Ethical Report on Unethical Practices in Commercial Vehicle Industry of Australia

The report discusses the unethical practices of Volkswagen in Australia, including underpaying employees and falsifying carbon emission readings. It includes a PESTLE analysis and concludes with the importance of ethical decision making in business.

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Authors Note

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Executive summary
The report is based on this ethical issue that took place in commercial vehicle industry of
Australia. In this context, it has been reported that there are revelations in the recent weeks of
business that have awakened the suspicion related to ethics. In this context, Volkswagen
Company in Australia has always enjoyed a good reputation that has been marketing their
decision vehicles for the purpose of low emission vehicles whereas the engineering motors
they used gave it a false reading. Apart from these, they have also underpaid their employees
for the purpose of making profit in the growing competitive environment. The concern of
ethical dilemma revolves around the study that has been portrayed through a PESTLE
analysis.

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Table of Contents
Introduction................................................................................................................................4
Who........................................................................................................................................4
What.......................................................................................................................................4
Analysis......................................................................................................................................4
Why........................................................................................................................................4
Where and When....................................................................................................................5
How........................................................................................................................................5
PESTLE analysis........................................................................................................................6
Political...................................................................................................................................6
Economic................................................................................................................................6
Social......................................................................................................................................7
Technological.........................................................................................................................7
Legal.......................................................................................................................................7
Environmental........................................................................................................................8
Conclusion..................................................................................................................................8
Reference list..............................................................................................................................9
Appendix..................................................................................................................................10
Appendix 1: Declining share price of Volkswagen..............................................................10

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Introduction
Who
The issue related to business ethics embraces all organisation whether small or big
and it is not just the latest fad with a restricted lifespan. In this context, managers of the
commercial organisation have identified that ethical behaviour is necessary for managing
sound and healthy business activities.
What
Based on this ethical issue, it has been seen that there are revelations in the recent
weeks of business that have awakened the suspicion related to ethics. In this context,
Volkswagen Company in Australia has always enjoyed a good reputation that has been
marketing their decision vehicles for the purpose of low emission vehicles whereas the
engineering motors they used gave it a false reading. To examine the unethical issue took
place in the commercial sectors, the Australian competition and commission are investigating
over the insider claims that the company has developed.
Based on this specific issue that, the study investigates the ethical challenges faced by the
organisation in Australian. In this regards, the study recognises the ethical issues that the
company has currently faced in terms of their internal business.
Analysis
Why
Ethical scandals have seen around several organisation where the organisation has to
face questions related to ethical decision making. All those scandals lead to huge loss of
confident and breakage of reputation. In the existing market, the organisation tries to expand
their profit in unethical ways that raise the problem of an ethical dilemma (Thompson 2018).

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In the present study business ethics are related to rules, standards and codes of ethics that
provides the appropriate behaviour in terms of specific situations. These ethics have therefore
become one of the most important areas of decision making that help to determine the
corporate sustainability of the business.
Where and When
In this context of ethical scandal, Volkswagen also tried to address unethical ways to
expand their business profits. The scandal took place in Volkswagen Australia. Their carbon
emission falsification that came up with a lot of attention during the year 2015 (Ng et al.
2018).
How
Apart from the deceptive readings in the engineering motors of the Volkswagen
Company, it has been seen that the convenience chain 7 eleven exploits as well as underpays
several of its employees in different franchises. They also installed illegal software in the
diesel cars to fake the carbon emission test that emitted 40 times more toxic gases that
crossed the permissible limit. These reports of unethical as well as illegal business activities
are in support of the contention that ethical behaviour is completely incompatible with the
corporate beliefs.

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Figure 1: Unethical emission of carbon setting in diesel cars
(Source: Thompson 2018)
PESTLE analysis
Political
On the basis of this statement, Ferguson et al. (2016) argue that these claims are
unfair for the business managers who are concerned about the ethical values and are proud of
following these rules. It can be said that it is growing level of competition and government
regulatory framework that increased the amount of stress thereby forcing the company to take
such a step. Moreover, being unethical while dealing with the employees and customers can
be very bad for the business. For conducting such unethical practices, Volkswagen had to
face millions of dollars in recalls and fines followed by a loss of brand image that led to the
decline in sales as well. The founding chairman of the company had to resign as a result of
which the newly elected chairman had to confront disgruntled franchisees.

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Economic
Economic elements includes the indexes of the external environment that influenced
the market. There are several factors that may influenced the leadership and employee
relations within the organisation. Moreover, fluctuation of currency creating an impact of the
increase of goods tax may have forced the CEO of the company to take such steps.
Volkswagen attempted to crate money and profits by planning to initiate the carbon emission.
As a result of economic impact the company had to face 3.3 million of legal fine led by
possible criminal persecution (refer to appendix 1). In addition to these, the company has
30,000 fine for each car with a total amount of $18 billion.
Jeanes (2017) argues that there needs to have respectful relations with the employees
as well as client that helps to provide protection in service. These activities help to build
public relations, the morale of the workers and helps to build consumer trust. However,
underpaying the employees are ethically wrong, that eventually leads towards the corruption
of the organisation.
Social
However, arguments here is dependent on the contribution of ethical dilemma that is
related to the social welfare of business that is in direct conflict between a requirement of
business and doing the appropriate thing (Clarke and Boersma 2017). One of the Volkswagen
franchise that exploited the workers by doing that they felt correct for running the business.
In this context, Reamer (2017) stated that if the sustainability of the organisation depends on
the underpaying the employees, then it strongly implies cutting down the ethical corners.
Technological
Operating within an international environment where technological advances are
increasing may have added to the unethical issues that these corporations usually face, but it

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is necessary for them to mainat8ing transparency for encouraging ethical behaviours (Ehrich
et al. 2015). There will always be a business that may act in an unethical way, but it is the
duty of the leaders to take an ethical step for reasoning out the pessimistic reform in the
interest of avoiding unethical activities.
Legal
Unethical activities are usually more prevalent in the small business organisation and
smaller franchises as they low-profit margins and sustainability is always at a doubtful stage.
According to Ehrich et al. (2015), it is ironic that competitive, risk-taking and unregulated
economic activities that politicians encourage is an environment that is prone to unethical
behaviour. By doing such unethical activity the company has violated the rules of Clean Air
act by faking carbon emission in diesel cars.
Environmental
They faked the carbon emission activities by making their cares look less polluting
than they are. The Australian environmental protection agency reported that there are almost
half of million Volkswagen diesel cares that were emitting 40 times more chemical toxic
fumes than they are permitted.
Conclusion
The case, therefore, presents the ethical dilemma faced by the CEO of the company
who is highly responsible for the unethical decision that followed by ethical justification. The
unethical part that took place in the company is that they sold the cars by misleading the
environmental examination. While applying Utilitarianism to the Volkswagen dilemma it can
be said that the issue is engaged with several parties such as the company and its employees
as well as the customers.

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According to this theory of ethical dilemma, this unethical action of cheating on sales
of cars and underpaying their employees are not permissible as they are not morally correct.
This is specifically due to the fact that at the end of the issue no one was left happy. The
permissibility of goodness is classified by the element of appreciation. However, the
company has managed to lose its reputation owing to their unethical actions. The company
may have taken this decision for the profit of the company, but did not move towards a
greater good of the organisation.
In this context, punishment will be ethically obligatory for the organisation. At the
end of the ethical decision, it is the about the fact that whether the act helps to expand the
greater good of the organisation. In the case of Volkswagen and the manager of the company
did not aim for greater well-being when it came to cheating their car sales and increasing
profit.

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Reference list
Clarke, T. and Boersma, M., 2017. The governance of global value chains: Unresolved
human rights, environmental and ethical dilemmas in the apple supply chain. Journal of
Business Ethics, 143(1), pp.111-131.
Ehrich, L.C., Harris, J., Klenowski, V., Smeed, J. and Ainscow, M., 2015. Ethical leadership
in a time of increasing accountability. Leading and Managing, 21(1), p.22.
Ehrich, L.C., Harris, J., Klenowski, V., Smeed, J. and Spina, N., 2015. The centrality of
ethical leadership. Journal of Educational Administration, 53(2), pp.197-214.
Ferguson, S., Thornley, C. and Gibb, F., 2016. Beyond codes of ethics: how library and
information professionals navigate ethical dilemmas in a complex and dynamic information
environment. International Journal of Information Management, 36(4), pp.543-556.
Jeanes, E., 2017. Are we ethical? Approaches to ethics in management and organisation
research. The organization, 24(2), pp.174-197.
Ng, A.K., Wang, T., Yang, Z., Li, K.X. and Jiang, C., 2018. How is business adapting to
climate change impacts appropriately? Insight from the commercial port sector. Journal of
Business Ethics, 150(4), pp.1029-1047.
Reamer, F.G., 2017. Evolving ethical standards in the Digital Age. Australian Social
Work, 70(2), pp.148-159.
Thompson, J. 2018. Despite the recent scandals, 'business ethics' isn't a contradiction in
terms. [Online] ABC News. Available at: http://www.abc.net.au/news/2015-10-05/thompson-
business-ethics-isnt-a-contradiction-in-terms/6827488 [Accessed 4 Sep. 2018].

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Appendix
Appendix 1: Declining share price of Volkswagen