Volkswagen Dieselgate: An Ethics and Sustainability Analysis Report

This report analyzes the Volkswagen Dieselgate scandal, examining its ethical and sustainability implications. It discusses the negative impacts on Volkswagen's brand image, customer trust, and financial performance due to the emissions cheating. The report explores the impact on value proposition from a sustainability perspective, discusses non-use values for green products, and assesses the company's focus on willingness to pay and consumer surplus. It highlights the increased pollution levels and health impacts, especially on children. The report provides recommendations for improvement, focusing on quality, productivity, and adherence to CSR practices to regain credibility and customer trust. It references relevant articles and academic sources to support its analysis.

Running head: ETHICS AND SUSTAINABILITY
Ethics and Sustainability
Name of the Student
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Abstract
The report has been helpful in analysing the dieselgate scandal of Volkswagen in the current
scenario due to which it impacted their brand image and performance to a large extent. As per
the article, it has been noticed that the company was not able to provide the customers with
the different CSR practices as they cheated on them and it impacted the growth performance
of the company negatively.

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Table of Contents
Description of Potential Impacts of Situation on Volkswagen..................................................3
Impact on Cheating Scandal on Value proposition from Sustainability Perspective.................3
Discussion of Non-Use Values for Green products of Volkswagen..........................................4
Focus of Volkswagen on Willingness to Pay and Willingness to Accept or Consumer Surplus
....................................................................................................................................................5
Recommendations for Improvement for Volkswagen...............................................................5
References..................................................................................................................................7

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Article- Maxine Joselow, E. (2020). VW Emissions Cheating Scandal Increased
Children’s Pollution Exposure (online) Retrieved from
https://www.scientificamerican.com/article/vw-emissions-cheating-scandal-increased-
childrens-pollution-exposure/ [Accessed on 4 March 2020]
Description of Potential Impacts of Situation on Volkswagen
Due to the emission scandal of Volkswagen, it impacted the company in a
negative manner as the customers avoided to purchase the different cars and other
transportation vehicles from the respective organization (Maxine Joselow, 2020). Due to the
cheating scandal of Volkswagen, the pollution level has increased to a large extent and it
impacted their performance drastically. Volkswagen agreed to plead guilty to the scandal of
emissions and they were ready to pay $4.3 billion in penalties. Moreover, six Volkswagen
executives are charged and it resulted in 40% drop in the share price of the company in next
two weeks in an inefficient manner.
Impact on Cheating Scandal on Value proposition from Sustainability Perspective
Due to the Dieselgate Cheating Scandal of Volkswagen, it impacted the value
proposition of the company to a large extent. Volkswagen has been constantly cheating in
emission tests through making and developing cars appear far less polluting than they
actually are. Due to the same, it impacted the brand image of the company wherein their sales
and revenues dropped to a large extent. The goodwill of Volkswagen was impacted; however,
they were capable of accepting their mistakes and they were ready to file the penalty which
was required to be provided to the different government bodies (Zhou, 2016).
While the sales of the VW fell in the United States market, there was high level of
frustration among the drivers in UK over the lack of proper information regarding how the

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vehicle will be repaired. Volkswagen did not take any step towards implementing the
initiatives related to corporate social responsibility which impacted their performance to a
large extent. The different customers demanded answers as well as compensation over the
emissions scandal and they were largely shrugged off controversy. Furthermore, there was
increase in the air pollution which impacted the low birth weights and asthma attacks which
impacted their performance and it impacted and created downfall in the sales and revenue of
the company (Maxine Joselow, 2020).
Discussion of Non-Use Values for Green products of Volkswagen
In case of Volkswagen, there was failure of the corporate social responsibility and
sustainability practices as the organization deliberately set out the design which meant the
circumvent emissions control which provided them with the unfair competitive advantage
over the others who are present in the market. Therefore, it made them the number one
company in the market and it poisoned the entire environment (Siano et al., 2017). The
company VW decided that they did not bother if the cars poisoned the planet more than 40
times after exceeding the limit of the nitrogen oxide.
Due to such kind of incomplete and inefficient corporate social responsibility
practices, it has been noticed that the entire planet has been polluted and it affected the
children to a great level. The smoke which have been inhaled by them is highly dangerous
and it impacted the brand image along with performance of the company overall (Rhodes,
2016). The main problem which was committed by Volkswagen was related to the cheating
the different customers who are loyal ones and the inhaling of such harmful gases led to the
inefficiency in the performance of the company as a whole to a certain standard and it
impacted the trust factor among the customers as they are feeling that they will be cheated
again.

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Focus of Volkswagen on Willingness to Pay and Willingness to Accept or Consumer
Surplus
In case of Volkswagen, the company has lost many loyal customers in their company
and the main reason behind the same is the fact the cheating which has affected the
performance and brand image of the company negatively. In such kind of scenario, it is
required that Volkswagen need to focus mainly on Willingness to Pay and Willingness to
Accept aspects which will be able to make them understand that they were wrong and they
need to improve their performance effectively (Li et al., 2018).
The company needs to rectify their mistake through adopting sustainability practices
and it will be helping the customers in regaining the trust on Volkswagen. In such scenario,
the VW have the capability in understanding and accepting the mistake and it helped them in
reducing the same mistake again and again. In the current scenario, VW is still considered to
be one of the largest car manufacturers in the world and it will be suitable for them in
managing their efficiency (Jacobs & Kalbers, 2019).
Recommendations for Improvement for Volkswagen
From the analysis of the scandal and cheating issues of Volkswagen, it has been noted
that there are different recommendations which can be provided to them to improve their
performance and work highly on the different sustainability practices that are as follows:
Firstly, the improvement in the quality as well as productivity are the two main
aspects which need to implemented by Volkswagen as it has been noticed that there are high
recall rates which are indicative of the significant quality issues at VW. These kinds of issues
related to quality are correlated in a positive manner with the lower level of productivity
through the global presence of the company and operations. In such scenario, the company

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needs to focus on following in a sincere manner the different kinds of CSR practices which
will be effective in generating the successful outcomes in a positive manner.
Moreover, in the present scenario, Volkswagen need to focus on the maintaining of
the credibility and generating the effectiveness to get back their position in the market. From
the article, it has been analyzed that the company had cheated on their customers and other
stakeholders (Crête, 2016). In such scenario, it will be helping them in implementing
verification agencies that will be improving their growth prospects and the company will be
able to compete with the other competitors competitively. The combination of the two points
are the major approaches which will be beneficial in regaining their brand and trust among
customers thoroughly (Blackwelder et al., 2016).

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References
Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J. S., & Wozniak, D. (2016).
The Volkswagen Scandal.
Crête, R. (2016). The Volkswagen scandal from the viewpoint of corporate
governance. European Journal of Risk Regulation, 7(1), 25-31.
Jacobs, D., & Kalbers, L. P. (2019). The Volkswagen Diesel Emissions Scandal and
Accountability. The CPA Journal, 89(7), 16-21.
Li, L., McMurray, A., Xue, J., Liu, Z., & Sy, M. (2018). Industry-wide corporate fraud: The
truth behind the Volkswagen scandal. Journal of Cleaner Production, 172, 3167-
3175.
Maxine Joselow, E. (2020). VW Emissions Cheating Scandal Increased Children’s Pollution
Exposure (online) Retrieved from https://www.scientificamerican.com/article/vw-
emissions-cheating-scandal-increased-childrens-pollution-exposure/ [Accessed on 4
March 2020]
Rhodes, C. (2016). Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), 1501-1518.
Siano, A., Vollero, A., Conte, F., & Amabile, S. (2017). “More than words”: Expanding the
taxonomy of greenwashing after the Volkswagen scandal. Journal of Business
Research, 71, 27-37.
Zhou, A. (2016). Analysis of the Volkswagen scandal possible solutions for recovery. School
of Global Policy and Strategy.

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