Volkswagen Emission Scandal: A Case of Ethical Dilemma

This report shares an ethical dilemma breach faced by a German brand known as Volkswagen which inserted a software that helped the cars in passing the test. The emission scandal is discussed in detail with the pestle analysis of the whole case study.

Running head: Construction Management
Construction Management
Volkswagen Emission Scandal

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EXECUTIVE SUMMARY
This report shares an ethical dilemma breach faced by a German brand known as Volkswagen
which inserted a software that helped the cars in passing the test. The emission scandal is
discussed in detail with the pestle analysis of the whole case study.

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EXECUTIVE SUMMARY.............................................................................................................1
Introduction............................................................................................................................3
Case of Ethical Dilemma..........................................................................................................3
PESTLE ANALYSIS.....................................................................................................................4
Recommendation in Future.....................................................................................................5
Conclusion...............................................................................................................................5
References..............................................................................................................................6

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Introduction
There are several times when a firm can face ethical dilemma. This can lead the firm to lose its
image in the market. Similarly, Volkswagen had to go through this dilemma in the case of the
diesel emission from the cars that created environmental pollution in the countries. Due to this
the company had to go through lots of loss in terms of money and also the customers were not
happy with such scandal done by Volkswagen (Abdelrasool, 2018). This report shares the
detailed issue and breach that was done by this company in terms of the Pestle analysis. Towards
the end the recommendations for the whole situation are shared.
Case of Ethical Dilemma
Volkswagen is very well known firm when it comes to cars and other automobiles. This is a
German brand who has been known as the best-selling cars worldwide with the best of all
designs and engines too. In the year 2015, the EPA came to know that VW attached a software
device with the engines that controlled the Nitrogen Oxide emission and when the cars went on
in testing, they were approved to finally move out on the roads (Mansouri, 2016). In reality, all
those cars were emitting 40 times more NO2 and that is why the environment was being
polluted. The company had this belief that diesel cars would be good for the environment and
that was just the 5% of US Market in 2007. This illegal emission was found in multiple types of
cars of the same brand like Porche, Jeta, Beetles etc (Bachmann & Ehrlich, 2017). This scandal
was carried by VW’s 11 million cars and 5 lakhs in US undergo that particular software in the
years 2009 till 2015. Prior when this ethical breach by the brand came into picture, VW said that
it was all done by mistake but after then they also agreed that it was done deliberately by the
superiors of the company. VW was costed a total of 10 Billion Dollars as the compensation due
to this scandal and 2.7 Billion were taken from them as the remediation fund with 2.7 Billion
dollars were given to EPA as fine. This whole act decreased the image of the company a lot in
the eyes of the customers and they did not entertain it at all. It later came into the picture that the
CEO was also involved in this breach (Aurand , et al., 2017).

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WHO: Volkswagen was at fault in this whole scandal.
What: The cars of the brand VW emitted pollution due to this ethical data breach.
When: September 2015 and came into picture in 2016.
Why: For earning good image and good money from the customers.
Where: Worldwide the cars were polluted and emitted Nitrogen Oxide.
How: A software device were fixed in the card which were being tested so that the testers would
never come to know about the emission.
PESTLE ANALYSIS
In this case of breach, the major factor analysis that can be done is on the environmental front.
Still all pestle factors be considered in this case.
Political and Legal Factors: This breach was against the Governmental rules of every country
and that was to not go unethical in any case. Due to this scandal, the planet was getting polluted
which is anyway against any governmental law (Rastogi, 2016).
Economic Factors: The economic loss was bearded by the government du to this pollution as
well as by the company too.
Social Factors: The customers were heartbroken from this case especially the people who bought
all the cars from the brand. They were not ready to buy Volkswagen’s cars again as they lost
their trust in the brand. Due to this the brand also spend 1000 million dollars as the penalty on
their customers who bought these cars which were emitting Nitrogen Oxide in the air (Ho, 2014).
Technological Factors: Cars are built on new technologies day after day. As the 21st century is
proceeding, there is new technology coming into picture every now and then to build something
unique because of the tough competition in brands. A software was fixed in the engines of the
VW cars in order to stop the emission of the Nitrogen oxide which was 40% of the natural

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emission. This technology which was used also misled the complete testing of the cars and
hence, the environment was polluted (Gupta, 2013).
Environmental Factors: The major impact due this emission was done on the atmosphere and the
environment of the planet Earth. As it is Earth is going through so many changes since the
decade when the technology started moving very fast. It is getting dirty day by day by the people
who live in it. This emission of Nitrogen Oxide was not just creating the pollution worldwide but
also was breaking the laws of the environmental safety provided by the Government for the
safety of the planet.
Recommendation in Future
In Future, not only VW but every company should keep that in mind that they should not just
focus on the temporary growth of their firms but they should focus on building the networks and
good relations with the customers. A good word of mouth will create good profit to the company.
Money and the profit earned by the working on ethical grounds should be the best in focus by
any company for growing in the market.
Conclusion
This report talks about the case of Volkswagen in which this German brand inserted a software
in the engines of the cars so that they can go via testing and come out safe. But in reality these
cars were emitting NO2 and that was creating pollution in the environment. The PESTLE
ANALYSIS of the complete case has been shared in the report and it can easily be concluded
that out of all the factors, the environmental factor was the most important which did not come
out to be fine at all by this breach. At last some of the recommendations are shared for the future
actions of the company.

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References
Abdelrasool, M. K., 2018. Case Study: The Volkswagen Emission Scandal. Researchgate.
Aurand , T. W., Finley, W., Krishnan , V. & Sullivan, U. Y., 2017. The VW Diesel Scandal:
Engaging Students via Case Research, Analysis, Writing, and Presentation of Findings. Journal
of Higher Education Theory and Practice, 17(7).
Bachmann, R. & Ehrlich, G., 2017. Firms and Collective Reputation: the Volkswagen Emissions
Scandal as a Case Study. [Online]
Available at: https://www3.nd.edu/~rbachman/BER_current.pdf
[Accessed 3 September 2018].
Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business
Environment. International Journal of Modern Social Sciences, 2(1), pp. 34-43.
Ho, J. K., 2014. Formulation of a Systemic PEST Analysis for Strategic Analysis. European
Academic Research, 2(5).
KarimiJahromi, P. S. M. A. a. S., 2016. iosrjournals. [Online]
Available at: http://www.iosrjournals.org/iosr-jhss/papers/Vol.%2021%20Issue7/Version-4/
D2107043439.pdf
[Accessed 23 January 2018].
Mansouri, N., 2016. A Case Study of Volkswagen Unethical Practice in Diesel Emission Test.
International Journal of Science and Engineering Applications , 5(4).
Rastogi, N., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN
CONSTRUCTION PROJECTS. International Research Journal of Engineering and Technology,
3(1).

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