Volkswagen Emissions Scandal Analysis

This assignment provides a comprehensive analysis of the Volkswagen emissions scandal, covering its history, key events, and impact on the company and its stakeholders. It includes a review of relevant literature, online sources, and academic papers related to the scandal, as well as an examination of the factors that contributed to the ethical breakdown. The assignment also explores the consequences of the scandal, including job losses, profits decline, and reputation damage. A detailed summary is provided at the end, highlighting the key points and takeaways from the analysis.

Report Volkswagen scandal

EXECUTIVE SUMMARY
This study will include the ethical issues related with the Volkswagen diesel emission
scandal. It also highlights the impact of the dieselgate scandal on the Volkswagen company's
reputation. This study includes thorough analysis of the ethical issues in pertinent to Volkswagen
scandal related with “defeat devices”. It also analyses the impact of Volkswagen scandal on
shareholders, revenue, employees, public relations and media coverage. It also highlights
measures to cover up the diesel emission scandals to regain reputation of the company.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
ANALYSIS......................................................................................................................................1
CONCLUSION................................................................................................................................4
RECOMMENDATION...................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Ethics or moral principles influence the behaviour of the people and individuals of the
organization in the most systematic and reliable manner. Ethics is the rules of behaviour which
helps in taking effective decision in a particular situation. It is the knowledge, behaviour, ideas
and opinions of individuals to understand what is right and wrong in a particular situation and
effective capability of the person to manage a particular problem effectively and efficiently in an
ethical manner (Volkswagen: The scandal explained, 2015). This study will highlight the ethical
issues in persistence with the Volkswagen scandal related to emission of harmful gases in the
environment. This study highlights the areas which have adversely affected the performance of
the organization.
Volkswagen company faced a major issue related to emission of harmful gases in the
environment. Volkswagen cars were not in compliance with the United States emission
standards and were emitting 40 times more harmful gases as prescribed by the law. Almost
around 600,000 cars were found to be fitted in “defeat devices” in the U.S. Market and around
11 million cars were fitted in “defeat devices” worldwide. Volkswagen scandal has hampered the
reputation of the company which leads to lower volume of sales, revenue and profit margins.
Engineers of Volkswagen company had difficulty in building diesel engines with the regulatory
emission standards of U.S. Which lead to higher performance and sustainability.
The main aim of the report is to highlight the measures taken by Volkswagen to cover up
the diesel emission scandal and how they have affected the performance and productivity of the
vehicles. It also includes the strategy and policies which were implemented by the organization
to overcome the loss and increase the sales volume ans increase operational efficiency of the
Volkswagen company.
ANALYSIS
THESIS STATEMENT: To outline the impact of scandal in relation with stakeholders, media,
public relations, employees and revenue, ethical issues in relation with “defeat devices”.
Volkswagen's scandal was accused of emission cheating scandal and was in non
compliance with the US standards. Engineers of Volkswagen struggled to make diesel engines
which were more capable of high performance and productivity of vehicles with the regulatory
standards of United States (Blackwelder and et.al., 2016).

Ethical issue is of key importance for Volkswagen which should be considered by the
organization to work effectively and smoothly in legal manner which leads to effective operation
efficiency and sustainable growth of business. Ethical issues in pertinent to Volkswagen scandal
was not in compliance with legal emission standards which led to this scandal. Volkswagen was
highly impacted due to this scandal and led to legal breach and health implication on the general
public.
Volkswagen has violated the Clean Air Act (CAA) by developing products which emits
more harmful gases by the car. This lead to various health issues and non fatal outcomes. The
diesel toxic emitted by Volkswagen cars was 40 times more than the permitted law under United
States legal standards (Ewing, 2017).
Public relations and media coverage: Volkswagen scandal pose very negative impact on
media coverage and public relations which has adverse effect on their reputation which led to
lower market share and lower performance, productivity and profitability. Volkswagen
company aimed at practising corporate social responsibility to contribute on sustainable
development of the company and economy (Clemente and Gabbioneta, 2017).
After Volkswagen scandal, company shift its focus on producing products which are
environmental friendly and understand its social and environmental benefits by complying with
legal laws and emission standards of United States (Krall and Peng, 2015). This led to increase
in public relation by and increase in reputation of the company by designing more circumvent
emission control vehicles. Positive impact and advertisement with the help of media coverage
helped Volkswagen company to gain competitive position in the market by using various social
media platforms and media networks to cater and attract large number of customers by
maintaining strong public relations. Implementation of corporate social responsibility led
Volkswagen for effective sustainable growth by engaging more in sustainable business practice
for creating prominent social and business value (Lawsuit: VW employees tried to cover up
emissions cheating, 2016). Volkswagen company aimed at promoting vehicles with the help of
effective advertisement to attract high quality customers and helps in giving specific and reliable
information to the large number of public. Volkswagen company aimed to run public relation
campaigns to make people understand about the emission scandal and makes sure that company
works in compliance with power, efficiency and safety of the Volkswagen cars. Ethics is

important for the organization to satisfy basic needs of individuals and helps in creating
credibility by taking various social responsibility initiatives. It is also important in improved
decision making which helps in achieving long term sustainable growth and success of business.
Ethics also helps in safeguarding and securing the interest of society and individuals (VW
EMISSIONS AND THE 3 FACTORS THAT DRIVE ETHICAL BREAKDOWN, 2016).
Shareholders: Shareholders of the company are referred to as stockholders who are owners of
the company in proportion to the number of shares hold by each individual of the company.
Shareholders of the company have significant interest on the working and operations of the
business. Due to Volkswagen scandal shareholders were drastically suffered which led to
unrecoverable equity losses and downfall of 35% stock prices in just 2 days which hampered
company's profit share and reputation (Jung, Chilton and Valero, 2017). Shareholders of
Volkswagen company were highly devastated due to lower share prices and led to huge losses
and no dividend. Large number of large shareholders has also sued the car makers due to the
emission test cheating scandal. Credit rating companies and agencies like S&P and Moody's
have put Volkswagen in a negative credit watch which has adversely impacted sharehoders of
the company. This led to lower market share and huge reduction in sales and profitability after
Volkswagen scandal and lower operational efficiency and productivity.
Volkswagen company tried to overcome the emission scandal by focusing on upgrading
their software and clean diesel strategy to mainly focus on upgrading their engines to protect
environment from emission of harmful gases. This leads to attract higher customer base and
market share. Volkswagen company aimed at regaining trust of the shareholders by rigorously
conducting various emission test and getting certified for its quality and safety by taking part in
environmental charity activities and position themselves to develop green fuels. This led to
increase in market share of the company and regaining attention of its shareholders (Ewing,
2017).
Revenue: Volkswagen profits faced a major downturn of 20% after the diesel emission scandal .
Revenues of the Volkswagen company were down to 3.4% which is approximately around €51
billion. This downturn in profit and revenues were due to lower sales of Volkswagen vehicles
and negative exchange rate. The annual loss of the company for the first quarter was around
€16.2 billion which is more than double the amount of the cash set aside to pay expenses related

to diesel emission scandal of Volkswagen. The operating profits of the company got plunged
from €513 million before scandal to €73 million. Revenues of the company got plunged to 5% in
the year 2016 (VW profits down 20% after diesel emissions scandal, 2016)
.
After the diesel emission scandal Volkswagen company aimed to focus more on the
emerging markets to increase the sales of the company which lead to higher volume in sales and
eventually leads to higher revenues. They aimed at fuelling sales number by focusing more on
petrol and electric segment by compiling with United States emission standards (Crête, 2016).
Volkswagen company is facing slightly weaker growth in the market due to structural deficits.
Volkswagen company aims at delivering increased customer service to clients with cintinued
growth in hina and Europe. Increase in cash flows helps company inceased operational
efficiency and productivity.
Employees: Volkswagen employees were highly impacted with job cuts of around 30,000
employees to reduce cost and recover the amount from diesel emission scandal. Volkswagen
company engineers were struggling to make diesel engines which were not in stringent with
United States emission standards. The employees of Volkswagen company felt demotivated
which leads to lower operational efficiency (Volkswagen to axe 30,000 jobs worldwide, 2016).
Volkswagen company tried to cover the emission scandal by giving more emphasis to
invest on electric powered vehicles for higher performance and productivity. They aimed at
building good cooperation and support to manage work of the employees and engineers in a
coordinated manner (How VW Tried To Stave Off The Dieselgate Scandal, 2015). Proper and
continuous research and development programs were conducted to improve the performance,
skills, knowledge and experience of the employees to produce products which are in accordance
with the United States emission standards (Mansouri, 2016).
Volkswagen company aimed to change its corporate culture to retain more prospective
and talented employees and engineers in the organization. They should also change governance
structure to cover up the diesel emission scandal. .
CONCLUSION
From the above study it has been summarized that Volkswagen company faced a major
scandal of diesel emission into an environment which affect the environment adversely. It

concludes that Volkswagen cars emit 40 times more harmful gas as prescribes by emission
standards of United States. It also concludes that Volkswagen company take into practice clean
diesel engine strategy to improve the reputation of the company.
Volkswagen company has to work in compliance with ethical consideration for smooth
functioning of the organization and leads to effective decision making in any difficult situation.
Volkswagen company also practice corporate social responsibility to design cars which are
environmental friendly and focus on developing green to fuel to protect environment from
harmful gases.
Volkswagen company tried to cover up the diesel emission scandal by complying with
laws and conduct various emission test to abide with United States emission standards
effectively and efficiently to increase sales, revenue which ultimately leads to higher
performance, productivity and profitability.
RECOMMENDATION
In accordance with the analysis of the study of the “dieselgate scandal” the Volkswagen
company has made a financial loss of around $25 billion and a job cut down of 30000 employees
which led to financial losses and crisis in the economy. Volkswagen company reputation was
adversely hampered which led to lower sales, revenue and profit margins and adversely affected
the market share of the company.
Volkswagen company should launch various promotional activities to attract large
customer base by describing all necessary and special features of the Volkswagen company cars
and engine. They need to restructure their company by meeting all necessary regulations,
policies and standards implied by the government for more smooth functioning of the
organization in a legal manner. Volkswagen company should focus on developing eco-friendly
cars which are beneficial for the environment. They should aim at developing green fuels which
do not possess any harmful gas into the environment. Implementation of corporate social
responsibility helps company in building strong reputation as it considers social and environment
responsibility which regains trust of public and shareholders. The Volkswagen company aims at
implementing various organizational regulation to work in an ethical manner.
Volkswagen company should focus more on hiring local employees and engineers who
have desired, skill, knowledge and experience to effectively manage the problematic situations

and leads organization towards sustainable development. Hiring of local employees helps
company in regaining trust and loyalty of the people which helps company in effectively
building the strong reputation. Volkswagen company should restructure the company in a
effective manner by hiring potential and talented candidates who work in accordance with
ethical consideration and have desired skill and knowledge which leads to sustainable growth of
business. Volkswagen company aimed to hire local employees so that they can build trust of
people which will help company regain its competitive position in the market by increasing its
operational efficiency
It has been recommended that company should make strategy to design around 30 new
battery powered electric vehicles by 2025 which will lead to higher sales and profit. Sales of the
company will increase around 20-25% which will help Volkswagen company to achieve higher
market share (Dieselgate Scandal: What Options Does Volkswagen Have To Get Out Of This
Mess?, 2015.). Volkswagen company should focus on autonomous vehicle testing and other
certification programs for sustainable growth of the organization. They should aim to develop
new advanced technology, software and models to lower down the cost by €1 billion yearly by
2025 to increase market share and maintain competitive position by offering high quality
products (After emissions scandal, VW’s roadmap for the future is aggressive on electric, 2016).
The Volkswagen maintain ethical standards and protect the interest and safety in order to
provide ethical guidance.

REFERENCES
Books and journals
Blackwelder, B and et.al., 2016. The Volkswagen Scandal.
Clemente, M. and Gabbioneta, C., 2017. How does the media frame corporate scandals? The
case of German newspapers and the Volkswagen diesel scandal. Journal of Management
Inquiry.26(3). pp.287-302.
Crête, R., 2016. The Volkswagen scandal from the viewpoint of corporate
governance. European Journal of Risk Regulation.7(1). pp.25-31.
Ewing, J., 2017. Faster, Higher, Farther: The inside story of the Volkswagen scandal. Random
House.
Ewing, J., 2017. Faster, Higher, Farther: The inside story of the Volkswagen scandal. Random
House.
Jung, K., Chilton, K. and Valero, J.N., 2017. Uncovering stakeholders in public–private relations
on social media: a case study of the 2015 Volkswagen scandal. Quality &
Quantity. 51(3). pp.1113-1131.
Krall, J.R. and Peng, R.D., 2015. The Volkswagen scandal: Deception, driving and
deaths. Significance. 12(6). pp.12-15.
Mansouri, N., 2016. A case study of Volkswagen unethical practice in diesel emission
test. International Journal of Science and Engineering Applications.5(4).pp.211-216.
Online
After emissions scandal, VW’s roadmap for the future is aggressive on electric. 2016.
[ONLINE]. Available through:<https://arstechnica.com/cars/2016/06/after-emissions-
scandal-vws-roadmap-for-the-future-is-aggressive-on-electric/>
Dieselgate Scandal: What Options Does Volkswagen Have To Get Out Of This Mess?. 2015.
[ONLINE]. Available
through:<https://www.forbes.com/sites/sarwantsingh/2015/11/25/dieselgate-scandal-
what-options-does-volkswagen-have-to-get-out-of-this-mess/#4dcbac8d4fc2>

How VW Tried To Stave Off The Dieselgate Scandal. 2015. [ONLINE]. Available
through:<https://www.forbes.com/sites/michelinemaynard/2015/09/27/how-vw-tried-to-
stave-off-the-dieselgate-scandal/#21ba477d1375>
Lawsuit: VW employees tried to cover up emissions cheating. 2016. [ONLINE]. Available
through:<https://www.wheels24.co.za/News/lawsuit-vw-employees-tried-to-cover-up-
emissions-cheating-20160720>
Volkswagen: The scandal explained. 2015. [ONLINE]. Available
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VW profits down 20% after diesel emissions scandal. 2016.[ONLINE]. Available
through:<https://www.theguardian.com/business/2016/may/31/vw-volkswagen-profits-
down-20-diesel-emissions-scandal>
Volkswagen to axe 30,000 jobs worldwide. 2016. [ONLINE]. Available
through:<https://www.theguardian.com/business/2016/nov/18/volkswagen-axe-30000-jobs-
worldwide-diesel-emissions-scandal>
VW EMISSIONS AND THE 3 FACTORS THAT DRIVE ETHICAL BREAKDOWN. 2016.
[ONLINE]. Available through:<https://ideas.darden.virginia.edu/vw-emissions-and-the-3-
factors-that-drive-ethical-breakdown>