case study on Volkswagen PDF

Running head: VOLKSWAGEN CASE STUDY
Volkswagen case study
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1VOLKSWAGEN CASE STUDY
Table of Contents
Part 1. (a).........................................................................................................................................2
Introduction......................................................................................................................................2
Overview of the Volkswagen scandal.........................................................................................2
Ethical considerations..................................................................................................................2
Role of the business in the society...............................................................................................4
Key stakeholders who were affected...........................................................................................4
Importance of a corporate culture in business ethics...................................................................5
The impact of ethical choices on business...................................................................................5
Recommendations for Volkswagen.............................................................................................6
Conclusion...................................................................................................................................7
Part 1. (b).........................................................................................................................................7
Part 2................................................................................................................................................9
Factors that make an ethical leader..............................................................................................9
Ways to manage business according to ethical standards.........................................................10
References:....................................................................................................................................12

2VOLKSWAGEN CASE STUDY
Part 1. (a)
Introduction
Overview of the Volkswagen scandal
In the past few years, there has been a growing awareness and consciousness about the
impact of business operations on the surrounding society and more importantly, the environment.
Phenomena like commercialization, globalization and widespread industrialization have
adversely affected the environment. As a result, the onus is on the organizations and businesses
to minimize their impact on the environment. However, Volkswagen has recently been charged
with violations of the Clean Air Act, which regulates vehicular emissions of nitrogen oxides,
which is considered to be one of the most potent pollutants in the environment at present. In
September of 2015, the United States Environmental Protection Agency or EPA accused
Volkswagen of willingly cheating on their emission tests (Blackwelder et al. 2016). Volkswagen
had apparently installed emission controls in their engines, which were programmed in such a
way that they would be activated only during the emission testing in the laboratories.
Volkswagen had used this software in more than 11 million vehicles worldwide. The discovery
of this scandal led to a worldwide uproar, with Volkswagen being forced to call back more than
5 million cars (Krall and Peng 2015).
Ethical considerations
Since the 1970s, the EPA has imposed stringent policies which regulate vehicular
emissions in the case of all vehicles. This is because vehicular emissions consist of harmful

3VOLKSWAGEN CASE STUDY
pollutants like carbon monoxide and nitrogen oxides which detrimental to both the environment
and the people who are exposed to it. The new emission standards which had been posed on the
automobile companies proved to be a challenge for brands like Honda, Nissa, Hyundai and also
Volkswagen. In the year 2015, Volkswagen consequently deployed a diesel dupe, which would
rig the emission tests that the vehicles are subjected to. This particular software ensured that the
emission controls were activated during the tests, so that the vehicles demonstrated lower levels
of pollution that what they actually emitted (Mansouri 2015). A defeat software or device had
been embedded in the diesel engines of more than 11 million vehicles, which would change the
emission performance of the vehicle to the desired results. In other words, for quite a long time,
Volkswagen had been pretending to meet the emission standards, whereas in reality, it was
simply cheating its customers (Ragatz 2015).
More importantly, the attitude of the Volkswagen management and the public statements
made were unethical in nature (Siano et al. 2017). Following the discovery of the scandal,
Volkswagen suggested that the people involved in rigging the emission tests and had worked
independently. In short, it was suggested that the management of the company was completely
unaware of the implementation of such a software. In 2015, only 9 managers were accused of
partaking in the scandal and they were suspended. It was a classic “bad apples” case and
Volkswagen publicly stated that the unethical behavior on their part had been due to the mindset
of a few employees and their inability to comply with the rules. However, internal investigations
conducted later showed that at least 50 managers had been aware of such a practice. The
technicians involved in the process had reportedly informed the supervisors, who had chosen to
turn a blind eye. In other words, there were several people involved in the scandal, which makes
the entire company responsible for the fiasco which erupted.