Volkswagen Emission Scandal: An Analysis of Ethical Issues and Dilemmas

This article analyzes the Volkswagen emission scandal and identifies the ethical issues and dilemmas faced by the parties involved. It also examines the different ethical frameworks used by organizations to develop ethical codes.

Running head: BUSINESS ETHICS
Business Ethics
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Author note

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As stated by Pearson (2017), business ethics is a type of applied ethics which checks the
morality and ethical principles while working a business environment. The different aspects of
conducting business are examined to identify the policies and actions that are not appropriate.
There are different frameworks used by the organizations to develop ethical codes which guide
them to stay ethically appropriate. In this context, Volkswagen emission scandal has been chosen
as the case which will thoroughly be analyzed to identify the ethical issues and dilemmas faced
by the parties involved.
Volkswagen AG is one of the German automotive multinational companies which have
its headquarters at Wolfsburg in Germany. The organization is known for designing, developing
and selling commercial and passenger vehicles, engines, and motor cycles and offers other
services such as fleet management, leasing and financing (Volkswagen.com 2018). The
organization has been the market leader in this industry till the year of 2016 and had taken over
the current market leader Toyota. The company is listed among the top 10 companies in the
fortune 500 and consists of premium brands such as Audi, Bugati, Bentley, Porsche,
Lamborghini, SEAT, Volkswagen Marques and Skoda. The organization also sells motorcycles
under the brand name of Ducati and sells commercial vehicles under the brand name of marques
Man and Scania. The organization has been able to maintain their supremacy in Europe but the
operating margin of their own brand is low.
However, the organization was in the lime light for the wrong reason where the EPA
(United States Environmental Protection Agency) found out the cheat device used by the
organization and issued a violation against the German automotive company in respect to the
Clean Air Act (Hotten 2015). The organization had used Turbocharged direct injection during
the lab test to reduce the level of emission by activating the emission controls. This software was

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installed in all the cars that were sold worldwide. These defeat devices were developed in such a
way during testing period it would automatically increase their level of performance.
Volkswagen had a major push for selling cars in the United States market and their marketing
campaign were developed highlighting the fact the diesel cars provided by the organization had
low diesel emissions.
The findings of EPA shows that the 482,000 cars sold in the United States had defeat
device installed in them. This consists of models such as Jetta, Golf, Beetle, Passat and Golf
(kansascity 2016). Moreover, the organization sold more than 11 million worldwide with cheat
devices installed in them. Moreover, the organization was also accused on modifying the
software in some of the Porsche models. The development these devices were deliberate which
shows that the organization has spend huge sums of money on developing these software.
However, on the other hand, this amount could have been spent effectively to actually reduce the
emission (Cavico and Mujtaba 2016). These are one of the biggest scenarios of malpractices in
the current times where the consumers bought inefficient system at premium prices which had
more emission than the industry standard.
This scandal has harmed both the surrounding environment and has cheated million of
consumers. The organization sustainability report shows their efforts in protecting the
surrounding environment but everything holds false in comparison to these case (Aurand et al.
2017). Moreover, the higher officials had full knowledge about this cheat device and still they
allowed the organization to sell these cars in different countries. This scandal definitely poses
amoral dilemma where the actions of the organization were illegal as they have not followed the
industry regulations. However, the managers and the engineers could have protested and stopped
these from happening by acting as a whistle blower.

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As stated by Endrikat, Hartmann and Schreck (2017), Utilitarian point view states that
outcomes is the best judge of the actions and if the consequences are good then the action is
right. Moreover, it considers the action that brings happiness to large number of people are right
but this contradicts this case totally. The cars developed with cheat device may have an enhanced
performance which will bring happiness to majority of the consumers and the large number of
employees, stakeholders and investors. However, the emission level of the devices in very high
and it will degrade the condition of the atmosphere (Trevino and Nelson 2016). These mean that
there are people that will suffer for breathing problems and respiratory diseases. Even though the
organization has been able to explain their actions by using this concept of utilitarianism but
morally and ethically it’s inappropriate to lie to so many people. The main value proposition for
the company was to deliver cars with higher performance and lower level of emission. This
theory is self contradicting where a set of people are getting benefitted from these actions
whereas there are others that affected negatively.
According to the virtue theory, it can be seen that the actions are ethical if it is consistent
and provides benefits to the overall humanity (Endrikat, Hartmann and Schreck 2017). However,
in this scenario, virtue ethics proves the actions to be unethical. This is the very reason that
Volkswagen have to pay heavy fine and their prices in the stock market fell immediately.
Moreover, the consumers lost their trust on the product sold by Volkswagen. Therefore, the
organization lost their reputation in the market which made Toyota the global market leader.
Business is a crucial aspect of organization values and beliefs which should be followed
by organizations in order to make sure that they contribute socially through their activities. This
case study has provided a deep insight of how organizational leader face dilemma where some
practices may not illegal but they are highly unethical. Therefore, there is always a dilemma

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which the top level management have to deal with and with this scenario the ethical codes acts as
guidance in keeping the organization in track so that they can positively impact the
corresponding society. Initially, I had considered ethics as a supporting tool but ethics
formulates the basic values, beliefs and goals of the organization.

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References
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