A Detailed Report: Volkswagen Emission Scandal Case Study Analysis

This report presents a comprehensive case study analysis of the Volkswagen emission scandal. It delves into the ethical violations surrounding the use of defeat devices in their diesel engines, which allowed vehicles to pass emission tests while emitting pollutants far exceeding legal limits during normal driving conditions. The report meticulously examines the damage inflicted upon Volkswagen's reputation, assessing the impact on various stakeholders, including customers, managers, shareholders, and overall revenue. It highlights the decline in customer satisfaction, financial losses, and the erosion of trust due to unethical practices. Furthermore, the report explores the responsibilities of managers and shareholders in the scandal. The analysis culminates in specific recommendations for Volkswagen to rebuild its reputation, focusing on contributions to economic and social growth, fostering innovation, and valuing its staff and customers. This assignment is contributed by a student to be published on Desklib, a platform providing AI-based study tools for students.

Running head: VOLKSWAGEN CASE STUDY
Volkswagen Case Study
Name of the Student
Name of the University
Author’s Note:

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Executive Summary
The main aim of this report is to know about the case study of Volkswagen. They have made
devices for passing every emission tests; however, these specific devices were not made
ethically. Ethics is one of the major and the most significant requirement in every
organization. These are moral principles that should be followed in every company for
providing proper products and services to their customers. When the customers do not get
proper products, they would not be happy with the organization. When the scandal of
emission test came out for Volkswagen, they eventually lost several customers as well as
their reputation. This report has clearly measured the damage occurred to their reputation in
respect to customers, managers, shareholders and revenue. Proper analysis of these four
above mentioned points are provided in this report. Volkswagen had to face major issues
related to their reputation due to the emission scandal and it was required to resolve these
issues as well as rebuild their reputation with proper strategies. This report has also provided
significant recommendations for helping this particular organization to rebuild their
reputation with utmost efficiency and effectiveness. Contributing to economic and social
growth of the company, valuing their staffs and customers and fostering growth and
innovation in their cars are the three recommendations provided in this report.

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Table of Contents
1. Introduction............................................................................................................................3
2. Analysis of the Case Study....................................................................................................4
2.1 Measuring Damage to the Reputation of Volkswagen....................................................4
2.1.1 Customers..................................................................................................................5
2.1.2 Revenue.....................................................................................................................5
2.1.3 Managers...................................................................................................................6
2.1.4 Shareholders..............................................................................................................6
3. Conclusion..............................................................................................................................7
4. Recommendations..................................................................................................................8
Reference List............................................................................................................................9

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1. Introduction
Ethics can be defined as the part of moral philosophy, which is responsible for
involving systematization, defending as well as providing recommendations of various
concepts of correct and incorrect conduct (Lacan 2013). It mainly focuses on values after
comprising issues related to human morality. These are moral principles, which eventually
govern the behaviour of an individual or even conducting any activity. It is the system of
various moral principles and are responsible for affecting how people are making decisions as
well as leading their behaviour.
In September 2015, Volkswagen announced that they have made 600000 cars with
defeat devices for enabling emission tests. Then they announced that they have fitted these
devices in 11 million cars worldwide. After few days, they published the statement of facts as
the part of an agreement with the respective US Department of Justice. As per this document,
these engineers had faced major difficulty in building the diesel engine, which had the
capability to achieve higher performances after keeping the emissions in regulatory standards.
The engine was made in such a manner that could allow emissions beyond legal limits; hence
the managers have supported the system utilization, despite of protest from several multiple
workers. The organization has eventually decremented their reputation with this type of
activity.
Every organization should maintain their reputation in the subsequent sector and this
could only be done by maintenance of work ethics (Noddings 2013). In 2004, Coca Cola has
faced similar situation regarding their scandal with mineral water. The following report
outlines a brief description on the case study of Volkswagen with proper analysis and
relevant details.

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2. Analysis of the Case Study
Volkswagen has unethically implemented few devices after claiming that they could
pass any emission test (Frank 2013). However, in reality, the design was made for the
purpose of reducing emissions while testing and are not all effective and allowed emissions,
higher than the legal limits while driving on road. Volkswagen even claimed that a couple of
software engineers has made these devices. They did not follow ethics in their work. Several
concepts like good or evil, virtue or vice, right or wrong and justice or crime. Descriptive
ethics, moral psychology and value theory are majorly related to this ethics (Fromm 2013).
These were not followed by Volkswagen and hence they lost work ethics. The main aim of
this analysis is to know about the people responsible for such unethical activity in the
business of Volkswagen. Moreover, the measurement of the damage caused to the reputation
of this organization should also be analysed. Finally, relevant strategies would be provided
for dealing with these significant reputation issues in the organization of Volkswagen.
2.1 Measuring Damage to the Reputation of Volkswagen
The organization of Volkswagen has faced major reputational damage for their
unethical act of implementing ineffective devices within their cars claiming to have emission
free engines (Peters 2015). Such incidents could easily affect the reputation of the company
and there is major impact on the financial sector and shareholders of that particular
organization. Disruption was one of the major effects of such cause in Volkswagen. Since,
Volkswagen is within public light and had several customers worldwide, they have
considered about their stakeholders and take any decision (Crane and Matten 2016).
Customers are also stakeholders and hence it was important to take consent from them. The
detailed description of the factors affecting this case study are as follows:

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2.1.1 Customers
Customer satisfaction is one of the most important and significant requirement in any
business. They are solely responsible for contributing success and failure in the business. It is
extremely vital for tracking this factor and then working on the improvements for making
these customers more loyal towards the business. In this particular case study of Volkswagen,
due to the huge reputational backlash in Volkswagen, the share prices were down and they
were suffering from huge losses (Sorokin 2017). Moreover, the government of the United
States had imposed penalty on Volkswagen and this created a major issue for them. The
customers, after knowing that they were being deceived by this popular car manufacturing
company, chose to share their personal views over the social media platforms that had further
damaged the organizational reputation (Keown 2016). This was mainly because there was a
lack of communication between the customers as well as the organizational staffs. Since, they
have cheated the customers by providing unethical devices, it is their duty to communicate
properly with the customers and justify themselves so that the customers do not feel deceived
any more. Due to the back step of these customers, Volkswagen had to lose their reputation
in front of the media and rest of the world (Crane and Matten 2016). A proactive damage
limitation process was being required by various trained staffs.
2.1.2 Revenue
The second important factor or point for this Volkswagen case study is their decrease
of revenue (Nussbaum 2013). Revenue is the amount of money that any organization earns or
brings in before any expense is being taken out. This revenue comprises of service and
product sales on account and even in which the customer is paying cash. Volkswagen earned
their economic engine, business growth, credit and confidence from the revenue (Frank
2013). Being one of the most significant organizations in car manufacturing industry, there
were the strongest financial impacts on the organizational sector. Revenue should be

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incremented to a higher level; however, as soon as the news came out in public, the
respective organizational revenue has decreased in the company. There was a flat or decline
in sales growth and this affected their continued growth to a major extent. The custom, sale as
well as expenses on the compensation could even had lead them to organizational failure
(Moor 2017). However, luckily such situation did not arise and the company was able to
regain their previous position effectively and efficiently.
2.1.3 Managers
The next important and significant factor that had strongly affected the entire case
study of Volkswagen is the respective organizational manager (Dewey 2016). Manager
performance is required to be stronger for proper recognition of employee performance. In
this particular case study of Volkswagen, the respective project managers were responsible
for checking the effectiveness and efficiency of the implementation of the new emission test
devices. Since, the first objective of these managers was to bring out profit in their business
by answering to the organizational expectations (Trevino and Nelson 2016). While passing
the test, the workers or staffs of this specific organization has opposed eventually; however
the managers did not listen to them and decided to launch the unethical devices for their
personal profit. Although, with this activity, initially Volkswagen earned profit and
popularity through media; after few days, media released a statement of facts and the truth
came out through this matter of facts and the case study was known to all (Gatens 2013). This
specific activity demonstrated that even the managers were unethical in Volkswagen, which
damaged reputation majorly.
2.1.4 Shareholders
The fourth or the final factor that had a strong effect or impact on this particular case
study of Volkswagen was shareholders (Trevino and Nelson 2016). These shareholders are
individuals, who legally own maximum shares of stock within any public and private

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corporation. Since, they were responsible for owning shares in the company, they had full
right to know about the issues within the company. Similarly, any important decision should
be undertaken after consulting with them (Bennett 2016). The respective organizations sell
their shares of stocks as well as partial ownership within the business. They are responsible
for bringing profit objectives and short term orientation. This particular factor is majorly
linked with the previous point of revenue as stakeholders helps to have a solid stock value in
business (Lacan 2013). In Volkswagen case study, the shareholders knew about the unethical
defective pieces, however, they did not protest anything, rather supported the activity. Since,
any activity within the company could not be undertaken with proper permission from the
investors or shareholders, the mentioned individuals of Volkswagen case study were equally
involved in the scam (Fromm 2013). This was being covered by media and the rest of the
world got to know about unethical means within their company and their reputation was
damaged.
The above mentioned four factors clearly depict that the organizational reputation was
damaged to a great level and should have been rebuilt or checked properly.
3. Conclusion
Therefore, from the above discussion, it can be concluded that Volkswagen has built
their diesel engine with difficulty and this engine comprised of the core capability of
providing better performances although after keeping the emissions in regulatory standards.
A mechanism was being engineered for reducing emissions during tests, however such
emissions were far beyond the legalized limits while car driving. Several protests were raised
from the workers although the managers of Volkswagen supported utilization of the system.
This was not at all ethical since, the reputation was damaged to a high level. The
organizational managers did not follow work ethics and thus had to lose few of their clients.
The above report has clearly outlined the brief discussion on the case study of Volkswagen

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and the ethical considerations of this particular case study. Moreover, proper analysis is also
done for understanding the responsibilities of shareholders and managers are also described
here with relevant details.
4. Recommendations
Volkswagen could easily improve their reputation from the issues faced by them with
the help of few recommendations. These recommendations are as follows:
i) The first and the foremost recommendation for this particular organization is that
they should contribute to the economic as well as social development of their customers.
Since, they have not maintained ethics while implementing the devices in their cars, it is
highly recommended that the future cars should be made after following each and every
regulation and ethical rule. This would help them in gaining their position in the market as
the customers and government would understand that there is no unethical activity in the cars.
ii) The second important and significant recommendation for the company of
Volkswagen is that they should foster growth and innovation within their cars. This would be
helpful for them for learning and adding subsequent value and hence they would become
more successful. The shareholders and the managers of Volkswagen should bring out
changes, however by following ethics in the work. This particular recommendation would
also be effective for them for bringing competitive advantages in their business and hence
they earn profit eventually.
iii) The next significant and noteworthy recommendation for this organization of
Volkswagen is that they should value their employees and staffs. As per the case study, the
workers of this specific company has resisted for such unethical work and did not want to
make the devices; however the organizational managers supported the system for their profit

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and hence allowed such work in the organization. If they would had listened to their workers,
such issue would not have been raised and they would not have faced any problem.

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Reference List
Bennett, J., 2016. The enchantment of modern life: Attachments, crossings, and ethics.
Princeton University Press.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dewey, J., 2016. Ethics. Read Books Ltd.
Frank, A.W., 2013. The wounded storyteller: Body, illness, and ethics. University of Chicago
Press.
Fromm, E., 2013. Man for himself: An inquiry into the psychology of ethics. Routledge.
Gatens, M., 2013. Imaginary bodies: Ethics, power and corporeality. Routledge.
Keown, D., 2016. The nature of Buddhist ethics. Springer.
Lacan, J., 2013. The ethics of psychoanalysis 1959-1960: The seminar of Jacques Lacan.
Routledge.
Moor, J.H., 2017. What is computer ethics?. In Computer Ethics (pp. 31-40). Routledge.
Noddings, N., 2013. Caring: A relational approach to ethics and moral education. Univ of
California Press.
Nussbaum, M.C., 2013. The therapy of desire: Theory and practice in Hellenistic ethics.
Princeton University Press.
Peters, R.S., 2015. Ethics and Education (Routledge Revivals). Routledge.
Sorokin, P., 2017. Social and cultural dynamics: A study of change in major systems of art,
truth, ethics, law and social relationships. Routledge.

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Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to
do it right. John Wiley & Sons.