Volkswagen Emission Scandal: An Ethical Case Study Analysis

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Academic and Professional Skills
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Executive Summery
Volkswagen Company in 2015 did the emission-scandal, which affected the company in a
negative way. They sold nearly 11 million cars, which were fitted with the ‘defeat devices’ so
that they can pass the emission test. The managers of the company admitted that they give the
permission to their engineers to fit the defeat devices for the pressure of the government. As a
result, the company faces a heavy loss and their reputation and fame become shattered in a
time. It increases the turnover rate of the employees and it has become hard for the company
to recruit new employees. The investors also denied to invest more money in the company for
their unethical work.
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Table of Contents
Introduction................................................................................................................................4
Analysis......................................................................................................................................5
Conclusion..................................................................................................................................9
Recommendations....................................................................................................................10
Reference List..........................................................................................................................11
Appendices...............................................................................................................................12
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Introduction
Ethics has an important role in improving any business condition. Ethical behaviour can help
the company to gain more profit with the help of high productivity and less turnover of the
employees. In the same way, the unethical work of any organisation can affect the company
in a negative way. The Volkswagen Company in 2015 made a scandal, which reduces the
profitability and the honours or reputations of the company. The Volkswagen Company
admitted that their engineers had been given the permission for fitting the ‘defeat devices’ in
the around 600 cars so that, they can make their engines of the cars pass the emission test.
Moreover, later the managers of the Volkswagen Company told that they also did the same
thing to the 11 million cars.
However, they later clarified the reason for hiding the scandal because; they were facing
many difficulties in making the diesel engine (BBC News, 2019). As a result, the company
also faces the lack of the high performance of their cars. The company due to their lack of
ethics in the managing process of the business faces a high employee’s turnover, which
increases the cost of the recruitment. The fame or the reputation of the business is shattered in
a time after the scandal of the company. The management faces legal pressure from the
government. The prosecutors prove this unethical work of the company as an “appalling”
fraud. This emission-cheating scandal becomes tough for the company to gain the trust of the
investors or the shareholders and there was a heavy downfall of the reputation of the
company.
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Analysis
Using your case study as an example, discuss to what extent ethics play a part in the
success or demise of an organisation.
Nowadays, ethics are important for any kind of organisation so that, they can hold their
success in the market. Volkswagen Company fails to maintain its practice of ethics in the
process of production and in the environment of the company (Barrett et al., 2015). Ethics
help any company to get or achieve any kind of social respect and approval through their
loyalty of the business process. Ethics deals with the moral concern and judgment of the
employees of the company. However, there are also some negative effects of maintaining
ethics in the organisation and sometimes, due to the moral ethics, the company faces some
losses.
The role of ethics in the company:
The Volkswagen Company in 2015, did an unethical thing that the management of the
company gives approval to the engineers to fit the ‘defeat devices’, so that their vehicle can
pass the emission test. Moreover, the company makes an announcement that, the company
fits the same devices on minimum 11 million cars (Mansouri, 2016). It proves the downfall of
their moral ethics in the business. The company according to their downfall of moral ethics
faces many issues and losses.
 The Volkswagen Company due to their unethical steps faces heavy pressure from the
government and the managers of the company are warned that any hidden things like
it should be uncovered immediately and the managers must give all the explanations
for their work (Prasad et al., 2017).
 The employees of the company were quitting the company with the passing day so
that, they cannot face any legal issues. As a result, the turnover of the employees was
so high that, it was affecting the production rate of the company.
 The company, after the scandal, fails to attract their customer to their vehicles. That is
why; they are facing a heavy pressure to sell their vehicles.
 They fail to attract more employees to engage them in their company after their
unethical work. It also increases the cost of the recruitment process because any kind
advertisement fails to engage the employees in their company. Moreover, the
company was facing the lack of high skilled engineers in their organisation.
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 The number of the shareholders are decreasing due to the scandal. The company fails
to find new investors, as the shareholder suspect that the company still can do any
unethical things again (Mun et al., 2018).
 It also affects the managers of the company in their decision-making process. The
mangers find difficulty in taking any decision as at this pick point any wrong decision
can affect the company in a negative way. Poor ethics of the company plays an
important role in the downfall or demise of the company (Normore et al., 2016).
 The poor ethics or the unethical behaviour of the company can harm the nature or the
environment of the society. The company admitted that they were facing difficulty
and issues in building the diesel engine. As a result, the company fails to achieve the
high performance of the cars. It affects the environment, a result, their relation with
the public was facing many issues, and as a result, the numbers of the customers
began to decrease highly (Pearson, 2017).
 There are many customers or buyer, who goes to any company for their moral ethics.
That is why the company can face a less number of customers after the scandal. This
emission scandal was reaching to every customer through the media. Their brand
image became shattered for this unethical and illegal work.
What measures can an organisation take to ensure ethical practice?
 Business ethics is one of the main factors, which can help the company internally to
be successful. The Volkswagen Company must maintain ethics while dealing with
customers so that, they can attract their buyers or their customers, who can only boost
the selling rate and profits.
 The company must maintain ethical behaviour in the company, because it influences
the employees or the workers to stay in the business to help the company in achieving
the goals. As a result, the company can face less turnover of the employees and so, the
productivity and profit gradually can increase.
 The company with their ethical behaviour can attract more workers and employees to
work in the company and as a result, the cost of the recruitment of the company
begins to reduce. Moreover, it also helps in engaging most talented and skilful
workers or employees so that the revenue of the business increases with the
innovations (Wu et al., 2018).
 Ethics among the directors and shareholders of the company also play important roles
in the success of the business. It can help the shareholders of the company to meet and
find the necessary objective. Moreover, it balances the interest and rights of the
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shareholders and gives the guarantees of maintaining the promises made by the
company.
 The company must secure their relationship with the new employees with ethical
behaviour because; the new employees of the company after knowing the moral and
ethical strategy of the company try to work with responsible and ethical manner. It
influences the investor of the company to maintain their peace of mind while
investing a huge amount in any project.
 The manager of the Volkswagen Company must try to maintain their moral ethics in
dealing with the board. Their main aim should be maintaining or keeping all the
promises they have made to the board and their shareholders because breaking any
promise or the negligence of the moral ethics can reduce the reputation of the
company.
 The company must think about society while taking any steps. The lack of
maintaining ethics of the company can affect the external or the natural world. It
means that society can be affected if they do not have any social ethics in their
company. For example, if the company does not care about the disposal of wasted
products, it can affect the lives of the people. As a result, the prospects in the future of
the company can be damaged gradually.
 The management of the company must follow ethics while taking any decision. They
also keep in mind about the problems and issues that can be faced by the employees
while taking any decision. It helps the company to ignore the continuous recruitment
process and the training session (Dietz et al., 2015).
 The company can never be successful in achieving their goals, if they ignore their
ethics in business while dealing with the investors. It is very common and easy for the
company, who serve the needs of the society, which the reputation of the company
can decline immediately with any unethical step (Craft, 2018). However, after losing
the confidence and belief upon the company, the investors can break any project or
deal. There are many customers or buyer, who goes to the company for their moral
ethics (Gogoll et al., 2017). That is why they try to serve the features of the cars,
which are promised by the company to their customers.
 Nowadays, the companies, which are co-operating in maintaining their social
responsibility and doing charity work so that, they can help in improving the social
condition and can build their image. One of the main reason in helping such activities
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or project is that any unethical behaviour can damage their relation with public
(Wertheimer, 2015).
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Conclusion
It can be concluded that the Volkswagen Company faces many legal issues and heavy losses
for not following their ethics in the business. According German enquiries, it is proved that
the mangers of the company give their approval for fitting the ‘defeat devices’ in their
vehicles. The study has elaborated the fact that any kind of unethical work can be profitable
for the company for some time. However, it affects the entire process and management
negatively in future. The engineers of the company produce a mechanism, which can reduce
the emission rate, but it has no legal rights. As a result, the company was suffering from less
employment and high turnover of the employees. The employees after the scandal were
leaving the company so that they cannot face any legal issues. However, if the company
follows the moral ethics in their business, they can gain the trust their shareholders or the
investors and their customers again.
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Recommendations
The Volkswagen Company must follow some ethical steps, so that they can gain the
reputation again. The company must maintain a good ethical behaviour with their employees
because; there are 40 percent of employees who quit their work due to the misconduct or any
unethical behaviour. The company must change their old ethical climate so that the effect of
the scandal begins to decrease. At this case, the organisation must transform new business
programs and can change the initiative of the management. The company first knows their
present situation in the market and takes any decision, so that they can recover the trust again.
They must consider the issues or problems of the employees before inventing new strategy.
The company at this case must first try to gain the trust and belief of their customer and their
shareholders and then try to improve the condition of the company.
The company must present their model in a way so that they can be visible to every customer.
However, if the organisation practices ethics as a code in their company, it can help in the
reduction of the ethical ambiguities. The ethics code of the organisation must present the
rules and values of the organisation, so that, the employees can be familiar with the ethical
rules in their work. Moreover, the main thing the organisation can do is to take the decision,
which can be effective in present and even in the future. They should not do any unethical
and illegal work to avoid losses in the present, because, in future they can face a heavy loss
for their illegal and unethical work.
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Reference List
Barrett, S.R., Speth, R.L., Eastham, S.D., Dedoussi, I.C., Ashok, A., Malina, R. and Keith,
D.W., 2015. Impact of the Volkswagen emissions control defeat device on US public
health. Environmental Research Letters, 10(11), p.114005.
BBC News. (2019). How VW tried to cover up the emissions scandal. [online] Available at:
https://www.bbc.com/news/business-44005844 [Accessed 8 Apr. 2019].
Craft, J.L., 2018. Common thread: The impact of mission on ethical business culture. A case
study. Journal of Business Ethics, 149(1), pp.127-145.
Dietz, J. and Kleinlogel, E.P., 2015. Employment discrimination as unethical behavior.
In The Oxford Handbook of Workplace Discrimination.
Gogoll, J. and Müller, J.F., 2017. Autonomous cars: in favor of a mandatory ethics
setting. Science and engineering ethics, 23(3), pp.681-700.
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.
Mun, K. and Shin, I., 2018. A close look at the role of regulatory fit in consumers’ responses
to unethical firms.
Normore, A.H. and Brooks, J.S. eds., 2016. The dark side of leadership: identifying and
overcoming unethical practice in organizations. Emerald Group Publishing.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Prasad, N., Kumar, V. and Kapoor, S., 2017. Business ethics: A decision between right or
wrong. Journal of Public Policy & Environmental Management, 1(1), pp.20-30.
Wertheimer, A., 2015. The social value requirement reconsidered. Bioethics, 29(5), pp.301-
308.\
Wu, Y., Wang, X. and Shen, D., 2018, June. Business Ethics in Price Discrimination in the
Automotive Industry. In 2018 3rd International Conference on Humanities Science,
Management and Education Technology (HSMET 2018). Atlantis Press.
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