Case Study: Volkswagen Emission Scandal - Business Ethics Perspective

This presentation delves into the Volkswagen emission scandal, examining the ethical issues that arose from the company's use of defeat devices to cheat on emissions tests. It evaluates these issues through the lens of various ethical theories, including individualism, justice, ethical rights, and utilitarianism, highlighting the company's failure to prioritize stakeholder interests over profits. The presentation assesses the morality of the protagonists' actions, particularly those of the CEO, and discusses the negative impact on the company's image, customer trust, and the environment. Recommendations for resolving these ethical issues include implementing a strong CSR structure, adopting a customer-centric approach, issuing environmental statements, restructuring the board, and taking decisive action against those involved in the scandal. The presentation emphasizes the importance of ethical conduct and sustainable management practices for long-term success.

Business ethics and a global perspective

Volkswagen emission scandal case
 This presentation will focus on the case of “Corporate governance; a disgrace
at Volkswagen” is set in September 2015.
 The Volkswagen emission scandal provides the arguments for strong
environmental implementation, even for persons who believe that climate
changes is deception and emission rules put avoidable burden on automakers.
 Volkswagen expended ten million to publicise that the automobiles of
Volkswagen were hygienic diesel (Dybus and Lemmen, 2017).
 The consumers purchased Volkswagen cars in good faith.
 Volkswagen has cheated in emission test by creating car seem far has less
pollution.
 The CEO knew about this and he was involved in the cover up of these actions.

Ethics Issues in the Case
 An ethical dilemma is a situation where it is not possible to differentiate
correct or incorrect. In context of Volkswagen, the company did not
differentiate right and wrong.
 The company cheat its customers and authorities by manufacturing
engines which were specifically focuses on passing emissions tests.
 The company failed to maintain a standard to protect the interest of its
stakeholders which include customers, government, shareholders and
the environment.

Ethics Issues in the Case
 The corporation prioritised profits above the interest of its key
stakeholders in order to increase its profitability due to which the
company violated its duties.
 The senior level management of the company acted unethically so that
they can sell more cars which shows that they did not consider the
impact of their decisions on stakeholders.
 The management covered these actions to protect the engineers and
the company which shows their immoral intentions.

Evaluation of Ethical Issues based on Ethical
Theories
 Individualism method- The acts, which encourage the best interest
of individual, are ethical (Blackwelder, et. al, 2015). In this case, the
company should have adopted this approach to consider the interest
of customers before taking the decision.
 Justice method- It is required that the ethical decisions should be
depended on norms of equity, justice, fairness, and independence.
It was not fair for the company to cheat the tests to sell more
vehicles due to which it breached its duties.

Evaluation of Ethical Issues based on Ethical
Theories
 Ethical rights method-
It is stated by the ethical rights method that the ethical decisions are the decisions,
which keep the basic rights of the individuals influenced by them. Customers were
unaware that their rights are violated by Volkswagen and the CEO did not took
ethical decision after knowing about the ethical dilemma.
 Utilitarian method-
This method states that it is required to take decisions that produce the
great good for great numbers. The decision taken by the company has negative
consequences for customers, shareholders, authorities and the environment based
on which they are not ethical.

The morality of the protagonists'
actions of company-
 These immoral actions of the management were not in the
favor of Volkswagen.
 The CEO of the company was the key protagonist who
failed to maintain a standard of care to ensure that other
members in the company did not engage in unethical
practices.
 These actions spoil the image and goodwill of company and
its subsidiary company.

The morality of the protagonists'
actions of company-
 This scandal broke the heart of its customers who believe
in protecting the environment because of which they
purchased the cars from the company.
 Further, the creditability of software engineers and the
management professional are degraded and the company
will face difficulty in resorting its old image back.
 It was required by professional bodies to avoid these
immoral actions to save the image of company.

Recommendations for Resolving Ethical Issues
 Volkswagen fixed the defeat tool or sophisticated software on
the Volkswagen Diesel and Audi motors; however, this is not
enough.
 The company should implement a strict Corporate social
responsibility (CSR) structure in the company to hold its
management accountable for their actions.
 This structure will enable the company in maintaining balance
between the interest of its stakeholders rather than solely
focusing on profits.

Recommendations for Resolving Ethical Issues
 As per the moral rights approach, it is clear that the customers
have the rights to be careful of norms and excellence of what
they want or purchase; therefore, the company should adopt a
customer centric approach to restore its image (Indrawati,
2015).
 The corporation should issue an environment statement along
with its annual report in which the company should include
details regarding actions taken by the company to protect the
environment.

Recommendations for Resolving Ethical Issues
 The partition of the boards of company in the ‘administrative
board’ and ‘management board’ is supposed to be one of the
top reasons to the Volkswagen Emission scandal; therefore,
the company should eliminate this partition and increase flow
of information (Hartati, 2018).
 The company should apologise to its customers and fire those
engineers and managers who were involved in this ethical
scandal and take stricter actions towards adopting a
sustainable management approach.

References
 Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J., and
Wozniak, D. (2016) The Volkswagen Scandal: Case Study. Cambridge:
Cambridge University Press
 Dybus, C. and Lemmen, J. (2017) “Dieselgate” and Consumer Law:
Repercussions of the Volkswagen scandal in the Netherlands. Journal of
European Consumer and Market Law, 6(2), pp. 91-94
 Hartati, R. (2018) Pengaruh Free Cash Flow Dan Leverage Terhadap
Manajemen Laba Dengan Corporate Governance Sebagai Variebel
Moderasi. Jurnal JOCE IP, 12(2).
 Indrawati, N. (2015) Pengaruh Mekanisme Corporate Governance,
Asimetri Informasi dan Leverage Terhadap Manajemen Laba dan Kualitas
Laba. jurnal riset akuntansi dan BISNIS, 11(2).