Volkswagen Emission Scandal

Running head: VOLKSWAGEN EMISSION SCANDAL
Volkswagen Emission Scandal
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1VOLKSWAGEN EMISSION SCANDAL
The paper is focused on the description of the unethical business practices conducted
by one of the renowned organization operating in the automotive industry in the form of
Volkswagen. The paper analyses the Volkswagen emissions scandal and the impact of the
case on the business performances of the mentioned organization. Apart from that, the paper
also provides significant information regarding the impact of the case on the reputation of the
selected organization with a precise focus on the preferences of the customers of the
organization. In addition to this, the paper evaluates the implications of the case on the
strategy and governance of the mentioned organization and provides crucial
recommendations in the aspect of risk management. Apart from this, the paper provides
important inputs regarding the restructuring of environmental law for producing effective
measures in order to manage the cases in the near future.
Factors responsible for cheating:
In the month of September of 2015, the selected organization faced a notice from the
part of the United States Environmental Protection Agency for intentionally violating the
environmental legislation. With the introduction of the Clean Air Act, the United States
Environmental Protection Agency made sure that all the organizations operating in the
region, are effectively aligning their business operations in accordance to the environmental
guidelines (Fortune.com, 2019). The agency was able to put a strong emphasis on the
effective management of emission of the products of the automotive organizations and that
enforced the selected organization in conducting the emission testing for the identification of
the NOx values of the products that the organizations operating in the region were
introducing. In order to manage the design of the products for efficient control of the
emission rates, specifically the NOx rates of the products, the organizations had to face a
design change along with the application of the necessary control methods (di Rattalma,
2017). The restructuring in the design of the products had the possibility of increasing the

2VOLKSWAGEN EMISSION SCANDAL
costing of the products for the companies, and that was the main triggering factor for the
mentioned company in conducting the unethical business practice from the part of the
mentioned organization.
Results of the cheating and the impact:
The impact of the event was pretty significant for the mentioned company and their
performances across the globe. The unethical business practice from the part of the
mentioned organization affected the purchase intention of the buyers in a significant manner
as the customer community of the mentioned organization was observed to be concerned
regarding the impact of the emission on their health and the surrounding environment. With a
precise focus on the market of the selected organization, the immediate impact of the case
reduced the stock prices of the mentioned organization and also forced the organization to
undergo several emission related tests in the nations in which it operates
(Cleanenergywire.org, 2019). In addition to this, the criminal charges on the mentioned
company as a result of the case was one of the prime reason of the reputational damage that
the organization had to face and that affected the purchase behaviours of their loyal
customers as well.
Long and Short term implications of the case:
As a result of the case, a series of sacking and suspensions took place inside the
organization which included the head of brand development, Heinz-Jakob Neusser, Audi
research and development head, Ulrich Hackenberg and Porsche research and development
head, Wolfgang Hatz. In addition to this, CEO Martin Winterkorn resigned from his position
as a result of the case (Just-auto.com, 2019). Apart from this, the significant fall in the stock
prices of the company along with the plans of US$18.32 billion for the necessary adjustments