Comparative Business Ethics: Volkswagen Scandal Case Study Report

This case study analyzes the Volkswagen emissions scandal, focusing on the ethical breaches and business impacts. It examines the company's culture, which contributed to the fraud, and the consequences of their actions, including financial penalties, reputational damage, and legal scrutiny. The report details the use of 'defeat devices' in diesel vehicles to manipulate emission tests and the resulting environmental and health impacts. It also explores the company's attempts to recover from the scandal and the future implications for environmental claims made by companies. The study covers the dismissal of key executives, the role of corporate culture, and the need for stricter regulations. The case study concludes that the scandal has had a significant impact on the automotive industry and the importance of ethical behavior in business.

Case Study on the
Volkswagen Scandal and
admission to Emission
Fraud

Contents
EXECUTIVE SUMMARY.........................................................................................................................3
INTRODUCTION.......................................................................................................................................5
MAIN BODY..............................................................................................................................................5
1. Culture of Volkswagen created this ethical scandal.............................................................................5
2. Recover from ethics disaster................................................................................................................6
3. Scandal will lead to tough scrutiny of companies environmental claims in the future.........................7
CONCLUSION...........................................................................................................................................7
REFERENCES................................................................................................................................................8

EXECUTIVE SUMMARY
By the end of 2016, Volkswagen cars with diesel vehicles would have created additional
toxic emissions to cause actual early mortality in the United States alone of around sixty (60)
persons. From 2008 to 2015, 428,000 Volkswagen and Audi petrol engines poured out forty (40)
times the most nitrogen oxide than permitted under the Clean Air Act. Scientists determined that
Volkswagen and Audi diesel generated more than 36.7 million kg of nitrogen oxide to the
ecosystem after six (6) years. Nitrogen oxide is a main component of fine particulates and
pollution that leads us down the foundation for different cancers, notably heart attacks, early
death, bronchitis, and respiratory and cardiac diseases. Researchers have indicated that
substantial nitrogen oxide impacts generated by Volkswagen cars are prematurely endangering
60 human lives from 10 to 20 years. It is mentioned that surplus carbon emissions from
Volkswagen vehicles was actively engaged in thirty-one (31) and thirty-four (34) ulcerative
colitis and acceptance of pulmonary and furnace cases worldwide, in both. If Volkswagen
declines to recollect automobiles with defeat devices, there will be 140 unnecessary deaths from
2015 onwards. Additionally, the Volkswagen diesel cars would incur safety costs of $840
million. In regards, Volkswagen diesel cars cause excessive nitrogen oxide to the natural
environment, resulting in acid rains. Now had the chlorine rained heavily crucial effect on the
physical care bot, they also have vital devastation of environmental protection. VW has had a
massive push to offer diesel engines in the US, supported by an immense advertising campaign
promoting smaller engines from its vehicles. First, it has been confirmed that nine (9)
administrators have been dismissed for engaging in the fraud. Volkswagen chairperson states
that one of purposes why suspension group has taken this immoral controversy was essential to
the city's intentions in some agencies which refused to comply with the regime. It was mentioned
in October 2015 that the lot of workers involved in the diesel emissions scandal are short.
Volkswagen's CEO confirmed to US legislators that even a tiny major software technician
integrated the machine in vehicles for whatever reasons. The CEO said he is not sure of the
proper number of engineers, and this fiasco was not really a smart business decision. The
majority of managers, specialists, and developers involved in the pollution check scandal to run
the failure system in November 2015 is significant. This scandal has had numerous levers. It is
characterized that one person can write the destroy sensor software code; but in the other side,
the realization to work of electric motor as well as other components necessitates more labor
force involvement. In addition, Volkswagen junior roles were not included in deceitful test
according to Bode, while it was officially announced that a huge proportion of non -
management officer corps working population were implicated in diesel vehicles. The postponed
community of executives is composed of nine (9) supervision members of the board, process
improvement and management, engine developers, site engineers and sub company supervisors
including such Porsche and Audi. EPA introduced that roughly one hundred (100) million
sections of rules would be included in every other car, while Volkswagen includes the kill switch

by many millions of guidelines that are certainly motivating to detect. Additionally, a 3rd party’s
developer may have published the trying to cheat software code, Ricker introduced.

INTRODUCTION
Business ethics is the research of ownership structure and corporate governance, along
with financial reporting, money laundering, corruption, racism, corporate social responsibility
and fiduciary obligations. Ethical behavior, also called professional responsibility, is a type of
applied ethics which explores the legal and cultural principles and issues that arise in a business
setting. This can also be characterized as the formal and unspoken examines ethical principles
and moral that regulates choices and actions within that organisation, decided by the
organizational culture (Weninger, 2016). This report is mainly based on the Volkswagen
company scandal. The Environmental Protection Agency ( EPA) noticed in September that
several VW cars sold in the country had a "defeat device"-or technology-in diesel vehicles that
could've been detected while they're being checked, thereby adjusting the output to boost the
results. Since then and the German car company has acknowledged manipulating checks on
pollution across the US. In this report consist of culture of company that become reason of
scandal, recover from the disaster and company environment claims for future.
MAIN BODY
1. Culture of Volkswagen created this ethical scandal
The objective and directs the organization that describes how all tasks are directed
towards achieving the organizational objectives. Organizational culture is a set of common
perceptions, principles, and convictions that control how individuals handle themselves within
organizations. Such common beliefs influence the people inside the company strongly and
controls how people act, behave, and carry out their duties. Those may involve laws, positions,
and obligations. The organization’s structure also acts as a communication inside the corporation
among both concentrations. Within a hierarchical system, for instance, decisions come from the
top up, while being in a decentralized framework; choice-making authority is spread across
different levels within the entity. The Volkswagen culture is responsible for the ethical scandal
that face by the company (An and et. al, 2018).
One of the other major reasons which fuel Volkswagen manipulation is the firm's
particular corporate culture. Volkswagen's culture is conformity predicated which require users
to relate with the regulations. This culture has spurred to an environment in which, within an
objectively organisation approach, the labor force performs its assignments. According to this
cultural identity, the business's demand and aspirations must be met, irrespective of how staff
members can execute the activities. According to Ferdinand Dudenhöffe, director of research for
automobiles studies, Volkswagen's cultural norms vary significantly from several other
automakers of automobiles. Instead of being democratic, the firm is autocratic. The
organization's strategic emphasis is on origins and Wolfsburg; hence regional thought is notably
dearthed (Nguyen, Mujtaba and Cavico, 2015). Volkswagen's top jobs, predicated on

Dudenhöffe, may not immediately implement the working population to configure cheating
software in engines, but Volkswagen's work performance is known for trying to avoid dissidence
and conversation. As per the reason company face this ethical sandal (Rogerson, 2017). In this
company all the major decision taken by the top board members and they are not involving the
other members of team. As a result they are not focusing on the results of innovation and sell out
the defeat piece in the market. According to one of Volkswagen's executive staff, Volkswagen's
performance appraisal is also another purpose why many people wished to keep silent about
emission testing for a long period of time even though they favor to uncover it. Volkswagen's
compensation model employs to all working population from subordinate ranks including such
factory floors to leadership ranks including such CEOs. In Volkswagen's rewards and incentive
program not only workers earn bonuses evaluate the results, but departments also offer rewards
focused on their performance is directly related. Volkswagen's beneficial program's profit motive
results in staff members not coming out with opposing views. When Volkswagen deceiving in
the diesel emission was openly stated, Bernd Osterloh, who is Volkswagen's workforce
commander, decided to declare that organizational culture and frameworks are not rational and
acceptable; consequently, a few other value-based adjustments in corporate culture must be
developed to require people to discuss explicitly with elevated amounts on just about any subject
inside the corporation. Although some individuals may stick to the assumption that the
Volkswagen scandal occurred as a result of profit maximization, this is a misperception in the
forehead (Bez, 2016).
2. Recover from ethics disaster
Volkswagen can attempt to recover from such a moral disaster by having to pay the
misdemeanor fees, repurchasing buyer automobiles, rectifying prospective performances and
able to monitor automobile evaluation with stronger regulatory authorities and segments and sub-
management. The company takes the decision to restore their consumer trust such as; it has
retracted the vehicle and provided a $1000 goodwill package to all the purchaser of car at the
country of United States. The manufacturing team of company agreed on the curb executive
compensation after the outcomes of scandal. The corporation can take various steps in EU
countries and also implement same method in the other countries and the company will go
bankrupt. VW agreed for the 3 years probation, a ban on selling diesel vehicles in the United
States and an independent compliance analysis that will care of all the activities over the next 3
years (Murtaza and et. al, 2016). The company had been suspended to all the nine management
team members which re part of these testing and reveal wrong report. After all the activities they
are taking right steps to come out from these activities. They are following all the set up
government act and apply in proper manner. Along with follow the ethical approach to maintain
good culture in the company. In addition, reimbursement for Volkswagen vehicle owners with 3
liters of diesels is now under manner. Volkswagen scandal deliberations are remain secret. The
suggested arrangement is endorsed and assisted by California regulatory agencies, the California
prosecutor's office and the Department of justice including both, according to the judge.

Attorneys have mentioned that the federal communications Commission (TFC) is prepared to
respect the amendment grounds. TFC lately sued Volkswagen for tidy-diesel testing
3. Scandal will lead to tough scrutiny of companies environmental claims in the future
Volkswagen is an example of that. In 2013, Corporate Responsibility Report, which
spoke about environmental sustainability, pledged that "acting responsibly will always be part of
the overall business culture. Anybody else hoping to verify or to what large extend we are
achieving this must first take a glance at our product lines. "Revelations started to emerge just
after Frankfurt exhibition in September about both the Volkswagen Group's dishonesty on diesel
vehicles (Vitell and et. al., 2016). Public sector scam detectives have indeed been raiding French
manufacturing companies PSA team and Renault as part of wider vehicle emissions controls.
After the scandal the environment committee take the decision of the make the new act that
follow by the all the automobile companies effectively otherwise ban their selling activities. On
21 April 2016, a judge in the United States of California confirmed that Volkswagen presented a
concrete proposal that was sponsored by U.S. state authorities and environmentally conservation
authorities to settle and finalize the argument that Volkswagen compromised in the pollution
check by implementing a cheating system in the EPA game pollution specifications in the U.S.
At the end of 2015, Volkswagen confirmed that the misleading program has been installed
worldwide in eleven (11) million cars and 600,000 of those cars are on U.S. roads. Accordingly,
agreement will in concept apply to Volkswagen cars in the USA. Sales of diesel already have
been declining, and the VW controversy has come at a bad time. "The disclosures are likely to
contribute to a strong drop in demand for diesel car cars," said Vendigital consultant automobile
expert Richard Gane. "In the US, the diesel auto industry typically affects for about 1 percent of
all new auto sales but this is unlikely to change in the short term at least." that being said, in
Europe the effect could be so much greater, resulting in a large disbursement of the industry
swapping practically overnight to petrol engine vehicles (Wymer and Rundle-Thiele, 2017).
CONCLUSION
As per the above report it has been concluded that The Volkswagen misleading
controversy is an extraordinarily complicated case, helping create drastic inconveniences for its
internal and external relevant parties, according to research results and analyzes evaluates
preceding paragraphs. Even though Volkswagen manipulating in the diesel pollution test was an
immoral action culminating in a number of catastrophic results, the Green Penalty plan is an
acceptable way to complete this event. Electronic getting services protecting the environment
departments and save costs and time complexity and expenses discover new emissions control
monitoring systems. In addition, Volkswagen is nevertheless punished in this manner but also
adequately helps pay for its scandal. In summary, as this is an open investigation, there seems to
be an opportunity to put forward the Green Penalty proposition to evaluate the problem by a win-
win technique.

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