Management Problem Solving Analysis: Volkswagen's Emission Scandal

This report provides a comprehensive analysis of the Volkswagen emissions scandal, examining the company's failure in Corporate Social Responsibility (CSR) and its impact on the organization. The report delves into the background and context of the scandal, identifying the core problem as a lack of CSR activities and unethical business strategies focused on maximizing profits. The analysis explores the implications of Volkswagen's actions, including the use of "defeat devices" to manipulate emissions tests, and the resulting damage to the company's image and stakeholder trust. The report further discusses alternative approaches and solutions, such as reinventing CSR and improving transparency, to address the identified problems. Finally, the report offers recommendations for Volkswagen to enhance its profitability, including employee training, sustainable production processes, and transparent operations. The report underscores the need for ethical considerations and CSR integration within the organization's strategies for long-term success.

Running head: MANAGEMENT PROBLEM SOLVING ANALYSIS
MANAGEMENT PROBLEM SOLVING ANALYSIS
Name of the Student
Name of the University
Author Note

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Executive Summary
The report is based on the analysis of the case study of Volkswagen that has faced major
issues related to the sustainability levels in the operations and CSR activities as well. The
emission scandal that had taken place in the organization had an impact on the image and
share prices of the firm in the automobile industry. The issue has been analysed with respect
to the CSR theories and different aspects that are a part of the case study. Recommendations
and alternate strategies will also be provided based on the future strategies that can be
implemented by Volkswagen in the automobile industry.

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Table of Contents
Introduction....................................................................................................................3
Background and context.................................................................................................3
Problem identification and description..........................................................................5
Analysis..........................................................................................................................5
Alternative approaches and solutions.............................................................................7
Recommendations..........................................................................................................8
Conclusion......................................................................................................................9
References....................................................................................................................10
Appendices...................................................................................................................11
Appendix 1...............................................................................................................11
Appendix 2...............................................................................................................11

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Introduction
The case study is mainly based on the German car maker Volkswagen that is currently
paying out around 15.3 Billion Dollars in order to address the crisis that has taken place in the
US. The issues that have been faced by Volkswagen are an important part of the discussion
that is made in the case study. Hyper-competition is considered to be a key aspect that is able
to affect the operations and profitability levels of Volkswagen in the automobile industry.
The CSR or corporate social responsibility failure that has been faced by the company is the
major part of the analysis made in the case study (Volkswagenag.com. 2019).
The report will be built on the analysis of the concerns that are mainly faced by
Volkswagen in its operations and their impact on the revenues and position of the firm as
well. The impact of ineffective CSR on the image of Volkswagen will also be a major part of
the analysis that will be made in report.
Background and context
The intense levels of competition that have been faced by Volkswagen in the
automobile industry have an influence on the organization and its profitability levels as well.
The stakes that have been faced by the firm and the levels of inflated corporate power are
considered to be major factors that have an impact on the organization as a whole. A major
emission scandal had been faced by the company in the year 2015. The scandal had a major
impact on the share prices, sales revenues and the pre-tax profits that are earned by
Volkswagen as well. The new business strategy of the firm had been quite aggressive in
nature and the agreement to terms and conditions of Volkswagen have been huge. The major
focus of this strategy was thereby based on the future operations of Volkswagen in the
automobile industry (Volkswagenag.com. 2019). The costs related to emissions scandal have

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also been unknown and the car dealers have been quite disgruntled about the calls that are
being made by the angry shareholders of Volkswagen.
Criticisms have also been raised with respect to the ways by which the company aims
at compensating the customers due to issues that are faced post the scandal. The case study
has provided a detailed analysis based on the strategy implemented by Volkswagen and the
culture of the organization as well. The major focus that is developed by Volkswagen for its
future operations are mainly based on the technological innovations and customer satisfaction
as well. The strategy of selling greater than 10 million vehicles per year had been quite useful
for the company. However, the lack of focus of the firm towards ethics and CSR had been
revealed as after the implementation of this strategy. The strategy further proved to be a
major disaster for the organization based on the aim that had been developed to enhance the
revenue levels and profitability in the industry (Volkswagenag.com. 2019).
The image of the company and trust of stakeholders had been influenced in an adverse
manner due to lack of focus towards ethics and sustainability. The future operations of
Volkswagen will thereby be based on the steps that have been implemented by the
organization in order to solve the issues that have taken place with respect to the
implementation of CSR and ethics. However, the future strategy may not be able to solve the
concerns that have been faced by the organization due to lack of CSR implementation. The
CSR based scandals have been able to influence the image developed by Volkswagen in a
huge manner. The company has reduced its focus on CSR with the aim of increasing the
levels of profitability and revenues as well. The risk-and-reward based game that has been
played in the organization is also considered to be a major factor that has increased the focus
of employees to gain high profits in the industry (Volkswagenag.com. 2019).

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Problem identification and description
The problem that has been identified in the operations of Volkswagen in the
automobile industry is based on the lack of CSR activities. The business strategies that have
been developed and pursued by the firm are mainly based on the enhancement of profitability
by selling more than 10 million cars per year. The company has lost the trust of employees in
the process of pursuing the strategy of increasing the revenue growth in the competitive
industry. The impact of ineffective CSR strategies is quite high on the firm and will have a
negative influence on Volkswagen in its future processes as well.
Analysis
The analysis of Volkswagen will be based on the corporate social responsibility or
CSR based area. CSR is considered to be a major part of the strategies that are implemented
by the modern organizations. The absence of proper CSR strategies will be able to influence
the methods by which a company like Volkswagen can maintain its processes. The case study
of Volkswagen is able to represent the failure of Corporate Social responsibility or CSR. The
corporate social responsibilities have been ignored by Volkswagen in the process of
development of the cars that are released in the market (Volkswagenag.com. 2019).
The details that are provided in the case study are mainly built on the methods by
which Volkswagen had programmed its emissions in order to increase the sales of its cars in
the industry. The company had faced major levels of allegations that included “rigged
software” and “defeat devices” as well. The engine of the cars had been controlled by an
algorithmic software that had an impact on the emission levels. The successful globalization
based strategy implemented by Volkswagen was mainly developed by the CEO Martin
Winterkorn who was also considered to be a key mover in this case. The major aim of the

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CEO at that time was to enhance the sales of the organization rather than showing concern
about the sustainable position of Volkswagen in the industry.
CSR issues faced by Volkswagen – Volkswagen had developed methods in order to
circumvent the emissions control in its cars in order to enhance sales per year. The strategy
was also not communicated to the employees belonging to all levels in the organization. The
management level employees only had the knowledge based on the strategy that had been
implemented by the firm in an unethical manner. The CSR department of the organization
also did not have any knowledge based on the emission strategy that was implemented in
Volkswagen (Volkswagenag.com. 2019).
The command chain within Volkswagen had led to formation of various lines of
software that are able to put an engine into the “test mode” and then also returning to the
“dirty mode” as well. The company also implemented every possible method in order to hide
the contaminating nature of the engines. The major objective that had been set by
Volkswagen in this case was to enhance the levels of profit in any way possible. The
ignorance that Volkswagen had towards the impact of its cars on the environment is
considered to be a major aspect that has led to the concerns faced by the firm.
The emission rates of nitrogen oxide of the cars had been found to be 40 times more
than the actual legal limit. The most important aspect that is related to the corporate social
responsibility based issues faced by Volkswagen is based on the high levels of importance
that the organization provides to sales and profitability. On the other hand, the car drivers are
however not concerned with the impact of their cars on the environment as long as the speed
levels are maintained. The emissions by cars of Volkswagen however, have the ability to
increase the respiratory diseases that are caused due to the gases.

7MANAGEMENT PROBLEM SOLVING ANALYSIS
The corporate citizenship based theory can be implemented in order to understand
the CSR issues that are faced by Volkswagen in the automobile industry. The partnerships
that have been developed by an organization in the society is considered to be a major factor
that has an impact on the operations of Volkswagen. The willingness of modern organizations
to become responsible towards the local communities is able to influence the image and
position of the firm in the industry and the society as a whole. The improvement of local
communities and considerations provided to the environment are affected by the CSR based
activities that are performed by Volkswagen.
Volkswagen has failed in maintaining its responsibility towards the environment due
to the lack of importance provided to the impact of the operations of its cars on the
environment. The organization had not developed effective communication with the different
levels of employees and the CSR departments regarding strategies that are being
implemented at different levels (Volkswagenag.com. 2019). The company has failed to
identify, evaluate and provide response to the various political and social issues that will be
able to impact the future operations in a huge manner. The policies that are developed by the
firm are not able to provide support to Volkswagen in order to solve various issues that are
being faced with respect to corporate social responsibilities (Volkswagenag.com. 2019).
Alternative approaches and solutions
The alternative approaches that can be maintained by Volkswagen will be related to
the proper improvement of strategies that are implemented with respect to corporate social
responsibilities. The corporate citizenship based responsibilities will also be able to influence
future position that Volkswagen aims at developing in the automobile industry. The
reinvention of CSR is considered to be an important solution that can be developed and

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implemented by Volkswagen in order to improve the revenue levels. Volkswagen had also
faced major crisis with respect to un-sustainability in its operations.
The company has also aimed at providing compensation to the employees in order to
improve the image and position in the society. However, the activities have not been enough
in improvement of the corporate position of Volkswagen. The CSR department of the firm
needs to be taken into confidence before the implementation of specific strategies related to
manufacture of the cars of Volkswagen. The payments that are provided to employees in
CSR department of the firm will also be able to increase the levels of motivation among the
employees.
Recommendations
The major recommendations that can be provided to Volkswagen in order to improve
the profitability levels and revenues are as follows,
 The employees of CSR department of Volkswagen have to be trained
effectively based on the ways by which they can reduce the impact of the
manufacture of its cars on the environment.
 The production processes of Volkswagen need to be developed with respect to
the requirements related to the environment.
 Volkswagen has to maintain transparency of its operations and manufacture
processes for the purpose of improving its perception among the stakeholders
and the customers as well.
 Volkswagen has to develop the cars based on different sustainable policies
that have been set by the governments of various countries.

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Conclusion
The report can be concluded by stating that Volkswagen operates in the highly
competitive automobile industry that has a major impact on the society and the local
communities as well. The significance of corporate social responsibility within the
organization and the industry is thereby considered to be quite high. The company needs to
enhance the levels of importance that are provided to the employees of CSR department. CSR
activities of the firm need to be improved for maintaining a sustainable position in the
industry for a longer period of time.

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References
Volkswagenag.com. (2019). Volkswagen Group Homepage. Retrieved 17 September 2019,
from http://www.volkswagenag.com/content/vwcorp/content/en/sustainability_and_
responsibility/Sustainability_Report_2014.html

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Appendices
Appendix 1
Appendix 2