SHR011-3: Volkswagen Scandal, Ethical Theories & Change Management

This report analyzes the Volkswagen emissions scandal of 2015, examining the ethical lapses and the subsequent change management strategies implemented. It discusses the ethical theories violated, including utilitarian and deontological perspectives, and explores the legal ramifications and the company's response. The report further investigates inclusive and diverse practices for change management, emphasizing the importance of employee training, communication, and adapting to a dynamic business environment. The goal was to regain customer trust, improve the company's image, and focus on sustainable practices, such as investing in electric vehicle technology. The analysis highlights the shift from autocratic leadership to a more inclusive approach, aiming to address past failures and foster a culture of ethical conduct and social responsibility. This document is available on Desklib, a platform offering study tools and resources for students.

ASSESSMENT -1
INDIVIDUAL CASE STUDY
REPORT

Executive Summary
The report is based on the case study related to the Volkswagen scandal which took place on 18th
September 2015. The company was alleged of not complying the regulations and followed
unethical practises. The report has included the various ethical theories , lawful practices,
inclusive and diverse professional practices for improving change management. The report has
also reflected on complying with ethical practices that the organisation implemented for
improving the performance of the company. The organization has made various changes in its
organizational culture in order to motivate the employees and also focus on achieving the goals
of the company.

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Ethical theories ............................................................................................................................3
Inclusive practice for change management..................................................................................5
Diversity practices for change management................................................................................6
RECOMMENDATION...................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The organisation consist of various departments and all have their respective functions to
perform an contributes in achieving the goals and objectives of the company. Human resource
management is associated with the study of the activities that is related to the people working in
the organisation. It is concerned with the managerial functions which performs the recruiting,
hiring , motivating and mainlining the employees in the company. The Human resource
management ensures that the talent of the employees are used effectively and efficiently in order
to accomplish the goals and objectives of the firm(Saks, 2021). The report covers the case study
on the scandal that was held on 18th September 2015 that was related to the Volkswagen
emissions scandal. The study also highlights the theories related to the ethics, laws and
regulations that was violated and should be complied by the company and various ways and
practices in order to make various changes in the management of the company.
MAIN BODY
Ethical theories
Business ethics refers to the study of relevant policies and procedures including the
corporate governance such as discrimination and corporate social responsibility. According to
the law it is mandatory for the organisations to comply with the basic business ethics in order to
gain public approval. The concept of the business was developed in 1960s as the organisation
became aware of rising concerns of the customer to towards the society related to environmental
and social cause(Manasakis, 2018) . The various features of business ethics is associated with
the code of conduct and the company is bound to follow this code of conduct. These are based on
the moral and social values. The business ethics creates a structure in which it operates and
includes social, cultures, legal , economic etc. The business ethics framed by the management is
based on various principles that involve avoid the exploitation of consumers such as banning the
unlawful activities In trading or selling harmful products to the consumer for the sake of earning
profit (Ugoani, 2019.). The other principles are encouraging healthy competition, ensuring
accuracy , proper maintenance of the record of the transaction of business and also to avoid
discrimination among the workplace.

As per the case study, it was discovered that the Volkswagen cars in America was fitted
with the defeat device in order to detect the various changes in the performance of the cars. It
was observed that the company has admitted that the software emitted nitrogen oxide pollutants
which was above the regulation that is mention din the provisions of the respective laws.
According to the study it was stated that they violated the ethical provisions of the business that
is they did not comply with the policies and protocols that the were bound to comply. The facts
revealed that the company has broken the trust of many customers and public. This resulted in
that the Chief Executive resigned from the post and replaced by the former owner of the Porsche
which stated that the major task would be to regain the trust of the customers for Volkswagen .
Ethics are related to the policies and protocols of the company which is mandatory to
follow these rules and comply with the provisions of the organisation(Köseoglu, and et.al,). The
ethical theory is defined as the systematic efforts in order to understand the concepts of the moral
principles.
 Utilitarian theory: It is one of the theory of ethics and of morality that advocates the
actions that results into happiness and oppose the actions that causes unhappiness or
harm(Johnson, and et.al, 2021). The theory is emphasised more on social, economic and
political decisions with the aim for serving better to the society and its customers . The
company is incorporated in order to understand the preferences of the customers and then
make improvements in their products . The motive behind it is to serve better quality
products to their customers and in the market. The management of the company also
consider the possible outcomes in order to determine what is ethical for the company.
 Deontological theory: It is another theory of ethics that is concerned with the rightness
and wrongness of the actions and can have possible consequences depending upon the
type of actions done. It is different from the utilitarian theory as this theory states that the
the consequences depends upon the the action that is is either done correctly or done in
wrongful manner.
In the given case study , the company followed the unethical practices which was also
against the protocols and policies of the company which resulted in loss of trust of the customer
which directly affected their sales and profitability(Everett, and Kahane, 2020) . The company
suffered from various crisis and the new Chief executive went on resolving these issues . In
order to gain the trust of the customers and bringing back the company into its previous position

in the market. The company faced various consequences and was forced to compensate the
drivers . VW also paid the additional $4.7bn to programmes which offset excess emissions and
to clean car projects. Furthermore, the company also paid a certain sum of money in Germany as
fine and penalty accepting for the diesel emissions scandal. The case study states that there was
serious crisis the company suffered resulted in financial crisis for the company. The company did
not follow the ethical practices which resulted into biggest loss for the company. The situation
was very bad for the company as it resulted into loss of the customers and also the lose of
position as the chief executive admitted that due to this many or the cars were affected by this.
Laws is defined as the set of rules and regulations that is enacted by the Parliament.
These laws are different in different countries. Any industry operating in any sector is bound to
follow the rules and regulations. The act contains various provisions which is mandatory for the
company to follow. Along with this it also defines the different penalties if any company violates
these regulations. The laws are framed for the protection of the rights of the persons and for the
the betterment of the society. As per the case study, it was observed that the company violated
many of the provision of the act which resulted into increase in pollution resulting into violating
the Health and safety act.
The company used a software in which the engine emitted nitrogen oxide pollutants up
to 40 times which was above the range of the provisions specified in the act. The company did
not followed these rules which they were bound to follow which resulted into loss to the
customer and to the company as well. The company compensated for the loss caused as a result
of their negligence and obeying the provision of the act. The main purpose of the company was
to bring back the company into its previous position and also to regain the trust of the customers.
The pollution emitted from the cars of the company was a huge concern as it was affecting the
heath of people and destruction to the environment. After the investigation it was concluded that
the emissions from the vehicles was destroying the health resulting in violation of the health and
safety act .
Inclusive practice for change management
On the basis of present case study it has been analysed that there are some of major action that
are need to be taken for senior management such as due to failure they should make the practice
ions the basis of decision-making process(Theie, and Stamnesfet, ). Also, inclusive practice are
critical when it comes to create new way of working and then maintaining the productivity of

cars. It is not possibles that anyone can change their living according to the change because in
this situation peoples are getting habitual for doing same practices. At that time it is important to
provide trainings to employees and then share all the problems that are facing by the company so
that employee can support for protection of organization. On the basis of inclusive practice they
can identify the error in the practices, and then they can make decision accordingly. Also, it is
important to provide better communications practices which are helps for developing the plan,
and they can implement the plan on the basis of principle of inclusive practice such ass being
flexible help to open for change and makes the personality versatile then also it is necessary to
beings equitable for ensure about consistency and accessibility for all(Fisk, and et.al, 2018).
Further it is important to provide adequate trainings to employees related to software so it helps
for them to understand, and then they can make the strategy for marketings to attract consumers
for new advances technology of cars sell by organization.
Diversity practices for change management
Diversity refers to the efforts and practices that a company executes in order to support the
diverse workplace in order to achieve the competitive advantage in the market . Various
companies are introducing programs in their management so that to better manage the diversity
with the help of various new polices and procedures. The modified strategies help the company t
overcome various challenges the company is currently facing which help the company to regain
its position in the market (Vito, and Sethi, 2020.). Business environment is dynamic in nature as
various factors affects the functioning of the company . It is very important for the company to
make modifications and changes within the management in order to adopt such changes or
introduce new strategies in their planning which helps in improving the performance and help the
company to gain customer trust. These changes will result into increasing the image of the
company in the market . As per the case study , the company was guilty of the conduct and
admitted that due to the wrongful conduct the damage was suffered by many people which
resulted in loss of trust in the products of the company. The new chief executive of the company
decided to take various decision for the betterment of the society and also to regain the trust of
the customers. In order to regain its position in the market the company started a trust building
measure that was related was introduced in order to hear the complaints of the people. The aim
of introducing this programme was to convey that the repair of the vehicle is being made which
results in increase in the customer satisfaction after the happening of that scandal(Okolie, 2020).

The management of the company mad various modifications in its strategies and focus on
improving the damage that was caused earlier. The company further invested much cost on
electrification and moving towards manufacturing vehicles with zero emission in order to reduce
the EU limits on greenhouse gas emissions. They focused on reducing the harmful diesel cars
which was causing pollution and destroying the environment and further concentrated on
promoting eco -friendly electric cars in the future.
Earlier it was observed under the supervision of the former chief executive of the
company, the mangers followed the autocratic leadership style which did not allow the
subordinated to present their opinions and was focused on obeying the order of their superiors
but under the new chief executive that is Matthias Mueller, it was observed that various changes
in the management of the company resulted into flatter organisational structure(DeTienne, and
et.al, 2021). The efforts and changes made in the management helps the company to improve
their business performance by complying and using ethical practices. The culture of the company
was changes and open communication culture was also adopted in order to know the opinions of
the employees regarding the building of trust after the scandal. The Human resource department
predicts the position after various changes been done and identified the ways in order to make
the business more successful in the future.
The massive outbreak that was faced by the company resulted into massive loss and loss
of customers trust which reflected on their sales and profitability(Sroka, and Szántó, 2018). The
company was involved in using unethical business practices which resulted into negative
consequences. The company also violated the laws which the company was bound to follow and
was also against the US regulations. It was observed from the case study was that the firm has to
face crisis which was a huge problem but the major crisis for the company was loss of trust of
the customers which was more important than that . A year after the scandal the company also
compensated to the drivers of the vehicles. Furthermore,they also paid agreed amount to the
programmes which offset excess emissions and to clear car projects. As the company violated
the provisions o the act also forced to pay a sum as penalty(Bowie, 2020). After taking into
consideration the company took various measures in order to balance the losses suffered by the
firm and also bring the organisation back into the previous position in the market. The company
had made various mistakes by following unethical practices and also violated the rules and
regulation which had negative impact on the health of the customers . Volkswagen also violated

the provisions of the Clean Air Act and after the investigation it was found out that 482,000 cars
were using this defeat devices. After the inquiry the customers were compensated by the
company for their loss due to the company's negligence.
RECOMMENDATION
It is recommended that the company should follow the basic ethical business practices
and also to comply with the laws of that country and also related to the business industry. The
company should lay more emphasis on developing favourable work culture so that employees
feel that there efforts are valued by the company (Hasnas, 2020). The company should focus on
organising various group meetings and discussion session with their employees so that every
employees can come up with more ideas and suggestions which will benefit the company. The
management of the company should encourage team work, various changes in the working
environment of the company. It is also suggested that in order to make valid changes in the
company it is important for the company to make various modifications in its plans and
strategies in order to improve its position in the market .

CONCLUSION
From the above report it can be concluded that the role of every department is important
in accomplishing the objectives of the company. On the other hand it is the duty of the firm to
follow the proper policies and procedures and also to comply with the rules and regulations of
the act as it contains various provisions which is mandatory for the organisation to follow. The
report is based on the case study of the Volkswagen Diesel Scandal which led the company into
financial crisis and loss of trust of the customer in their products and services . The company
faced various challenges as a result of the scandal but made efforts in making improvement in
order to balance their losses.

REFERENCES
Books and journals
Bowie, N.E., 2020. Business Ethics. In New Directions in Ethics (pp. 158-172). Routledge.
DeTienne, and et.al, 2021. Moral development in business ethics: An examination and
critique. Journal of Business Ethics. 170(3). pp.429-448.
Everett, J.A. and Kahane, G., 2020. Switching tracks? Towards a multidimensional model of
utilitarian psychology. Trends in Cognitive Sciences. 24(2). pp.124-134.
Fisk, and et.al, 2018. Design for service inclusion: creating inclusive service systems by
2050. Journal of Service Management.
Hasnas, J., 2020. The core of business ethics. Business and Society Review. 125(4). pp.375-385.
Johnson, and et.al, 2021. Moral tribalism and its discontents: How intuitive theories of ethics
shape consumers' deference to experts. Journal of Behavioral Decision Making. 34(1).
pp.47-65.
Köseoglu, and et.al, 2018. Authorship trends and collaboration patterns in business ethics
literature. Business Ethics: A European Review.27(2). pp.164-177.
Manasakis, C., 2018. Business ethics and corporate social responsibility. Managerial and
Decision Economics. 39(4). pp.486-497.
Okolie, U.C., 2020. Effect of diversity management on human resource management:
Recruitment and selection in focus. Annals of Spiru Haret University. Economic
Series. 20(2). pp.63-86.
Saks, A.M., 2021. Caring human resources management and employee engagement. Human
Resource Management Review, p.100835.
Sroka, W. and Szántó, R., 2018. Corporate social responsibility and business ethics in
controversial sectors: Analysis of research results. Journal of Entrepreneurship,
Management and Innovation. 14(3). pp.111-126.
Theie, T. and Stamnesfet, A.T., Creating an inclusive community throughout the entire
organisation. Togetherness in Play and Learning, p.54.
Ugoani, J., 2019. Business ethics and its effect on organizational sustainability. Global Journal of
Social Sciences Studies. 5(2). pp.119-131.
Vito, R. and Sethi, B., 2020. Managing change: role of leadership and diversity
management. Journal of Organizational Change Management.