Case Study: The VW Emission Scandal and Ethical Responsibility Report

This report provides a comprehensive analysis of the Volkswagen (VW) emission scandal, a significant case study in business ethics and professional responsibility. It begins with an executive summary and introduction, highlighting the importance of ethics in contemporary business operations and the repercussions of unethical practices. The report delves into the details of the VW emission scandal, where the company fitted its diesel cars with a 'defeat device' to deceive governments regarding pollution levels. It examines the actions of VW, the role of ethics, and the impact on stakeholders, including consumers, governments, and the environment. The analysis covers the scandal's timeline, the discovery of the defeat device, the subsequent investigations, and the financial and reputational damage suffered by VW. The report emphasizes the ethical failures of the company, including utilitarianism and the failure to prioritize collective good over self-interest. The conclusion underscores the critical role of ethics in organizational development and the lasting impact of the scandal on the automotive industry. The report uses various sources to support its claims and provide a thorough understanding of the VW emission scandal's complexities and implications.

Running Head: Ethics & Professional Responsibility Report
Ethics & Professional Responsibility Report
Case Study of Volkswagen

Running Head: Ethics & Professional Responsibility Report
Executive Summary
Ethics is the moral judgment of right or wrong but it is more than that while being in use
in business organisations. In the history of business there are records of companies
sinking without a trace due to unethical practice and hence ethics is considered
important for business and its growth. VW is the latest victim of ethics going wrong. The
organisation failed to work ethically and fitted its diesel cars with defeat device to
deceive Governments regarding pollution and the present study has talked about this
incident and its relation with ethics.

Running Head: Ethics & Professional Responsibility Report
Table of Contents
Executive Summary.......................................................................................................................2
Introduction....................................................................................................................................4
Analysis of the VW Emission Scandal...........................................................................................5
VW Scandal and Ethics.................................................................................................................7
Conclusion.....................................................................................................................................8
References....................................................................................................................................9

Running Head: Ethics & Professional Responsibility Report
Introduction
Business ethics is one of the extremely important attribute related to operations in the
contemporary business world. Ethics could be considered as the moral judgment of
right or wrong by an individual but in terms of business moral judgment clearly stands to
be an important. Even though moral judgment is a part of ethics in business but it is not
all and ethics is seen in a broader sense especially in the operations of a business. The
decisions taken within an organisation has to be ethical in other words it should be
suitable for all the stakeholders of the organisation. It is important to note that ethics
plays a huge role in the effective operations of the organisation especially when it
comes to performing the social responsibilities efficiently (Ogunyemi, 2017). In the
history of business there are number of instances when ethics took the backseat and
the personal interest got the upper hand and this is when scandals are created. It is
important for the business organisations to keep in mind the aspect of ethics which
would help the organisation to make sure it has effective corporate relationship with all
the stakeholders. In the last few years there have been number of unethical incidents
but the one which has perfectly managed to shake the corporate world is the emission
scandal by Volkswagen. The Emission scandal of VW in the years 2015 has
revolutionised the automobile industry as governments and environmental agencies did
not spare a single chance to rebuke the company that owns brands like Audi, Bentley,
Bugatti Porsche and some other exclusive brands (Bowie, 2017). Hence the present
report will be based on the discussion of the 2015 emission scandal by VW.

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Analysis of the VW Emission Scandal
The Volkswagen Emission Scandal is a perfect example of how organisations rather to
say influential organisations like Volkswagen can shape the ethical and political
environment of business. For a long period of time VW aspired to become the leading
automaker in the world and it has been able to achieve that. The organisation has now
become the leading automotive organisation in terms of sales and revenue as well as in
terms of production and hence it clearly shows the organisational capability as well as
the customer loyalty. Many have disparaged this for VW’s overambitious attitude
towards business and have concluded this incident as the ultimate result of this
(Medeiros et al., 2017). VW is a German Automobile firm which has owned number of
top brands in the world and have equally done well with all the brands it sells but
sometimes the complete elimination of ethics from the organisational operation creates
self made trap that could ruin the overall stature of a business in a very short time. It
could be said that most of the organisations working in the automobile industry have
found a reason to constantly look down upon the organisation and compete highlighting
the debacle in the international market. Even though the organisation has lost the edge
after the emission scandal it still stands to be one of the key organisations in the global
automobile industry. It is important to understand the emission scandal and the aspect
of ethics related to it (Lindebaum, Geddes and Gabriel, 2017).
The organisation Volkswagen had a long term vision of becoming world number one in
terms of sales and revenue by 2018 and in order to do that the organisation did the
unethical sort of deeds. The action forcing event to this whole story started in 2015
when a group of scientists at West Virginia University were testing diesel engine cars on
the road. The international Council of Clean Transportation an NGO tried to fund the
research and it hired scientists to test cars and do emission testing on certain cars
(Sison, 2015). The organisation VW had been promoting their diesel cars for a fair
amount of time back in 2015 and emphasised on the fact that diesel cars are much
environment friendly and efficient but researcher scientists saw a dramatically different
result when the team tested the diesel engines of VW, and this is where the entire issue

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started. The team repeated the study and to confirm their findings and this clearly
showed that the promotional words of the company largely differ with the real test
results and the International Council on Clean Transportation (ICCT) suspected that the
organisation VW has fitted a defeat device which is tampering the results to a large
extent while being on road and during the tests (Clemente and Gabbioneta, 2017). The
ICCT took information from 15 different vehicles which gave the same results and this
clearly indicated that the organisation might have done it deliberately to increase sales
and revenue. The information went to the Environmental Protection Agency (EPA)
which declared that the organisation VW has violated the Clean Air Act by illegally fitting
in defeat device which is a kind of software that helps to give different results by
detecting the mode of the car in different situations.
In multiple countries the organisation became the subject to investigations and series of
cars of VW were banned in different countries especially in US, UK, Canada and in
Asian countries like India, China et cetera. These governments started running strong
investigations against the organisation which revealed more about heinous conspiracy.
Even some of the newspapers labeled this incident as the costliest act of stupidity in the
history of automobile industry. It is important to note that the organisation definitely
thought a lot about this deed before they executed which clearly shows the unethical
mindset and behavior of the organisation. However the biggest tragedy of the entire
scandal is the enormous amount of nitrogen oxide that was released in the atmosphere
(Wood, 2017). Amidst such strong environmental campaign to let people know Climate
change is real this incident acted as a thorn which definitely hurt the globe to a large
extent there are number of people who felt VW needs to be banned from making more
cars after this incident but it is important to understand that self interest often gets better
of collective interest if its seen from the philosophical perspective. As per the report
released by the EPA around 40% of the NOx emission happen from the cars and in-
spite of knowing such fact the organisation did something like this that clearly showed
ethics in the contemporary business environment just exist as a term and nothing else.
There have been number of debates over this act of one of the leading automakers in
the world but it cannot be denied that VW acted extremely unethically which needs to be

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compensated but this still remains a questions whether mere monetary compensation
could suffice the needs of the environment or not (Ewing, 2017).
VW in order to salvage their face as a brand announced to set aside 6.5 billion euro in
order to bring back the faulty pieces and revamp the cars to comply with the pollution
standards but did not unequivocally take the responsibility or accepted the outcomes of
the incident. The organisation thought it as a conspiracy that came within the
organisation may be to taint its pride which can be the fact but what one sees believes
and hence there’s no point looking for clues when the entire incident is displayed in a
salver. The organisation faced steep fall in its share price within the day of release of
the scandal and started facing the wrath of the market. In the US the organisation is
already facing huge financial penalty per car. The sales of the company has fallen by a
significant share which shows the awareness of the consumers and their resolute
mindset to eliminate anything that impacts the environment. It could be said from the
present incident that the organisation definitely didn’t understand the aftereffect of the
issue if it somehow gets revealed and hence acted in an utterly unprofessional manner
but with deep environmental impact (Latif, 2017).
VW Scandal and Ethics
As stated earlier ethics should form the very base of the organisation and it should be
working in the organisation as the rudimentary policy which a company should follow. In
this case of VW ethics was not there or else the organisation wouldn’t have fitted
11million cars with the defeat device. It is important to note that the organisation should
have thought prudently before implementing something that goes against the
environment but it did not do that and rather worked in a very selfish manner. The
company should have thought about the collective good of the community but attaching
the defeat device was mainly done to deceive people and foil their lies regarding the
emission in the diesel cars (Ruiz-Alba and López-Toro, 2017).
The organisation said upright lies about low emission and acted unprofessionally which
clearly had implications on its business. The organisation did not act as per the theory
of ethics companies like VW should have followed utilitarianism as the ethical mainstay

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but the organisation acted in a selfish manner clearly not willing to focus on collective
good. From the broader perspective the wrong reporting of CO2 is definitely not good
for the organisation since it lost the customer loyalty as well as the sales and revenue of
the organisation (Schwartz, 2017). The VW scandal is a great example of how
companies could react against cases and get themselves stuck in the ditch. It is also a
great example of bad corporate ethics as the organisation did not completely accept this
fault and stated that it is a technical error which would be fixed right away unfortunately
this did not happen and hence it could be said that the VW’s scandal is a egregious
breach of faith and loyalty of the consumers which the organisation paid back through
loss of customers, sales and plenty of financial lawsuits from different parts of the world
(Gates et al., 2017).
From the ethical point of view the organisation should have focused on understanding
the situation and taking steps accordingly rather than completely denying the fact and
trying to avoid the situation. As a leading brand the organisation should have
understood ethics in a better way and exhibited that effectively to make sure things
don’t go bad for the organisation which clearly did not happen and situations worsened
with the organisation denying this fault (The Independent, 2017). VW wouldn’t certainly
be the last company trying to deceive governments and it is not the first as well but VW
clearly made the Governments to become more prudent about the way they provide
relaxation to companies like these and will tend to be stronger with the testing and
examinations but to say it could be said that from the ethical point of view the
organisation was clearly not right as it acted upon its own interest, did not thing about
collective good that involves the environment too and also clearly worked
unprofessionally denying the issue that also puts a red cross on their ethics check box
(Schwartz, 2017).
Conclusion
From the present discussion it could be said that ethics plays a huge role in the
development of an organisation as a brand in the market. A brand should act ethically
and think about collective good of the community through its products rather being
focused on self interest and having negative effects on the environment and on the faith

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of the organisation. Overall to conclude it could be said that the VW scandal is the
perfect example of ethics not in use in business and hence companies should focus on
using this effectively for better organisational result in the market as consumers are
aware more than ever and will not spare organisations that don’t follow ethical business
path.
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Running Head: Ethics & Professional Responsibility Report
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