the Corporate Social Responsibility (CSR) issues of
Volkswagen and recommend ways through which the organization can focus more on ethical
business in future. Initially, it has been found that the organization has faced huge negative
publicity in the society due to the falsification of its NOx emission amount in the year 2015. It
has faced tremendous economic, legal and ethical issues in the past three years.
Poor Stakeholder Management, Unethical Corporate Bureaucrats and Improper Compensation
Management has been found to be the most crucial issues that lead to impact on Volkswagen
CSR. Directorial issues, organizational culture, poor corporate governance, ignorance of
administrative officials and blunt compensation package were some of the issues that resulted in
unethical business practice. Moreover, after comparing with Carroll’s CSR Pyramid, it has been
found that the organization has failed to meet all the pillars in the past ten years.
Following the issues some alternative solutions in favor of Volkswagen has been proposed,
which were Better Corporate Governance, Placing Responsible Corporate Administrators and
Proposing Realistic Compensation/Incentive Structure. The views from the authors indicated that
the organization might surely get huge response in future if the governance is restructured.
Finally, it has been recommended that Written Code of Ethics, Redefined Corporate Culture,
Strengthening Research and Development Team, Incorporating Audit Team and Strategic
Balance between Economic and Ethical Responsibility will help Volkswagen to reduce such
unethical practice in future. Ethical principles will indicate the internal stakeholders especially
the employees to perform morally or otherwise they will be penalized. Through R&D the
organization will be able to establish its latest engines, which will be emission free by
incorporating latest automation technology.

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Table of Contents
1.0 Introduction................................................................................................................................3
1.1 Context...................................................................................................................................3
1.2 Link to Case...........................................................................................................................3
1.3 Purpose...................................................................................................................................3
1.4 Argument...............................................................................................................................3
1.5 Outline....................................................................................................................................4
2.0 Analysis of the Critical Problems and Issues............................................................................5
2.1 Issue 1 – Poor Stakeholder Management...............................................................................5
2.2 Issue 2 – Unethical Corporate Bureaucrats............................................................................5
2.3 Issue 3 – Improper Compensation Management....................................................................5
3.0 Analysis of Alternatives and Options........................................................................................6
3.1 Alternative 1– Better Corporate Governance.........................................................................6
3.2 Alternative 2– Placing Responsible Corporate Administrators.............................................7
3.3 Alternative 3– Proposing Realistic Compensation/Incentive Structure.................................7
4.0 Recommendations......................................................................................................................8
4.1 Recommendation 1- Written Code of Ethics.........................................................................8
4.2 Recommendation 2- Redefined Corporate Culture/Corporate Relationship.........................8
4.3 Recommendation 3- Strengthening Research and Development Team.................................8
4.4 Recommendation 4- Incorporating Audit Team....................................................................9
4.5 Recommendation 5- Strategic Balance between Economic and Ethical Responsibility.......9
5.0 Conclusion.................................................................................................................................9
References......................................................................................................................................10

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1.0 Introduction
1.1 Context
Globalization has tremendously increased the competition among all business sectors,
among which automobile industry is one of the most rapidly flourishing industry. However,
manufacturers are often found to disregard the environmental sustainability policies by
practicing some fake or unethical methods (Lin, Chen & Huang, 2014). Such unethical practices
often lead to corporate sustainability issues and extreme negative publicity in the market.
1.2 Link to Case
While considering Volkswagen, it has been found that “Volkswagen emissions scandal”
is one of the most prominent case that has raised the question of Corporate Social Responsibility
in the entire automobile industry (Tse et al., 2017). The organization has been found to violate
the “Clean Air Act” in the United States by intentionally programming ‘turbocharged direct
injection (TDI)’ diesel engines, which masked the actual carbon emission from engines at the
time of testing. The main intention of the manufacturer was to limit the emission output by
meeting the US standards during regulatory testing. However, in actual, it was found to emit 40
times the NOx emission limit, which eventually was found to impact the environment by raising
the toxicity level of clean air (Rhodes, 2016).
1.3 Purpose
The purpose of the report is to analyze the major management problem, which is
Corporate Social Responsibility (CSR). The ethical issues that Volkswagen have raised since
2015 will be evaluated and alternative solutions will be highlighted. Finally, some
recommendations will be introduced in support of Volkswagen so that it can restore its CSR
practices.
1.4 Argument
The main argument that will be discussed in this report is regarding the differences
between CSR theoretical model and the ways through which Volkswagen have violated the
theories. The main theory that will be selected is Carroll’s CSR Pyramid and its pillars will be
compared with Volkswagen case.