Academic and Professional Skills: Volkswagen Emission Scandal Report

This report provides an in-depth analysis of the Volkswagen emission scandal, examining the company's unethical practices of fitting devices to manipulate emission tests. It explores the negative impacts on Volkswagen's brand image, market share, and financial performance, including the decline i...Read More

Academic
and
Professional
Skills

EXECUTIVE SUMMARY
For an organization it is essential to adopt legal and ethical practices because it help a
firm in conducting business activities in effective and appropriate manner. Volkswagen is a well
known auto-mobile company which manufacture and sales cars. But this organisation get
engaged in some unethical activities due to which they face major issues such as reduction in
profitability, market shares and customers base. In order to overcome they must adopt some
plans and strategies which help them in growing business in effective manner.

Table of Contents
INTRODUCTION...........................................................................................................................2
ANALYSIS .....................................................................................................................................2
CONCLUSION................................................................................................................................5
RECOMMENDATION...................................................................................................................6
REFRENCES...................................................................................................................................7
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INTRODUCTION
Ethics and principles are concern as two main aspects which if essential to for an
organisation to adopt it in order to conduct work in effective and appropriate manner. By
adopting this a company also able to operate its business operations and functions at international
level in proper manner. Along with this by developing as well as adopting these an organisation
able to get long term benefits and opportunities which help them in expanding business in
appropriate manner (Rhodes, 2016). For adopting and maintaining effective and efficient ethical
culture at a workplace, a firm need proper guidance of manager and leader so that they operate
business in effective manner. Moreover those company who are operating their business in auto-
mobile industry they have to adopt various legal as well as ethical practices so that they can
conduct its business operation in proper manner.
Organisation taken for this assignment is Volkswagen which is operating its business in
auto-mobile industry from year 1937. Its headquarter is in Wolfs-burg, Germany and they offer
their products as well as services at worldwide level. They have approx 100 production facilities
which is operating across 27 countries. Along with this to operate business in effective manner
they adopt various ethical and legal practices. But they face issues due to their unethical
practices i.e. Volkswagen fitted a device in new manufactured cars which enables it to achieve
emission test simple. In this case vehicles which have that particular device they show limited or
less pollution even if they are generating excessive pollutions. Due to this scandal respective
company face negative or bad impact on their brand image and name. Due to this Volkswagen
asked to take back all cars which have that particular device which show low pollution. This
report include as well as focus on negative impact of scandal on image of respective company
and recommendation related to respective case.
ANALYSIS
There are various points or factors which cause issues through which Volkswagen face,
this is also affecting their process, decision, market shares, profitability and other factors badly
(Cavico and Mujtaba, 2016). Along with this there are various major risk that are associated with
organisation image and its reputation, some of them are explain below:-
Manager:
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It refers to an individual who are consider as higher authority of an organisation along
with this who have rights to take decision and operate business in systematic manner.
Volkswagen decrease or destroy its presence in market in September 2015, this occur due to
regulatory bodies found some illegal practices conducted by a company (Ewing, 2017). This
occur due to manager of respective company who permit their employees to manufacture
emission device in order to show less pollution. This will affect badly as well as negatively on
image and reputation of respectively.
In an organisation it is responsibility of manager to take care and ensure all operations as
well as functions conducted at workplace must be ethical in order to control wrongful activities
they must develop some strategies. Through investigation conduct by media, it can be analysis
that research and development manager want to introduce some more innovative product in
comparison to its competitors such as Audi, Porsche and many more. Moreover these companies
are also suspended for conducting unethical practices in same time. According to this condition it
is responsibility of manager to take care that no unethical practice will conduct at workplace. In
case of Volkswagen it is also found that some employees found them self guilty and left
organisation. This is so because those employees are not aware about this illegal practices which
is conducted due to inappropriate decision of manager. Due to which employees turnover rate
also get increased and decrease in market shares.
Share price:
Volkswagen face various issues and problems after conducting scandal of emission
device in order to show less pollution in test. By this device pollution level can be manipulated
and show less pollution. Through these devices they able to show minimum level of pollution in
order to enhance profitability and market shares of a business (Fracarolli and Lee, 2016). By
adopting this innovation they able to increase their business as well as sales in appropriate and
effective manner. In September 2015 regulatory bodies of United State conduct analysis for
testing and checking effectiveness of a vehicles. During which they found that in vehicles of
Volkswagen some device are fitted due to which emission level of pollution can be decreases
even if they are producing more.
Due to which respective company go through various issues and problems such as they
pay billion dollars as a fine. Along with this share price of respective company decrease by 30
percent in a single day when every one know about respective scandal. According to research
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conduct by Frankfurt Stock Exchange, it is identified and analysis that Volkswagen's share price
get decreased up to $US 86.36, which is down from a past 52 weeks which is $US 262.45 at that
time (CHART: This is what happened to Volkswagen after the emissions scandal, 2018). To is
hard for respective company to get overcome form this situation in effective manner and rebuild
their business properly. Due to decrease in shares price company also reduce its presence at
international market.
Regulators:
During testing of scandal, Volkswagen found guilty in respect of they fix technology
device in order to manipulate level of pollution which is produced by respective company
vehicles. This investigation is conducted by Mr. Winterkorn, as they planning to develop
appropriate and reputed auto-mobile industry and reduce or minimums use of devices which
affect environment badly such as emission device by which level of pollution can be manipulate
and show low in comparison to original level. In order to detect these type of illegal practices
Germany introduce a software by which they can identify vehicles which has emission device
and selling at world wide level.
For this government of United Kingdom conduct their own research in order to handle
and conduct test in effective and appropriate manner. After analysis conduct by Germany
Transport Ministry Minster they found that approx 3.6 billions cars of Europe are victim of
scandal. Due to which individual has to change fuel tank as well as hardware according to
requirement and condition (Siano and et. al., 2017). Along with this European investment bank
announced that if respective company take any loan for respective emission device then they will
demand for money or fine because due to this their reputation also get affected. Moreover, there
are some more criminal complains are filed Volkswagen that they adopt emission device for
reducing pollution level which is directly as well as indirectly affecting environment of country.
Public relations:
Due to scandal conducted by Volkswagen they face various issues and problems such as
their customers base get decreased, market shares and profitability ratio get diminished. In order
to resolve its mistake respective company take back all of its vehicles in which emission device
are fixed. The higher authority of this company also feel guilty and apologize in front of media.
This step of Volkswagen help them in creating and rebuilding their image in front of potential
customers in appropriate manner. Along with this these activities also help them in expanding
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business in internation market in proper manner in order to gain profitability and market shares.
But at some point of time due to scandal of emission device respective company's public
relation also get affected which will result in decrease in sales of products and services of
respective company (Mansouri, 2016). Along with this now, public relation is become huge
issues for Volkswagen and for which they put near about £4.7 billion money to get overcome
form respective situation and again enhance their sales and profitability in effective and
appropriate manner.
Evaluation of the Extent
According to an article given by Mansouri, 2016, it can be identify and analysis that
scandal which is conducted by Volkswagen has affected their brand image as well as relationship
with customers very badly and negatively. Along with this due to their illegal practices company
face major reduction their profitability and market shares. Scandal of respective company was
disclosed on 18th September 2015 by conducting emission test which prevent vehicles to produce
more pollution that is up to 40 time more than normal which is illegal practice (Clemente and
Gabbioneta, 2017).
Due to which Volkswagen face major loss and reduction in various aspects such as there
is reduction in shares by 18 percent as well as respective company also lose approx 14 billions
euros in from of shares. Along with this they also go through various difficulties in investigation
process at many countries such as Japan, USA and Italy. These countries also cut down their rate
of investments from respective company shares that leads to reduction in market shares at
international level.
CONCLUSION
Form above discussed point it can be conclude as well as analysis that for every
organisation adopting ethical and legal practices is essential which help them in conducting
business operations in effective as well as appropriate manner. This will also enhance company
goodwill and develop opportunities in order to expand business in proper way. Along with is
every country have its various legal norms and an organisation has to adopt it if they want to
operate their business in effective and efficient manner. For this process support of manager as
well as employees required in order to develop and maintain decision in effective way that leads
to growth of business. If an organisation conduct unethical activities they may face various
issues and problems such as they go through decrease in company name and image. Moreover,
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by it they may also face reduction in their customers base and market share. So its is essential for
an organisation to adopt proper code of ethics and legal practices in order to grow their business
in proper way.
RECOMMENDATION
The given case study is based on emission scandal conducted by Volkswagen, in which
they fix technical device due to which car can pass emission test easily and simply. When this
scandal get publicised and known by all company face major loss in their brand image and name.
In today's time customers wants innovation and creativity due to which company made their full
efforts so that they offer car with innovation which attract more and more customers. But due to
such scandal an organisation may affect their brand image and name badly and they have to go
through various procedures in order to recover it in appropriate manner. For this they may adopt
some innovative and unique technique in ethical manner.
Such as respective company is dealing or offer petrol as well as diesel cars hence now
they can introduce electric cars which help them in boosting there image and name in proper
way. According to current market situation there are vary less company which are offering
electric cars so it can be major opportunities for Volkswagen to come up with respective type of
cars in affordable price. Which will help them in regaining faith and trust of customers in proper
manner as well as by this they also stable and increase market share and profit. Along with this
electric cars or vehicles are eco friendly which can attract customers in appropriate manner.
Their are some other recommendation by which Volkswagen can gain or maintain customers
relation and loyalty is given below:-
 Respective company can organise events and campaign across the country in order to
accept their mistake and introduce new innovative products. By this they able to gain
trust and loyalty of customers again.
 They can also cut the cost and provide quality services to customers so that they can
regain loyalty as well as trust of customers in effective way.
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REFRENCES
Books and journals
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies. 37(10). pp.1501-1518.
Cavico, F.J. and Mujtaba, B.G., 2016. Volkswagen emissions scandal: a global case study of
legal, ethical, and practical consequences and recommendations for sustainable
management. Global Journal of Research in Business & Management. 4(2). pp.303-
311.
Ewing, J., 2017. Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal. Random
House.
Fracarolli Nunes, M. and Lee Park, C., 2016. Caught red-handed: the cost of the Volkswagen
Dieselgate. Journal of Global Responsibility. 7(2). pp.288-302.
Siano, A., and et. al., 2017. “More than words”: Expanding the taxonomy of greenwashing after
the Volkswagen scandal. Journal of Business Research. 71. pp.27-37.
Mansouri, N., 2016. A case study of Volkswagen unethical practice in diesel emission test.
International Journal of Science and Engineering Applications. 5(4). pp.211-216.
Clemente, M. and Gabbioneta, C., 2017. How does the media frame corporate scandals? The
case of German newspapers and the Volkswagen diesel scandal. Journal of
Management Inquiry. 26(3). pp.287-302.
Stanwick, P. and Stanwick, S., 2017. Volkswagen emissions scandal: The perils of installing
illegal software. International Review of Management and Business Research. 6(1).
p.18.
Online
CHART: This is what happened to Volkswagen after the emissions scandal. 2018. [Online].
Available through:<https://www.businessinsider.com.au/chart-this-is-what-happened-
to-volkswagen-after-the-emissions-scandal-2015-12>.
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