Volkswagen: A Case Study on Management Communication

This article discusses the Volkswagen scandal and how management communication played a role in the crisis. It covers attribution theories, crisis management theories, and image restoration discourse theory. The article also provides details on the scandal, including the use of defeat devices, the impact on the environment, and the financial cost to the company. The article concludes with a discussion on how Volkswagen used social responsibility theory to address the crisis.

RUNNING HEAD: Management Communication 0
Volkswagen
Management Communication

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The communication is an important aspect of an organization. The effective communication
is prerequisite for the implementation of organizational strategies. The communication has a
great role in the effectiveness of managers. Volkswagen is a German automotive
manufacturing company having headquartered in Germany. The company designs passenger
vehicles, engines, and machinery. Volkswagen sells passenger cars to Audi, Bugatti, Bentley,
Skoda and more.
Volkswagen confessed that 11 million vehicles were fitted with the software which was used
to cheat on emissions tests. The chief executive Martin Winetrkorn was accused of
misleading regulators about the German maker’s effort to cheat the emission test of it’s
diesel-fuelled vehicles. Volkswagen is the parent company of Audi. Audi has discovered
emission related issues with it’s 60,000 cars. The company stopped delivery of A6 and A7
models due to finding an unidentified problem with the emission software. The 60,000 cars
were called back for the software update. The company revealed that it faced irregularities in
the emissions controls of A6 and A7 models. While carrying out the internal investigation,
the authority was found guilty that is Volkswagen. The authority is under surveillance from
US regulators (Ziek & Anderson, 2015). The concerns arose because of wrongdoing by
Volkswagen. Audi faced irregularities in the emission controls of A6 and A7 models while
carrying out internal investigations. The vehicles with the Audi engines were recalled over
diesel-gate emissions scandal to more than 900,000. Volkswagen recalled millions of
vehicles and paid huge fines since 2015 because of using illegal defeat service software
which disguised the level of pollution released by it’s diesel engines. Audi informed the U.S.
monitor for overseeing Volkswagen’s post-diesel-gate reforms of the latest problem by
adding no more cars in the U.S. affected by it. After the wrongdoing by Volkswagen the
defeat device software was installed I the cars fitted with it’s larger engines. Audi faced the
significantly higher costs to resolve the emission issues (Ali, Nguyen, Vien & Shah, 2015).
The engine control software was completely revised, tested and submitted to KBA for
consent. The company was said to find the solution for the affected models. Audi suffered
from the diesel-gate emission scandal which consequently suffered poor performance and
worst fuel consumption of company. The problem required a simple software upgrade. The
Volkswagen was asked to offer a compensation package to the UK consumers. This
technology permitted cars to release up to 40 times the accepted levels of detrimental
nitrogen oxide at the time of driving (Dybus & Lemmen, 2017).

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The diesel-gate emission coasted Volkswagen about $30 billion in fines, reimbursements, and
remediation. It was the biggest crisis ever faced by the company in it’s history. As per diesel-
gate the company had cars with setback devices software which could perceive test
conditions and cut discharges to mend results. The diesel-gate technology permitted cars to
release up to forty times of the tolerable points of harmful nitrogen oxide during driving. The
company self-proclaimed that eleven million cars were fixed with the obstacle device
comprising eight million cars in Europe and 6,00,000 in the U.S. The excess of nitrogen
oxide from the diesel vehicles contributed to almost 38,000 premature deaths (SBS News,
2018). Schmidt was charged to oblige fraud and violated the clean air act and was sentenced
to 7 years in prison in 2017.
Volkswagen made use of social responsibility theory as an approach of the classical theory of
communication to handle the diesel-gate issue. This theory helped the company to guide
actions taken by it such as responsibility towards the environment, society, culture, and
economy. This theory promotes environmental and socio-cultural aspects. As per this theory,
the company encourages freedom to press and regulates according to the social
responsibilities. Volkswagen presented it’s facts with interpretation by making use of this
theory. It is based on the reality and affects the social order. The social responsibility theory
provides the interpreted and analyzed facts so that the public gets the true information and
comprehensible news. It helped the company to maintain social harmony by revealing it’s
bad conducts that is setback device software. The vehicles used more fuel and failed in
pollution tests (Wuthishuwong, Traechtler &Bruns, 2015). The company commenced
contacting owners of the models fitted with the illegal software and ask them to bring their
vehicle for the rectifications and set the technical malfunctions. There were around 11 million
units affected by the illegal software. Audi confirmed 2.1 million units affected whereas
Sakoda confirmed 1.2 million units and 7 lac units from Seat. Out of the 11 million cars, 5
million were with the Volkswagen device. The company paid $25 billion for the emission
scandal in the U.S.
The board of management at Volkswagen conversant to the supervisory board about the
situation regarding possible cartel law issues. These issues occurred in 2017. The company
did not make any comments on the present time regarding these issues or on speculation.
Volkswagen works very closely on the general principle which discusses the feasibility and
standardization of technical issues and safety standards where the regulatory approaches are

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still pending in many occurrences. The general principle works closely for Volkswagen in
order to cooperate and create trust. It is a common thing for the car manufacturers to involve
in technical issues in order to accelerate the quality of innovations. It brings benefits not only
to customers but in many aspects as the innovative solutions become more viable then the
costlier individual solutions (Volkswagen, 2017). Co-operation is appropriate in the
individual model specifications. Such cooperation used to exist in the particular car
manufacturers and did not use to involve competition specific vehicle features. These
manufacturers were not obstructive to brand competition. The visualized standardization of
charging connections for an electric vehicle is the example of cooperation. The open
discussion was made with the Supervisory board on the information. The board of
management keeps the supervisory board informed regarding such matters. The meeting
addressed the claim that was among the German carmakers functioning with a wide-ranging
cartel. According to the European Commission, the antitrust regulators investigated a
possible automotive cartel (Men, 2014). The companies such as Audi, Porsche, Mercedes,
and BMW used German car industry committees to discuss the price of machineries and
technologies and how it anticipates anticompetitive behaviour. It was also heard that the U.S
will also be looking into the allegations which could prove more cost to the Volkswagen
(Zulch, 2014).
Culture is a powerful force which causes people to take a decision which is not in the best
interest of the company. It does not lead to the honest internal communication and ends up
facing disaster. In the case of Volkswagen, technology failed to meet emission standards. The
company tried to cover up the issue by installing software in diesel-powered vehicles rather
than fixing the issue. The software was designed to beat tests by making use of phony data.
These setback devices made the cars appear safer for the environment (Sonnier, Lassar &
Lassar, 2015).
The attribution theories were used to analyze the Volkswagen case and identify the source of
events and stemming accountability. This theory is apprehensive with recognizing the reason
of events and originating accountability (Zhang, et. al. 2016). The attribution research is
significant for the study as it reflects how an individual reaches casual interference and what
the concerns of such interference are.
The crisis management theories are engaged to examine how Volkswagen directed itself to
deal with the consequence of the crisis that is public security, financial loss, and reputation

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loss. It has seen that people take behavior in terms of causes (Lee, et. al. 2016). This
understanding has an significant role in determining responses to the behavior. The crisis
management strategies are types of response and it follows attributions in order to implement
applicable strategies.
The attribution theories include internal and external attribution and Weiner’s attribution
theory. The internal and external attribution has recognized when there were 2 types of
attribution. The first is known as external attribution. In this theory, the behavior is attributed
as caused by the situational factors. In the internal behavior, the behavior is said to be
instigated by the internal characteristics. As per this theory, the condition is held accountable
for an effect. These effects are present when the conditions are present and the effect is
absent when the conditions are absent. The individuals cause more to the attribute cause to
the outlook than situational factors at the time of pursuing explanation for the action of others
(Martinko, et. al. 2018). There are various frameworks which have been developed in order to
emphasis on the attribution of outlook as a causal factor for events.
It has been noticed that people inclined to pay more courtesy to the intended behavior. It is
identified that the strong and identified disposition interferences are drawn about a person
under conditions of high choice. The attribution theories were easily practical to the
Volkswagen to understand the cause of employee’s behavior (Sharpe, 2017). This theory
develops a better understanding of the working of business employs the future decision
suitably. The company can gain the capacity to intervene in the working so that employee’s
motivation is increased. The understanding of internal and the external environment acts
more purposefully and how it fits in the context of a crisis.
The Weiner’s attribution theory makes use of an additional framework in examining why the
crisis happened. This theory accepts that individual’s try to govern the causes of the behavior
of other people. A person attributes a number of causes to the action of others. This theory
considers that the process of attribution can be divided into 3 stages. In the first stage, the
behavior is perceived by a person. In the second stage, the person believes that the behavior
was executed intentionally (Hewett, Shantz, Mundy & Alfes, 2018). The third stage decides
that whether the behavior was the result of pressure in which one accept an external cause
and in the other case, one assumes an internal cause in the individual. This theory suggests
the attributions of the cause which guides future actions such as preventive measures.

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The crisis management theory can be informed by the attribution theory. The response
strategies are created on the nature of the cause of the crisis. The Coombes situational crisis
communication theory helps to corporate crisis management. This theory helped Volkswagen
to focus on reliability and uniqueness as measurements of acknowledgment and looks in
terms of crisis and relationship history. This theory referred to how Volkswagen has
accomplished in respect to the stakeholders and in other backgrounds. Both the factors are
important in persuading the public opinion after the crisis. The crisis causes to manage
different communication strategies effectively (Braun, 2015).
According to the Benoit image restoration discourse theory, in order to assess company’s
course of action to accomplish risk, it is required to manage risk as it affects to the image of
the corporation. The defense of corporate image is essential to the organization’s response to
the threat. This theory helped management of Volkswagen to rebuild it’s image in the market.
The communication strategies are used to minimize damage and restore the image in the
corporate field. It is important for the company to identify the appropriate audience at the
time of using communication strategies to re-establish it’s image. This theory has
acknowledged the five image restoration techniques which are used to shift blame such as
avoidance of responsibility, reduction of impoliteness, measures to restore real condition and
prevent reappearance, offering regrets and penitence (Jin, Liu & Austin, 2014).

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