Volkswagen Emissions Scandal Case Study Sample

Introduction Of Volkswagen Emissions Scandal: Unethical Practices and Ethical Recommendations

Organizational actions or activities which are not in line with the laws and ethical standards fall under the category of illegal business conduct. It mainly includes actions that are universally acknowledged to be immoral. As a result of unattainable performance goals, inadequate training, and a lack of transparent reporting procedures, many people engage in this unethical behavior. For this report the chosen organization is Volkswagen and it has recently been involved in the emissions scandal. The objective of the report is to thoroughly review VW's illegal operations, evaluate their effects and offer suggestions for the corporation to improve its ethical behaviour going forward.

Main Body

Background of the organization

Volkswagen (VW) is the top automaker globally and was established in 1937 by the German Labour Front. The company which has its corporate headquarters in Wolfsburg, Germany, has a long tradition that involves models such as Beetle as well as the Porsche. The business's founding goal is to provide low-cost and easily available automobiles for the general public is reflected in its title, which translates to German for ‘People's Car' (Volkswagen Group, 2023). VW is a major player in the automobile industry with a wide range of cars, including small and expensive versions from names including Audi, Porsche, as well as Lamborghini. VW is a recognized brand for quality as well as creativity has pioneered advancements in automobile technology, particularly for electric as well as hybrid cars. Concerned organization is a significant participant in a sector that is committed to sustainable and electric vehicles, as demonstrated in programs such as the ID. The series indicates its continued influence in the growing vehicle sector despite earlier emissions issues.

Stating reasons behind choosing VW as case study

Volkswagen was selected as a particular instance of unethical behavior because of its famous and established participation. Among the biggest business misbehavior instances of this decade: was the Volkswagen Emissions Scandal (VES), sometimes known as “Dieselgate.” This incident, which took place between 2005 as well as 2015, featured illegal conduct that was harmful to the ecosystem and clients. It also included lawful but illegal behavior (THE VOLKSWAGEN EMISSIONS DIESEL SCAM, 2023).

Volkswagen was chosen primarily because of the severity and associated unethical actions. VW purposefully equipped their diesel-powered vehicle with “defeat devices” software that modified emissions test outcomes. To make the automobiles' emission values seem to be below acceptable limits when, they had been spewing hazardous gases at levels well beyond those limits (Allam, 2020). In addition to being unethical, this deceit had negative effects on the ecosystem, the public's well-being, and customers who made fraudulent claims to buy these automobiles. VW is a fascinating study to examine the effects of widespread unethical conduct. Its activities led to big financial fines, a decrease in faith, as well as reputational harm to the corporation. This incident provides a sobering reminder of the value of moral behavior in the workplace and the possible wide-ranging consequences when a business disregards moral standards.

Defining sort of ‘unethical business practices' was this company involved in?

The “Volkswagen Emissions Scandal” or “Dieselgate” refers to some unethical corporate activities. VW engaged in, most notably the purposeful falsification of emissions statistics. Such unethical conduct may be divided into numerous major categories, including:

• Emissions Fraud- VW cheated on emissions tests by installing software referred to as a ‘defeat device' in its diesel-motorized cars, especially in the US as well as Europe (Ameen, 2020). Such devices were able to indicate when a car was being tested for pollutants, and they might modify the engine's operation to cut emissions throughout the test. Nevertheless, those automobiles greatly exceeded the allowed levels of dangerous emissions including nitrogen oxides (NOx) when driving normally. This dishonest technique was used to give the impression that the automobiles were ecologically benign throughout testing whereas performing badly.
• Misleading marketing - VW used misleading marketing techniques to advertise its diesel cars as ‘clean as well as green. Utilizing catchphrases such as “Clean diesel” as well as making low-emission claims. These assertions were false because they depended on test outcomes for emissions that had been rigged using defeating devices.
• Client deceit- VW misled its diesel car buyers, who thought they had made an ecologically friendly decision. Clients paid higher prices for such clean diesel vehicles under the mistaken belief that they were lowering their environmental impact.

The unethical behavior of Volkswagen had a wide range of effects. First of all, they broke several green laws and emission limits imposed by authorities. This merely damaged the business's image but also posed serious hazards to the ecosystem and public health. Also, such unethical actions were made worse by an absence of openness (Chen, 2022). Even after proof of emissions trickery surfaced, VW first denied anything amiss, worsening trust. The corporation was subject to severe legal as well as financial repercussions. It involves millions of dollars in penalties, car recalls and litigation from a range of parties, including consumers, investors and governing bodies. These repercussions not only damaged the brand's image but also had significant fiscal and ecological implications, emphasizing the seriousness of the business's immoral actions.

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Critically analyzing moral philosophical bases that were infringed upon due to unethical business practices.

VW's unscrupulous corporate tactics in its emission crisis violated many moral as well as foundations of philosophy and revealed a complicated network of ethical transgressions. The following ethical transgressions may be examined from the perspectives of Virtue Ethics, Deontology, as well as Consequentialism:

• Consequentialism- Volkswagen's activities were in direct opposition to consequentialist morality. It places a strong emphasis on an action's effects as the primary indicator of its legality. The corporation put temporary financial benefits ahead of its lasting impact on the public and ecology (Ding, et.al, 2023). By falsifying emissions information and manufacturing cars that released hazardous gases well over the limits set by law. Such unethical practices may result into higher air pollution, adverse health effects and a decline in public confidence in VW. According to Consequentialism, these activities were ethically wrong since they harmed a variety of interests.
• Deontology- There was further transgressions of deontological principles, which emphasize the inbuilt morality of deeds instead of their results. VW violated its ethical obligations and legal duties by using defeat tools. Truthfulness, openness and obedience to legal requirements are deontological ideals. These were abandoned in preference for dishonest methods designed to get around emissions laws. The business's reputation for reliability and its adherence to moral commitments were damaged by this disrespect for legal responsibilities and ideals.
• Virtue Ethics- The company's failure to demonstrate truthfulness and integrity is highlighted by virtue ethics. It evaluates the ethical standards of acts by considering the traits and qualities of persons and companies (Gaim, 2021). Virtue ethics place a strong emphasis on traits such as duty, transparency as well as honesty. These attributes were lacking in VW's conduct. This was a planned and persistent campaign of deceit that damaged the business's confidence and image of ethics. According to the lack of ethical conduct inside the corporation, virtue ethics might consider these behaviors to be offensive to morality.

Impact of unethical business practices on the company.

An organization's decisions regarding morality, rules of ethics as well as social accountability are all impacted by unethical corporate activities. It also includes the VES, in a variety of ways, with both unfavorable and, to a certain extent, favorable outcomes. Despite the current issue, unethical business actions may result in significant harmful effects. The harm to the business's image is one of its greatest important effects (Holtbrügge, 2020). Stakeholders in an organization may stop believing in it once it acts unethically, as was the case with VW emissions crisis. This tarnished image merely harms the business's status now, but may also become more difficult for it to make moral decisions in the decades to come. Stakeholders can question the genuineness of its acts and think that its adherence to ethical standards is only surface-level.

This Unethical behavior can damage confidence among a wide range of stakeholders, not just consumers. Workers, shareholders, and authorities may all be impacted. Staff cynicism or reluctance to raise ethical issues as a result of this deterioration may compromise the efficacy of moral standards set by a business. They could worry about being punished or think the company doesn't appreciate moral principles. A business's liberty when it comes to ethical decisions may be constrained by greater supervision and legal obligations. Further, in the context of business unit, illegal conduct attracts extra attention from authorities and the general public. They frequently lead to legal repercussions like penalties and litigation, diverting funds away from moral projects and encouraging an uncertain mentality.

It's important to understand, though, that unethical behavior can sometimes have irregular good effects. Scandals may act as warning tales, causing businesses to review their ethical standards and ways of making decisions (Allam, 2020). These occurrences can assist businesses in identifying areas for development and in taking precautions to avoid ethical lapses in subsequent years. Along with this, businesses may make changes and stricter standards of accountability in reaction to public outcry along with pressure from regulators. Although these modifications may improve ethical behavior, they are frequently motivated by external forces and may not uphold moral principles. Unethical business actions can have limited good effects, like improved ethical consciousness and trustworthy loss. Referring overall evaluation, it can be presented that unethical practices adversely impacts company's brand image, market share and overall decision making.

Unethical business practices on the company's consumers and/or suppliers and/or competitors and/or stakeholders.

Volkswagen's illegal operations have a big impact on a lot of different stakeholders, including customers, suppliers, rivals, and additional stakeholders.

• Consumers- Many parties were significantly impacted by VES. With the rise in openness and accountability for ecological claims customers stated to give high priority to the organization which offers eco-friendly products (Jacobs, 2020). However, numerous consumers of the company's diesel automobiles had monetary setbacks and legal disputes. This resulted in diminished customer faith as well as financial troubles.
• Suppliers- Conversely, the increasing examination of suppliers' moral and ecological requirements may have encouraged changes. However, individuals connected to VW faced image consequences that may have affected their ethical status.
• Competitors- Rivals had the chance to highlight their dedication to moral behavior and conservation efforts to stand out in their sector (Kabeyi, 2020). Nevertheless, the controversy also exposed them to widespread industry inspection and the possibility of penalty fees.
• Stakeholders- Regulatory changes aiming at strengthening emissions inspections and laws were made as a result of the scam for stakeholders. However, it led to a decline in trust of stakeholders in the operations and activities of form. Overall this had an impact on stakeholders from various sectors and made it further difficult for businesses to win back people's faith.

Assessing whether leaders and employees of the company responded to the unethical business practices effectually or not

In managing the emissions controversy, Volkswagen's managers encountered both support and criticism. They admitted fault and created harm, showed transparency and apologized in front of others. It was essential to accept accountability for their deeds. However, there was debate over the first denial as well as efforts to minimize the problem. This weakened confidence because of the absence of openness as well as responsibility. They did not acknowledge the illegal conduct until there was strong evidence to support it (Shawver, 2023). Workers were united in their praise for whistle-blowing who bravely revealed the malfeasance. It caused a bit of discussion though as certain staff members might have engaged in the deceit. By either recognizing it but not disclosing it or taking part in it, which would have violated ethical standards.

Disagreed with the way Volkswagen's executives and staff handled the controversy involving the automaker's unscrupulous business conduct. The early approach was characterized by an absence of responsibility and openness. A prompt and sincere reaction was hampered by leaders' early denial of any misconduct and downplaying of the problem, particularly that of Martin Winterkorn, CEO. This early response further damaged relationships and increased the scandal's negative effects (Gaim, 2021). They finally acknowledged their unethical actions when copious proof became available. The business's workers were also involved in the fraud either by neglecting not disclose it or taking part in the deceit. This involvement shows a disregard for moral standards and a propensity to put individual interests ahead of the honesty of the company. The first reaction by both management and certain workers exposed a serious ethical failure inside the company. There is a dispute over how the company's unethical company procedures were addressed since there has been a total absence of responsibility, openness, and moral integrity.

What recommendations would you give to this company so that they can be better at being an ethical business?

The following suggestions are provided to assist Volkswagen in its endeavors to become a more moral company:

• Create a Stable Ethical Environment - The establishment of an enduring culture of ethics at Volkswagen must be given top priority. This entails fostering moral principles, openness, and responsibility across the whole organization (Kabeyi, 2020). Leaders must act as role models by continuously making or presenting moral choices. VW may avoid unethical actions from happening again by promoting an environment where morality is central to making choices.
• Improve Ethical Learning and Training- Programs for every worker that are full and continuous must be put in place. By doing this, the company can be confident that staff members are aware of the value of ethics, can see ethical conundrums, and can raise issues. Such initiatives can lessen the possibility of unethical behavior by fostering a feeling of accountability and ethics within the business.
• Enhance systems for disclosing and protecting whistleblowers- VW has established strong reporting procedures in place so that staff members may bring up ethical issues or misbehavior without worrying about reprisals (Poier, 2020). Encouraging staff to report unethical behavior when they see it would improve whistleblower security, fostering responsibility and openness. An efficient reporting procedure can help the business to handle problems quickly and stop them from getting worse.
• Spend in moral and ethical behaviour- VW must announce a commitment to using ethical as well as environmentally friendly company procedures, particularly when creating and producing automobiles. This entails making investments in clean technology, minimizing negative environmental effects, and strictly upholding emissions guidelines. Focusing on sustainable and moral production decreases the possibility of future controversies. This might damage the business's brand while also aligning with society's expectations.

Conclusion

The report concludes that the emissions crisis served as a shining example of Volkswagen's illegal operations. This exposed the disastrous results of putting financial gain before moral integrity. Going ahead, the business sincerely adheres to ethical culture and makes investments in sustainability as well as learning. This gives candor and responsibility a top priority. By performing this, VW may win back investors' trust, stop ethical slip-ups in the future, and become recognized as a leader in ethical corporate behavior. The insights gained from this difficult chapter direct VW toward an ethically better prospect. By making sure it not just makes up for previous errors, but also serves as an example of good corporate responsibility.

References

Books and Journals

• Allam, I., Scagnelli, S. and Corazza, L., 2020. Sustainability reporting, a new type of companies' hypocrisy: Zara and Volkswagen cases. Responsible Business in a Changing World: New Management Approaches for Sustainable Development, pp.195-211.
• Ameen, K., 2020. KashfiaAmeen" Failure of Ethical Compliance: The Case of Volkswagen. International Journal of Science and Management Studies (IJSMS), 3, p.I1.
• Chen, J.J., 2022. Volkswagen. In International Cases of Corporate Governance (pp. 45-65). Singapore: Springer Nature Singapore.
• Ding, J., Xu, M., Tse, Y.K., Lin, K.Y. and Zhang, M., 2023. Customer opinions mining through social media: insights from sustainability fraud crisis-Volkswagen emissions scandal. Enterprise Information Systems, 17(8), p.2130012.
• Gaim, M., Clegg, S. and Cunha, M.P.E., 2021. Managing impressions rather than emissions: Volkswagen and the false mastery of paradox. Organization Studies, 42(6), pp.949-970.
• Holtbrügge, D. and Conrad, M., 2020. Decoupling in CSR reports: A linguistic content analysis of the Volkswagen Dieselgate scandal. International Studies of Management & Organization, 50(3), pp.253-270.
• Jacobs, B.W. and Singhal, V.R., 2020. Shareholder value effects of the Volkswagen emissions scandal on the automotive ecosystem. Production and Operations Management, 29(10), pp.2230-2251.
• Kabeyi, M.J.B., 2020. Corporate governance in manufacturing and management with analysis of governance failures at Enron and Volkswagen Corporations. Am J Oper Manage Inform Syst, 4(4), pp.109-123.
• Kabeyi, M.J.B., 2020. Corporate governance in manufacturing and management with analysis of governance failures at Enron and Volkswagen Corporations. Am J Oper Manage Inform Syst, 4(4), pp.109-123.
• Poier, S., 2020. Clean and Green–The Volkswagen Emissions Scandal: Failure of Corporate Governance?. Problemy Ekorozwoju, 15(2), pp.33-39.
• Shawver, T.J. and Miller, W.F., 2023. Volkswagen: Balancing Values vs Profits. In Research on Professional Responsibility and Ethics in Accounting (Vol. 25, pp. 181-199). Emerald Publishing Limited.

Online

• THE VOLKSWAGEN EMISSIONS DIESEL SCAM. 2023. [Online]. Available through: < https://zpllp.com/en/what-are-the-10-things-you-need-to-know-about-the-volkswagen-emission-lawsuit/ >
• Volkswagen Group. 2023. [Online]. Available through: < https://www.britannica.com/topic/Volkswagen-Group >