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Study | Management Theory and Practice

   

Added on  2020-05-11

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Leadership ManagementPhilosophy
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1MANAGEMENT THEORY AND PRACTICEManagement theory and practicesName of the studentName of the universityAuthor note
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2MANAGEMENT THEORY AND PRACTICEIntroduction For the contemporary business organizations, various factors are there to be considered inorder to stay ahead in the competition. In addition, contemporary business organizations alsohave to consider the maintenance of their goodwill and reputation in the market in order to mainthe positive brand image (Maor, Gilad & Bloom, 2012). Thus, business organizations face issuesin maintaining the goodwill in the market along with initiating aggressive business objectives.Ethical issues are being emerged from the ineffective management of the leadership as well aspoor organizing ability in the organization (Bello, 2012). Moreover, in some cases variousbusiness organizations involve in unethical activities in view to gain profits in short time. Thus,for the emergence of the ethical issues for the contemporary business organizations, there arevarious determining factors, which promote the organizations in involving in unethicalapproaches. Volkswagen is one of the prominent automobile organizations in the world having theirpresence in different countries around the world. They are second to Toyota in terms of volumeof sales across the world. With having rich history and automobile heritage and having involvedvarious innovations, which changed the scenario of the global automobile industry, Volkswagenis one of the most trusted automobile brands in the world. However, in the recent years, thebrand value for them is at stake due to the origination of few unethical issues in their internaloperations. The emergence of the unethical business strategies in the operation of Volkswagenhave not only tampered their positive brand value across the world, but also attracted variouslawsuits.
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3MANAGEMENT THEORY AND PRACTICEThis essay will discuss about the ethical issues being faced by Volkswagen in theirbusiness activities along with evaluating the ethical dilemma being faced by them. Differenttheories related to organizational ethics will be discussed in relation to the ethical dilemma beingfaced by Volkswagen. Ethical issues being faced by Volkswagen Marketing force is the key motivating factor for the Volkswagen to get indulges inunethical business principles. In order to overtook Toyota in acquiring the status of globalmarket leadership, upper level management in Volkswagen set out an aggressive businessobjectives. However, the business objectives and goals being set out by the upper managementpressurized the engineers in the organization rather than motivating to bring out new andinnovative products. In acquiring the market leadership status from Toyota, Volkswagen targetedthe market of United States further penetration. However, in operating in the market of UnitedStates, they have taken the unconventional route of introducing diesel vehicles rather thanintroducing the new age hybrid vehicles (Kansascity.com, 2017). This decision was quitedistinctive due to the reason that, diesel vehicles holds only 5 percent of the total market share ofthe entire automobile market of United States. However, in creating the success path for operating in the American market, unethicalbusiness strategies are being involved by them. According to the legislations of vehicle emissionin United States, diesel vehicles have to go through stringent regulations to pass forcommercialization (Barrett et al., 2015). However, it was an impossible task for the engineers inVolkswagen to design their vehicles in fewer periods to adhere with the American legislations.In this case, the autocratic leadership style being possessed by then CEO of Volkswagen Martin
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4MANAGEMENT THEORY AND PRACTICEWinterkorn plays a key role in motivating the engineers to employ unethical means. Engineers inVolkswagen installed cheating software, which helped in showing lower rating of emission fromthe vehicles when being tested, however, the practical scenario, is quite different being emitting35 percent more than the given ratings (Ewing, 2015). Thus, they are involved in a huge unethical business principle in operating in the marketof United States. Afterwards the further investigation reveals the unethical practices of them,which lead to the crash in the global stock prices of Volkswagen. In addition, CEO was beingsacked along with some other top officials. All cars in United States being manufactured in 2015are being recalled, which further caused huge cost for them. Above all of these, the positivereputation and goodwill that they had earned were at stake, which caused huge deep impact intheir sales. Application of the theoretical concepts There are various theories being stated by the different authors in relation to the ethicalprinciples to be followed. However, in this case, the first ethical theory that will be used inanalyzing the issue with Volkswagen is the rule based or utilitarian ethical theory. This theory isbeing penned by Jeremy Bentham (Bonnefon, Shariff & Rahwan, 2015). According to thistheory, the ultimate objective or goal of ethical decision-making is to maximize the benefits ofthe organization and considering the welfare of all the associated stakeholders. However, in thecase of the Volkswagen, the decision of installing the cheating software in the cars is being takenfor enhancing the organizational performance, but the stakeholder welfare is not beingconsidered. Due to this reason, various internal stakeholders are being terminated from their job.In addition, due to the crash in the stock price of Volkswagen in the global share market, the
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