Volkswagen's Consumer Deception: Ethical and Corporate Analysis

This report provides a comprehensive analysis of the Volkswagen emissions scandal, focusing on the ethical dimensions of consumer deception and the impact of corporate culture. The introduction defines consumer deception and corporate culture, setting the stage for an examination of the V...Read More

Volkswagen - VW The case
of consumer deception and
corporate culture

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
(a) Ethical dimensions of the issue from the case........................................................................1
(b) Two theories theories and demonstrate with the chosen case................................................4
PART 2............................................................................................................................................5
CONCLUSION ...............................................................................................................................8
REFERENCE ..................................................................................................................................9

INTRODUCTION
Consumer deception also called false advertisement and it include the misleading, false
statement or manufacturing confusion. Advertisement law save the consumers from their
deception with the help of specific legislation (Bovens, 2016). Corporate culture include the
individual beliefs or behaviour and how they react at the time of facing business transaction or
other challenges outside the business. This report include the case of Volkswagen, deception of
consumers when US Environmental Protection Agency (EPA) issue violation notice regarding
Clean Air Act to Volkswagen Group. Agency found that company intensional programme
turbocharged direct injection to activate emission control which cause the vehicle. Volkswagen
company deployed the software which is about 11 million cars all over the world. This report
include the ethical dimensions of the case, ethical theories and it also discussed about ethical
leader, manager or standards.
PART 1
(a) Ethical dimensions of the issue from the case
Goal of the Volkswagen company is ambitious & simple, Marlin Winterkorn plane to
transform their company into world's largest auto maker through selling 10 million of cars in a
year. CEO of the company Merlin Winterkorn decided to triple their sale in the US market to
achieve their business goals & objectives. Volkswagen dismiss the idea to compete in hybrid
market and start building diesel cars which have only 5 % demand in the US market. After
knowing that diesel cars generate more pollution in comparison to gas cars (Brooks, 2016). So
company face the enough of issues in the market. There are three factors which drive ethical
breakdown and force their employee to take those actions which unethical or against the value of
the organisation. These factors influence the employees to take unethical actions or practices.
 Pressure: - Management get the pressure from the top authority to provide ostensibly
training in ethics to their employees. In the Volkswagen organisation management follow
the autocratic leadership style to take decision and try to achieve single minded goal at
any cost. Engineering reputation was at stake and the failure of German economy will
create the pressure among the employees or manager of the company. Economy or top
management pressure will encourage the person to break their ethical issues and done
something unethical which is against the company's values, beliefs or cultural. So
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organisation have to be careful because when pressure increased in the company so there
is high chances of unethical actions or activities. Due to lack of understanding among the
organisation and different situation which encourage the employees to perform unethical
behaviour. Top authority need to recognize these values & believes every day to their
employees so it can reduce the chances of using unethical practices in the organisation.
Because employees get these values in their mind and before taking any action they
identify that which action is ethical or which one is unethical (Bruijl, 2017).
 Opportunity: - It is also depend upon the opportunity when it comes in front of the
people. Employees receive the direction at the same time when company's engineer
required a new solution for the problem. Bosh company sold diesel engine management
software to the Volkswagen company which help to detect emission controlling device at
the time of testing vehicle. Use of software for the internal testing is illegal in vehicle and
sold to the general public. In the current market, modern cars will operate the 100 million
lines of software codes and and it easy to hide but it will create the complexity among
organisation. So basically, in the organisation engineers get the lots of opportunity to
solve their issues unethically and it will not be recognised by others easily. But it is
personal choice of a person to perform their task effectively or choose the unethical
practices as a shortcut to complete their work and grab the unethical opportunity (Carder
and et.al., 2017). Because of that issues company's change the corporate culture with the
help of new ideas or new leadership styles which overcome the unethical behaviour and
provide them warrants against unethical practices occur in the organisation.
 Rationalization: - It is an Defence mechanism where controversial behaviour or feeling
justified in rational or logical manner for the avoidance of true explanations. Volkswagen
engineers installed defeat device which allow the company to cheat on newly emission
standards. For this company bear the fine of $120,000 and it was minimum in comparison
to consequences. So it was rational decision because punishment was light in front of the
emission of ethics. Controlling agency have to be rational otherwise these practices will
increase rapidly in the organisation. It will not just affect the company's employees,
production or profitability. It will also affect the stakeholders of the company and provide
negative impact on society.
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These factors will develop the situation in the organisation to follow unethical practices
which will affect the Volkswagen business as well as it's stakeholders who majorly dependant of
the organisation.
Role of the business is to develop product & services and distribute these items in the
consumers to stratify their demand or need. It will help the organisation to increase their profit or
production which further help the company achieve their business goals & objectives. Business
play important role in the society through various practices perform by the organisation and it
called Corporate social responsibilities (CSR). CSR is the business practice which include the
participation of the organisation in term of taking any initiative for the social welfare (Carvalho,
2016). Organisation invest some of amount in the society for the development and it include the
healthcare facilities for the poor people, provide primary education for lower income people or
feed the hungers.
Ethical dilemmas affect the stakeholders of the Volkswagen organisation because without
the trust of stakeholders business can't perform well. It include the customers, lenders,
employees, government, investors etc. Ethical behaviour is the base of trust of stakeholder on the
business. Because when organisation done something unethical it will break the trust on
company and change the expression or perception of public towards company. Volkswagen
company prepare a code of best practices where they have to work under these practices and it
include some principle which is followed by the manager, employees or director.
Unethical practices such as fraud, mislead the financial record or embezzlement these
actions involve the huge risk for the stockholder but also bring the investigation by law through
enforcement agencies. Manager or directors of the company need to employ ethical standards in
their decision making process. According to 2009 survey by Ethical Resource Centre analyse
that which company follow the ethical standards that company less involve in fraud cases or
mislead the financial information (Howard, 2017).
It is totally depend upon the manager or director of the company to choose best strategies
in their organisation because good choice provide the benefits or bad choice negatively impact
the organisation. So organisation have to make them aware about their decision and build
analytical skills to identify whether it is good decision or bad for the company.
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People think that Ken Lays & Bernie Madoffs cheat the Volkswagen but what about the
ordinary manager, employees or engineers who develop design and cheat with consumers
through making automotive pollution control. Even they set a bank account without permission
of customers (Jonson and et.al., 2017). To stop these activities in the organisation management
need to follow some recommendation in their business to stop these unethical practices:
 Integrate ethics in their corporate culture
 Develop plans for the ethical challenges
 Transparency in their work
 Peer group will stop the unethical practices
(b) Two theories theories and demonstrate with the chosen case
Ethical theories is the branch of philosophy which determine the action of an individual
that can be judge in term of right or wrong. People pass the ethical judgement on the basis of
their past experience or based upon the specific reason or principle. There are various ethical
theories which organisation have to follow but this report going to discuss about two ethical
theory such as:
Deontological ethics: - According to this ethics, action could be considered as morally
good due to some characteristics not because of the good product develop by the company. It
include the some of the obligatory regardless of their consequences for human welfare. In this
type of ethics, people keep their promise and follow the law. Deontology include various positive
attributes but it also contain defect one of those is no rational or logical basis decision in the
individuals duty. Organisation can apply this theory in the Volkswagen case where employees
not perform their duty effectively and done consumer deception. Employees have to feel
responsible regarding their work and not only think about their personal profit. Because of their
benefits they will spoil the whole trust of stakeholders. They also have to feel responsible for the
community they serve and obligated for the owner, consumers and employees but at the same
time business not able to provide priority (Latif, 2017). So in this case dilemmas will increase
and organisation loose their profit as well as their consumer's trust. For example : - Due to short
term advantage business will loose the long term trust. After that personal judgement will start to
pass to the organisational every employee. Volkswagen company have to follow these ethics and
develop the value of their organisation as well as for their employees.
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Virtue ethical theory: - According to this theory judgement will pass on the basis of
persons character rather than their actions which drive their normal behaviour. It will include the
individual reputation, moral or motivation and rate them unusual which is unethical. One of the
biggest weakness is people not consider the change in the moral characters. In the case of
Volkswagen, people will made a perception about all the employee that all are doing unethical
practices in the organisation for their benefits. But because of the some people all are claim to be
responsible for that. People will make their perception about the organisation and not change yet
even organisation already take effective actions regarding those employees (Li, X and Peeters,
2017). Virtue ethics can develop the human values and moral which will increase the happiness
of employees to live comfortably in the society. For example: - It is tool for the Volkswagen
company which help the leader or manager to determine their attitudes towards other and in the
decision making process. Application of this ethical theory will provide the better effectiveness
in term of performing their duty or responsibility ion the organisation. Most of the organisation
fail to perform their ethical duty because of their personal interest. If manager or director of the
Volkswagen company think about their stakeholder or it's benefit not for their personal interest.
So it will stop them to follow unethical practices. It will break the trust of stakeholders and also
harm the companies reputation which affect the production, profitability as well as affect the
market share.
If every organisation follow the ethical theories or practices in their business so it will
decrease the fraud cases, misleading of financial data or use of confidential information. For this
manager or director have to be responsible regarding their work and duty in respect of
organisation. Organisation have to transparent because it will provide the effective flow of work
and make clear all the information in respect of operational activities. By using these ethical
theories company can develop the interest of consumers among the organisation (Painter and
Martins, 2017). It will also influence stakeholder because which company follow ethical
practices or standards are the best for the society in respect doing their corporate social
responsibility.
PART 2
Personal ethics: - Personal ethics are the attribute which is valuable for the individual or
any action is good or bad it totally depend upon their personal point of view. It is different from
the business ethics because in the business ethics each & every employee have to perform their
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task according to it. But in the personal ethics, people can change their perception according to
the actions. It include individual values, believes, moral and what is right or wrong for
themselves. Personal ethics include the various attributes such as honesty, integrity, loyalty,
fairness, concern, respect for other etc. Every individual have their own ethics which is not
changed for any one. For example: - If Business ethics not match with the personal ethics then it
is very difficult for the individual to survive in the organisation. Because, if any individuals have
strong ethics then there is low chances of fraud in the company (Skeete, 2017). But if any
organisation involve in some illegal activities them an honest person or those who have strong
personal ethics that person not able to survive in the business for long run. So it is important for
the organisation or management to hire those employees who have personal ethics and that will
be beneficial for the them to achieve their business goals & objectives.
Ethical leader is the person who respect their followers and represent the concern through
listening their problems. They also try to provide valuable solution through their contribution or
with the help of their point of view. There are some characteristic which make individual as a
ethical leader and it beneficial for the organisation. These are discussed below:
 Justice: - Ethical leader always take their decision fairly without any baseness and they
treat every one as same or equal. Leader not treat single employee differently on the basis
of gender, region or nationality.
 Respect others: - Leader should respect other, it is not matter that person is superior or
subordinate. They have to respect all and listen their issues very attentively and try to
solve by giving their valuable advice.
 Honesty: - It is not true that every ethical person is honest but it is important that ethical
leader should be honest. Because leader is the person who convey the msg from one place
to another place ,so that's why honesty is required for the transparency.
 Focus on team building: - Ethical leader encourage the workers to perform in team with
the high spirit in the organisation which will help the business to achieve their goals &
objectives.
 Take valuable decision: - It is the leaders responsibility to take effective decision in
respect of organisation and it will done after ensuring that it will meet with the objectives
or not.
Manager have to manage their business ethics standards:
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Manager of the company have authority or hold a position which make them accountable
for their ethical conduct. They fulfil their duties or responsibilities to know that employees are
aware about their ethical code or practices in the organisation. Manager monitor the behaviour of
an individual and also response very quickly which will minimize the impacts suspected ethical
violation. Manager have responsibility to interact with external stakeholders such as consumer,
supplier, government, investors or communities. Because stakeholders always interested in to
know about organisational ethics and it will we communicated by the mangers (Terry-
Armstrong, 2016).
Manager have responsibility to change their organisational ethics, standers or guidelines
and these changes will be implemented in response to an internal determination. Manager can
manager the business ethics by recognizing the ethical standards at the time of operational
process. Develop a ethical program for their employees to accomplish their behaviour in the
workplace. Manager have to take ethical decision with the help of other and declared in the
public. Also integrate the management practices with the ethics of the organisation.
Conditions that bring unethical practices in the organisation
unethical means any action which is not right for the person according to their moral and
it include some of the behaviour which force them to done something unethical activity in the
organisation (Trope and Ressler, 2016). So there are some common unethical behaviour practices
which happen in the organisation such as:
Misuse of Company's time: - Employee always late in the organisation by providing
various excuse. For example: - one employee came always late and said my wife is not well
that's why I am late. These type of excuses given by the worker and waste the organisational
time.
Employee theft: - According to recent study by Jack L, every single employee out of 40
stealing from their employers. These activities increase rapidly where workers steal the business
items and done unethical practices in the organisation.
Abusive Behaviour: - Authority people such as manager or supervisor take the advantage
of their position or misbehave with work through using abusive language. It will decrease the
moral of employees and force them to leave organisation.
Organisation need to focus on their business values and compliance strategies which will
be followed by the manager. Company have to follow the control base principle, policies and
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discipline (Tse, and et.al., 2017). It also include the rules based and process driven organisation.
Organisation have to follow compliance methods for the business values such as:
 Foot and door techniques
 Door in the face techniques
 Low Balling
 Integration
CONCLUSION
From the above discussion, it has been concluded that Volkswagen organisational
employee done ethical practices which affect the business or the it's stakeholder. These unethical
practices affect the business or it's productivity or profitability and it will also affect the image of
company. Along with this, it include the two ethical theories and personal ethics which is
required for the organisation. In addition, it also include the ethical leader or how manager
manage these practices in the business and what are the reason for the ethical practices. Which
force the employees to take unethical actions in the organisation or the practices and it also
include the methods of compliances.
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REFERENCE
Books and Journal
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p.094017.
Latif, A. A., 2017. Volkswagen brand: The fall of an auto empire. Journal for Global Business
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Li, X. and Peeters, R., 2017. Rivalry information acquisition and disclosure. Journal of
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Painter, C. and Martins, J. T., 2017. Organisational communication management during the
Volkswagen diesel emissions scandal: A hermeneutic study in attribution, crisis
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Terry-Armstrong, N., 2016. The Volkswagen Scandal-The high cost of corporate
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Trope, R. L. and Ressler, E. K., 2016. Mettle fatigue: VW's single-point-of-failure ethics. IEEE
Security & Privacy. 14(1). pp.12-30.
Tse, Y. K., and et.al., 2017. Exploring the hidden pattern from tweets: Investigation into
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