Problem Solving Report for Volkswagen

This problem solving report analyzes the scandal of gas emission that made Volkswagen lose its market position and client base. It explores the ethical and legal aspects of the incident and provides recommendations for the company to regain its market position.

Running Head: PROBLEM SOLVING REPORT FOR VOLKSWAGEN
Problem Solving Report for Volkswagen
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Executive Summary
The aim of the study is to excavate the incident that made Volkswagen lose its market position
from Europe and US. The scandal of gas emission made the company lose its market position
and client base as the company had deliberately violated the ethical and legal aspects of the
company. The owner and the other authorities in spite of knowing the consequences installed the
defeat device software in the car. This made the company face huge complications and penalty
from the legal bodies. The analysis of the problem is done by using Carroll’s theory and
Utilitarianism ethics theory. The recommendations has also been stated for the company so that
they can regain the market position and their client base.

Table of Contents
Introduction......................................................................................................................................4
Identification of the Problem...........................................................................................................5
Analysis of the Problem...................................................................................................................6
Carroll’s theory on CSR..............................................................................................................7
Utilitarianism ethics theory..........................................................................................................8
Recommendations............................................................................................................................9
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................11

Introduction
The Volkswagen Company has recently faced many issues in the management of their
company, which has become a big disadvantage for the company. The rival companies are
utilizing the loopholes and making their revenue generation more strong and efficient. The
Corporate Social Relationship (CSR) of Volkswagen has turned out to be a miserable failure.
The strategies that the CEO of the company has utilized did not proved to be beneficial for the
company (Blackwelder et al., 2016). The company wanted to make eco-friendly cars, which
would have been a news innovation in the automobile industry and this would have attracted
many customers but the processes and the strategies were not properly planted and thus it led to a
complete failure. The company indirectly polluted the environment, as the engineers could not
plant the proper mechanism in the cars of the company. The aim of the study is to identify the
proper problem areas of the company that made it suffer such severe loss and bad image in the
industry (Charles Riley & Mark Thompson, 2019). An analytical study will also be stated in
order to understand and explain the problems of the company. The study will also a
recommendation section that will help the company in reducing or eradicating the problems. The
implementation of the proposed recommendations will them in overcoming the hurdles.

Identification of the Problem
The company had initiated the concept of manufacturing eco-friendly cars for the
customers rather the company polluted the atmosphere in a large scale that depleted the
environmental layer. The Clean Air Act noticed the issuethat company had intentionally
implanted the processes that affected the environment and emitted harmful gases (Rhodes, 2016).
The cars when tested under the harmful gas emission test showed that the cars are properly
following the protocol of the CSR and the CEO of the company purposely falsified the whole
incident and claimed that the cars are environment friendly. However, later it was detected that
the cars were emitting the maximum of the air pollution and harming the environment. This
made the company go through many legal procedures because the mistake was done purposely
and the falsification is an unethical step that the owner of the company had undertaken (BBC
News. 2019).
The cars were emitting 40 times more nitrogen oxide than the usual cars did. The drivers
were also in a dilemma that whether they should drive slowly in order to reduce the emission of
the gas, because rash driving might emit mire pollutants and the police might penalize them. In
September, “The Environmental Protection Agency (EPA)” found identified that the cars had a
software of the “defeat device” in the engines of the cars that caused the maximum pollution
(BBC News. 2019). The company had a major target of making the diesel cars being sold for
which they conducted huge promotional and marketing strategies, which claimed that their cars
were purely eco-friendly mad that they emitted the least amount of pollutant and made the
customers aware about their innovation and convinced them do the purchase by falsifying the
whole situation (Npr.org. 2019). Volkswagen manufactured the cars that were involved in the
scandal such as Audi A3, Beetle, Jetta, Passat and Golf.

Later the owner of the Volkswagen admitted that 11 million cars globally and 8 million
in Europe has the “defeat device” inculcated in the system of the car (CarAndBike 2019). EPA
has found the company guilty of modifying and changing the software on the 3-litercars, which
had been installed in some of the Audi and Porsche cars as well as in many Volkswagen models
(Maxine Joselow, 2019). However, the owner of the company denied the fact and claimed that
they did not perform any unethical deeds and this as a result, affected 10,000 cars. In the
November month, it has been found that Volkswagen “irregularities” in the carbon dioxide
emission test that the pollutants and the practice that the company was committing can affect
near about 80,000 cars in Europe, which also included petrol vehicles (BBC News. 2019). Later
the study in December revealed that it affected near about 36,000 cars that was produced in each
year. The cars when put through the test under the controlled laboratory conditions showed that
they involved putting the cars on a stationary trial rig, where the vehicles were put on a safety
mode where the engine ran below the normal performance and power. However, on the roads,
the cars produced the maximum pollutants and the engines were not in the test mode
(Intheblack.com. 2019).
Analysis of the Problem
The Volkswagen Company and its authorities were aware about the consequences of the
defeat device yet they implemented that in their processes. The violation of CSR is a huge
penalty that has been levied on the company, the formulation of CSR is mainly based on the
profit generation of the company, the protocol and the legal procedures of the company and
aligning the policies and the procedures with the ethical grounds of the company(Newsweek.
2019).

Carroll’s theory on CSR
The theory of Carroll is proper framework that validates the need of maintaining the CSR
policies in the company. The theory also justifies the need of implementing the CSR policies in
the management of the company. The theory includes economic, legal, ethical and philanthropic
factors in the pyramid (Carroll, 2016).
Economic
This includes the responsibility of the company in producing the commodities and
services for the customers and cater their requirements. This will help the company in earning
the revenue and make it strong economically, and formulating the policies based on the ethical
grounds and aligning them with proper legal aspects in order to avoid any illegal action or severe
downfall to the business in the forthcoming days of the company. This theory also states that the
company must earn its revenue but maintaining the proper ethical grounds (Carroll, 2016). The
company has not been able to acquire the desired productivity for them due to the scandal that
they instigated purposely hence; the economic factor of the company was not successfully
achieved. The ideology of this factor encircles earning of revenue for the company, which
Volkswagen failed miserably due to the unethical strategy they applied.
Legal
This factor states that the companies must conduct its business maintaining the laws and
the legal grounds and carry out the processes aligning to those procedures. The legal factor states
that the company must conduct its policies and business procedures based on the all the ethics so
that the company does not experience any illegal occurring (Spence, 2016). Legal aspevt if the
company was not achieved in any which ways as the company planted an unethical strategy in

their cars. The software of defeat device was installed in the cars, which was illegal. In spite of
knowing the consequences, the company falsified the whole incident, which made the company
lose its market value and position. Thus, the legal aspect was also not successfully attained by
the company, which led to severe consequences from the legal authorities of the company.
Ethical
This factor as explained by Carroll is that the company must abide by the ethics that the
company must abide by. Ethical aspects are the ones that are not actually imposed by law but are
expected by the companies to follow in order to maintain the image of the company in the
industry. This is what the society expects from the company to deliver itself in the market
(Frynas & Yamahaki, 2016). The ethical grounds that the company has purposefully violated
even after knowing the consequences made the company lose the entire good image in the
industry. The company did not follow the CSR and the legal aspects of the company as the
company planted an illegal software in their cars. The ethics of the company was violated hence
they failed to achieve the ethics aspect as well.
Philanthropic
This aspect is in the top of the pyramid and it emphasizes on the most luxury factors such
as innovating the processes, improving the quality of the employees’ life, understanding the
preferences of the customers. Developing the life and standard of the community or society
(Carroll, 2016). The emission of the gas that was emerging from the cars not only harmed the
environment but also the population in a large scale. The employees associated with the
company also earned a bad image as they performed the instructions that was given to them by
the CEO of the company. Thus, the defeat device installation led the company to may downfalls

not only in terms of business but also in terms of customer base and market position. Thus this
made the company not achieve the philanthropic aspect.
Thus, Volkswagen has not successfully planted the Carroll’s theory of CSR the company
has purposely devalued the legal aspect knowing the consequences that can affect the
environment so aggressively the authorities still planted the software and denied the whole
acquisition levied against their company. The company also violated the ethical standard and the
authorities were severely penalized. There were legal actions that were taken against the
authority of the company as the cars that emitted the harmful gases were banned and the
manufacturing of those cars were completely stopped. The company dishonored the
philanthropic aspect severely as the cars that they manufactured was very mush harmful for the
societyas it was detected that the cars were emitting the maximum of the air pollution and
harming the environment.
Utilitarianism ethics theory
This theory is mainly based on the ability of one’s capability to forecast the consequences
of an activity. The concept of utilitarianism is that it support the activities that can bring
happiness and good survival of the people. Thus, the approach and the strategy that the company
applied not only harmed the environment but also the population and the employees. It is an
advantage for an individual to maintain the ethical grounds and conduct their business (Mill,
2016). There are mainly two types of utilitarianism rule utilitarianism and act utilitarianism.
Rule utilitarianism mainly composes of main of the law and the fairness and justification of the
action (Mulgan, 2014). This benefits the individual by applying the just and fair policies in the
management of the business and making the company achieve its goals on a legal platform.
There are other benefits associated with it for instance beneficence and justice. Act utilitarianism

mainly encircles the ideology of the utilitarianism, where a person performs the activities that
benefits the other people associated with it (Mulgan, 2014).
Thus, it can it is seen that Volkswagen has not abided by the theory of utilitarianism as
the company has violated the rule utilitarianism because they did not consider the ethical grounds
and manufactured their cars.The CEO of the company purposely falsified the whole incident and
claimed that the cars are environment friendly. The act utilitarianism was also not followed by
the company as the manufacturing of the cars had defeat device in them, which was highly
dangerous for the environment. This not only affected the environment but also the health of the
people hence; the company had to bear heavy consequences.
Recommendations
The recommendations for the company that they could have utilized to improve their
business management.
Focusing on emerging markets- The Company had grabbed the attention of the customers
without having the leadership in market share of US. The company focused on the markets of
China and USA after the scandal the company must shift its focus to the emerging markets,
which will involve less stringent emission regulation this will help them in overcoming the
incident that occurred in Europe and America (Frost.co.jp. 2019). The Company should focus on
the improvement of the sakes infrastructure as this will beneficial for the company in making
more strong position in the industry and increase its client base.
Amalgam and electric powertrain should be prioritized-The Company has worked on the
implementation of the electric drivetrains. The strategies that the company has planned is
regarding hybrid and electric powertrain plantation in their processes. The company is on the

verge of launching single battery concept in their cars, which will be innovation for the
company. Reduction of the battery expenses up to 66%, the company has announced of
incorporating electric model cars in their company. This will be a huge benefit for the company
to regain the clients and the market image at the same time (Frost.co.jp. 2019). The company can
be in secured position if they apply the modernized strategies that they have planned to
implement if they are following the ethical policies in a proper manner.
Consider passenger safety- The Company must consider and prioritize passenger safety,
“Forward Collision Warning”(FCW) and “Automated Emergency Braking” (AEB) have already
implement these strategies in their cars but the scandal created an impression that Volkswagen
deliberately wanted to hamper the environment and also the health of the people. The company
has to justify the innovations that they are planning to implement in their cars and states that the
new models will no way harm the environment (Frost.co.jp. 2019).
Connected cars as a major and basic focus point-In the intense competitive automobile
industry, the competitors of Volkswagen are trying to take the advantage of the scandal and
increase their revenue and client base. Volkswagen has implemented the touchscreen technology
and modernized infotainment in their cars. Over-the-air updates (OTA) can be another scope for
Volkswagen Company to regain their market position (Frost.co.jp. 2019).
Legal and ethical aspects must be implemented- The legal and the ethical aspect must be
strictly planted in the core management of the company. In order to achieve the success the
company has to maintain the success and the ethics of the company. This will protect the
company in avoiding any kind of illegal aspects. The company will also be able to maintain the
business image and portray a positive appearance to the competitors and the customers. The

company will also be able to retain the customers of the and dominate the automobile industry
legally and ethically.
Conclusion
The study can be concluded after observing and understanding the scandal that made
Volkswagen face many hardships in continuing their business. The company almost lost its
clients and position from the European and US markets. The Company had falsified the whole
ideology of defeat device software that they incorporated in their cars, which severely harmed
the environment. The problems have been identified and the consequences that triggered from
the situation for the company has been recognized and stated in the content of the report. The
problems have been analyzed and two theories such as the Carroll’s theory on CSR and the
Utilitarianism ethics theory has been applied and validate the problems that the company has
experienced and the findings has also revealed that the Company has followed none of the ethics
or legal aspect, which led them to great trouble. The recommendations have also been stated in
the content of the study, in order to help the company overcome the problems and regain the
markets of Europe and US.

Reference List
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Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J. S., & Wozniak, D. (2016). The
Volkswagen Scandal.
CarAndBike. (2019). Volkswagen India To Challenge NGT Recommended Fine On Emission
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Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look. International journal of
corporate social responsibility, 1(1), 3.
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02015.pdf

Frynas, J. G., & Yamahaki, C. (2016). Corporate social responsibility: Review and roadmap of
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Mill, J. S. (2016). Utilitarianism. In Seven masterpieces of philosophy (pp. 337-383). Routledge.
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