Report on Volkswagen Emissions Scandal: Ethics, Impacts, and Analysis

This report provides an in-depth analysis of the Volkswagen emissions scandal, focusing on the ethical breaches and their consequences. It begins with a definition of ethics and its importance in business, setting the stage for the case study. The main body of the report details the scandal, where Volkswagen engineers manipulated emissions tests, and the resulting ethical dilemmas faced by the company. It explores the pressures and rationalizations that led to the unethical decisions, and examines the impact on various stakeholders, including customers, shareholders, employees, and the environment. The report discusses both positive and negative impacts, such as the decline in trust and financial losses, as well as the rise of competitors. Furthermore, it offers a reflection on the author's evolving understanding of ethics and the factors that contribute to unethical behavior within large organizations. The report concludes with a summary of the key findings and emphasizes the critical role of ethics in organizational success.

Ethics

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY .................................................................................................................................1
CONCLUSION .........................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Ethics can be defined as the moral principles which are related to the behavior of a person
when he/she works on an allotted task. This assignment will discuss about emissions scandal in
Volkswagen where they failed to follow ethics (Smith, 2011). It will also discuss about various
dilemmas and its impact on stakeholders. Positive or negative impact of their decisions will
become part of this file. Original views will also get covered under this project.
MAIN BODY
The importance of ethics is enhancing in this era because it is directly connected to the
name of an organization. Companies who follow regulations which are present in business
environment earn trust of various stakeholder specially customers which help them in increasing
their goodwill and valuation. Volkswagen is one of a leading organization in automotive
industry, they are running their business across the globe and make different type of vehicles like
cars, buses etc. Almost 626,715 employees are working in this enterprise and their profit is
around 2 billion pound (Slingerland, 2011). They have many subsidiaries, some of them are
known for making only luxury cars. Cited enterprise is also working on vehicles run by either
hybrid fuel or electricity which can be considered as the future of this sector.
Engineers of Volkswagen made a software which assisted them in showing wrong
amount of carbon emission at the time of testing. In books, they were doing less pollution but in
real case they were breaking the rules and ethics. In investigation, it was found that their
engineers were in lot of pressure because they had to improve performance of company's car but
at the same time they have to follow the regulations which were made by government. This
dilemma forced them to find a middle path which was unethical.
When a person has options in his/her life they face a confusing situation where they fail
to choose right path. Volkswagen also faced same situation, Bosch sold them a software which
assisted them in cheating the test. If they would not have that device, they could never do this.
This problem initiated when they got an illegal choice whose chances of catching was next to
impossible (Shu and et.al, 2012). This was not the first time cited organization has done
something like that, in 1970 they did same thing but at that time they were punished with only
$120,000 fine. This incident can be considered as the main reason of confidence among
management. They thought it is rational and then entered in a dilemma. Company was earning
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lot of money because of this software, some people in management were aware of its outcome
but they did not take any decision because customers were demanding better products in
affordable price which was not possible without use of this software.
Stakeholders of an organization get severely affected by these kind of ethical incidents, it
has both positive and negative impact. With Volkswagen, faith in government of public also
went down because they are responsible for finding these kind of cheating which they fail to do
for a long period of time. Because of their negligence, environment got polluted with the
nitrogen oxide gas. Shareholder of company had to face major loss as price of stock plunges and
valuation of organization went down by billions of dollars. It was not a onetime thing, its long
term impact can still be seen in their share price (Noddings, 2013). They are still trying to
recover from this ethical emission. Dealers of Volkswagen faced anger of customers, they were
significant part in recalling the diesel cars which were running because of this software.
(Source: The EQ Assessment Criteria, 2017)
Demand of cars made by cited enterprise decreased in one short because of this ethical
issue, this made a negative impact on business of their suppliers who were selling them raw
material. Volkswagen was planning to expand their business in many countries which was going
to be main source of earning for their suppliers but after this incident they changed their plans
and save money for paying various kind of fines in different nations (Ethical Breakdowns, 2017).
The customer were produced to own a car made by Volkswagen after this ethical emission they
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Illustration 1: EQ Assessment

lose trust in their favorite automobile company which let them down among other competitors.
Other players of this industry got a chance to capture market of cited organization, enterprises
like Tesla saw impressive rise in their valuation because they make cars which do no harm to the
society. Their demand and popularity got increased and a small firm like Tesla is now seen as
their future competitor (Yoon, 2011).
Decision made by management was unethical because they were aware of the negative
impact which this software will make on environment. There are many companies who are
operating in same industry and making cars which has great performance but Volkswagen did it
because they wanted to earn more profit. This wrong decision can be considered as the prime
reason that they are now paying huge amount of fine in various courts and their profits are also
going down continuously. The engineers were also the part of this decision which was unethical,
initially their strategies worked and it made a positive impact on business but once their flaw
came in-front of public its negative impact became unbearable (Mero-Jaffe, 2011). Trust is an
important part in every business, their wrong and unethical decisions tainted image of
Volkswagen who were considered most successful company of automobile industry.
I was aware of various business ethics but after attending lectures, I learn lot of things
which was new and useful to me. Rules which are made by government are needed to be
followed by every firm but in my view they could break them if it is beneficial for public. Ethics
are something that do not change in short period of time so if an organization tell their
employees about the morals then they can easily bifurcate between ethical and unethical work. In
lectures my teacher taught that if you break rule for one time then it comes into your personality.
This theory was different from my original one because in my view it was not a big mistake if
someone do something unethical for one time.
I had faith in big organizations like Volkswagen that they will not do any unethical
activities but when I completed this case it was clear to me that anyone can commit a crime. My
original view get changed and I saw another side of this concept. I always thought the reason
behind these types of unethical issues is greed of companies (Frank, 2013). They do it because
they want to earn more money but there is another angle which I understood after completing
this assignment. Pressure, opportunity and rationalization were the reason that management and
engineers of cited company took this decision. Profit is not the only aim of ethical emissions like
this, sometime organizations do it to provide better service and product to their customers.
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CONCLUSION
From the above assignment, it can be concluded that ethics are essential for the success or
failure of an organization as it is directly connected to the image of a company. If an enterprise
do not have morals then they will face various problems relating to confusion at the time of
decision making. They do not have any idea about what is right or wrong. Those who choose
unethical path may see some positive impact on their business in initial stage but in the long run
they have to face serious problems.
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REFERENCES
Books and Journals
Frank, A.W., 2013. The wounded storyteller: Body, illness, and ethics. University of Chicago
Press.
Mero-Jaffe, I., 2011. ‘Is that what I said?’Interview transcript approval by participants: An aspect
of ethics in qualitative research. International Journal of Qualitative Methods. 10(3).
pp.231-247.
Noddings, N., 2013. Caring: A relational approach to ethics and moral education. Univ of
California Press.
Shu, L.L. and et.al, 2012. Signing at the beginning makes ethics salient and decreases dishonest
self-reports in comparison to signing at the end. Proceedings of the National Academy of
Sciences. 109(38). pp.15197-15200.
Slingerland, E., 2011. The situationist critique and early Confucian virtue ethics. Ethics. 121(2).
pp.390-419.
Smith, D.W., 2011. Deleuze and the question of desire: Towards an immanent theory of ethics.
Deleuze and ethics. pp.123-41.
Yoon, C., 2011. Theory of planned behavior and ethics theory in digital piracy: An integrated
model. Journal of Business Ethics. 100(3). pp.405-417.
Online
Ethical Breakdowns. 2017. [Online]. Available through: <https://hbr.org/2011/04/ethical-
breakdowns>. [Accessed on 5th September 2017].
The EQ Assessment Criteria. 2017. [Online]. Available through: <https://ethisphere.com/ethics-
data/>. [Accessed on 5th September 2017].
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