Challenges Faced by Family and Business at Volkswagen

Family Business Management

Table of Contents
Critical challenges faced by family at Volkswagen.....................................................................3
Critical challenges faced by business at Volkswagen..................................................................3
REFERENCES................................................................................................................................1

Critical challenges faced by family at Volkswagen
A family business faces several challenges from time to time despite being format or
industry. In the family business there are extended unique issues which own to family dynamics.
Business decisions and business emotions intermingle which create challenges to team and
company's detriment in a family business (Volkswagen with its failure in Corporate Social
Responsibilities, 2018). The challenges faced by family at Volkswagen are following:
Management crises
The management of the company is the hands of family. The supervisory and
management board members of Volkswagen lack process tolls to prevent future wrong doings.
The family has been controlling decisions by the board form many years. The company have a
overly large board with many stakeholders and warring family. Proper corporate governance was
evident from the managerial problems which gave rise to many scandals. There is also lack of
independent directors for making ethical and effective decisions. These factors have created the
environment which contributes majorly towards the misbehaviour of company. These factors
have created many management crises for the company. The management lacks monitoring and
control which reflected in inefficient detection of fraudulent behaviours of employees within the
company (Zellweger, 2017). This also raised questions to the responsibility of board of directors
for their corporate governance issues which resulted in scandal. Due to the elements such as
warring family infighting, fraudulent behaviours of employees and lack of freedom to board to
directors, the family of Volkswagen faces uphill war to deliver a board which fits for its main
purpose.
Approach for dealing with challenge
The company can re-structure its control in decision making. For many years, the control
has been centralized i.e. in the hands of family. It has raised many issues for the many and
management as well. The company can employ a decentralized structure as the centralized
structure have caused man internal issues between the board and the management which is
family. It has created an ineffective culture at company. A decentralized decision making can
lead the company to deal with persisting issues.
2. Leadership void
Family control is usual in European carmakers which can bring long term thinking to a
cyclical industry but it can create dysfunctional and management succession issues (Ahmad,