Volkswagen Scandal: Lessons Learned and Impact on Business Ethics

Running head: VOLKSWAGON SCANDAL 1
Volkswagen Scandal
Peter Jones
Columbia University

VOLKSWAGEN SCANDAL 2
Contents
Abstract............................................................................................................................................3
Volkswagen Scandal........................................................................................................................4
Leadership Style and Myopic Thinking..........................................................................................6
Lessons from Scandal......................................................................................................................8
Role of regulations...........................................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

VOLKSWAGEN SCANDAL 3
Abstract
Every commercial firm/business has a common objective that is profit earning;
nevertheless, another aspect is also significant in today’s era, which is ethics. A business has
several stakeholders and they all have different expectations. For instance, shareholders want a
high return, employees expect high remuneration, and society demands a responsible behavior.
However, there is a common expectation that all the stakeholders have. This expectation is
known as ethical behavior. Business ethics is an important area of study, which stipulates the
manner in which a business should deal with its stakeholders and carry business activities
(Businessjargons.com, 2019). In the past few years, many of the scandals have been reported
where businesses have behaved in a very irresponsible manner. In the future, results of these
scandals prove to be very dangerous for the profit and reputation of firms. For the preparation of
this report, one such scandal that has been selected which has been done by the well-known
automotive manufacturer is the Volkswagen entity. In the presented report, the subjective
scandal will be explained in addition to reason and impact of the same. In conjunction with this,
lessons that one can learn from the same will also be discussed.

VOLKSWAGEN SCANDAL 4
Volkswagen Scandal
Before starting the discussion over scandal, first the background of the company is
required to know. Volkswagen group has done the scandal, which is a German automotive
manufacturing company. The company is a multinational company having its headquarter in
Germany. The scandal is about operations of the company in Unites States. Before the scandal
company has huge faith of customers in US as well as across global but the event can be consider
as a major shock for the performance and success of the company.
The subjective scandal erupted in September 2015 when Volkswagen accepted that the
same placed defeat devices in nearly 600,000 of its automobiles with the intention to circumvent
the emission test (Mansouri, 2016). In order to discuss what exactly this company has done, this
is to state that the same was involved in the cheating of the emission tests and presented its cars
very less polluting than they were actually. The above-mentioned defeat device played an
important role in the whole scandal. This device was a program in the engine software rather
than a physical device. Clean diesel engines are there which reduce emissions via various
techniques such as exhaust flows, adjustment of air-fuel ratios and injection of the urea-based
solution in order to render Nitrogen Oxide. Cars of Volkswagen were not eligible to operate in
this manner. There was a proper system by which the respective defeat device could know that
it's being tested. The EPA tests have standard profiles and practice. Under this test, vehicles are
used to put on rollers and to run at a specific speed for a specific time. In such a situation, the
central computer of the car has the ability to detect and determine whether it is a test condition or
not considering the inputs (Topham, Clarke, Levett, Scruton & Fidler, 2015).