Volkswagen Emissions Scandal Case Study

Volkswagen is one of the largest automakers in the world and it has a global reputation as a high-quality German auto brand. Social responsibility is included in VW’s corporate culture and it seems that Volkswagen made some advances in Corporate Social Responsibility because the corporation was ranked 11th 2015 in the Global CSR Rep Track 100, which listed companies by reputation (Reputation Institute, 2015).However, the company has been threatened by an emission scandal which broke in September 2015, when the Environmental Protection Agency (EPA) disclosed that Volkswagen had installed defeat devices on diesel cars which were sold in the US. These devices equipped on VW cars cheated regulators in such a way that it could detect

its brand to more quality-oriented and had adjusted model prices in the view of new

The mistrust between the Volkswagen Company and their customers developed after the scandal associated with the incorrect emission of data and cheating of the system unfolded.  The scandal occurred on the eighteenth of September 2015 when it was found that the company had made a car with a turbo that released emission directly into the real word atmosphere. The allegations were genuine and were proved by the Environment Protection Agency in the United States (EPA) (Hotten, 2016).The chief

The automotive industry globally involves the processes of manufacturing as well as sales of cars and other automobiles. The business of this industry is also inclusive of retailing activities like services; sale of spare parts, gas-station retails etc. by the year 2015, and the growth rate of the industry is expected to have a rise of 5.5% (Market Line, 2012). Moreover, as per International Organization of Motor Vehicle Manufacturers, this industry is the leading driver in terms of global economic progress and the largest employer. The changing trends and rising demand for technically advanced cars are giving out more opportunities. This essay is going to be a presentation on the analysis of the Volkswagen positioning strategy with respect to the Porters models of competitive strategies. This essay would be vital, as this analysis would help in revealing the company’s competitive and strategic position in the industry.

As a multinational corporation, the implication of the scandal determines the fate of numerous stakeholders both internal and external. Internal stakeholders comprise of the board, managers and employees while external stakeholders subsume shareholders, customers and suppliers. The economic, political and social impacts of the dishonest practices would shape the fate of Volkswagen and affect the future prospects of the automotive industry. Common shareholders whilst not involved in the day to day running of the business placed faith and belief in the firm by providing capital had suffered severe economic loss as share prices (get something for stat). Despite the callous deception in advertising the defeat device displayed no signs of disturbing vehicle performance, however, customers of Volkswagen and its subsidiary vehicles suffer from lower resale value. In addition, even though the scandal was global, European consumers were the most affected with diesel cars accounting for 41% of all European cars (Fontaras, 2016). This high percentage in respect to other nations is a result of incentives provided by the European Union for the purchase of diesel vehicles such as subsidies towards the production process resulting in lower premiums compared to petrol counterparts (Vidal, 2015) In additional with sales falling suppliers of Volkswagen would likely lose future contracts or have current contracts downgraded as less parts are required. Thus, this loss of future

Volkswagen wants to become a global and environmental leader in the automotive world and has developed the “Strategy 2018”. The “Strategy 2018” is stated in their latest annual report in the goals and strategies section as follows:

On September 9, 2016, a veteran engineer of Volkswagen AG by the name of James Robert Liang pleaded guilty to charges of conspiracy to defraud the government, committing wire fraud, and violating the U.S. Clean Air Act. While working in Germany in 2006, Liang was part of a team charged with producing a new fuel-efficient diesel engine that satisfied new U.S. regulations on vehicle emissions. He and his team eventually came to the conclusion that their engine could not satisfy these new regulations while maintaining consumer expectations of engine performance. Their solution to this dilemma was to implement illegal software (known as a “defeat device”) into newly produced vehicles sold in the U.S. The purpose of this software was to detect any emissions test being performed on a vehicle and alter the results to show cleaner emissions on the onboard computer. Nearly 500,000 vehicles with this defeat device were sold in the U.S.; by 2008, consumers began to experience issues in their vehicles (not knowing it was due to the emission test software), and Liang worked to refine the device even further. The entirety of the scandal eventually came into the public spotlight in 2015 (Guess, 2016, p.1). The subsequent paragraphs of this essay will first discuss Kantian duty ethics and rule utilitarianism, and focus on analyzing the moral implications of Liang’s actions in reference to these moral theories.

The VW corporation was found to be guilty of falsifying programming for the emissions system, but the executives that were responsible for this corporate action are protected by corporate law for damages to the environment and to the health of human beings. In highly unregulated system of corporate law, it is very difficult to punish or remove the executives that were responsible for this unethical act. Many corporate legal cases end up being settled out of court with financial compensation for damages. However, the ramifications of air pollution related to VW's emissions violations prove to be a much harder case to prove in the courts. This is part of the brazen disregard for the greater good that the VW executives possessed when deliberately programming the TDI controllers during the initial testing

In today’s society we often come to many debates on several issues that go on in our world today. Recently there was an ethical debate on whether or not it is ethical to release vehicles with software that defeats emission testing by the EPA. Volkswagen is being accused of using illegal software designed to hide emissions during testing by installing cars with a software. The EPA accused Volkswagen of using the device in nearly over a half a million cars (Davenport). The cars are reportedly to have been installed with a software that had the ability to turn off the emissions controls when driving normally and turns them on when the vehicle is undergoing an emissions test. With all of these assumptions of Volkswagen cheating the emissions testing does that question their ethical corporate responsibility?

Volkswagen goal is to become the ecological and economical leader in the automotive industry and to be the world’s leading automaker by 2018. Volkswagen has four main objectives through which they will achieve their goals.

A car is spewing deadly carbon dioxide, forty times more than the car next to you. Piling onto many recent scandals in Europe, Germany’s Volkswagen has cheated emissions tests. The scandal has sparked enormous stifle across the world and turmoil in the company. The Volkswagen company started when Adolf Hitler gave the order to have the small middle-class car to be produced. VW produced the Beetle in the 1930s to much of Germany’s population. After the end of the third Reich, Volkswagen spread and became a large job creator in Germany as well as an international brand (Morning Edition). Volkswagen prioritization of the European market, led them to bet their future on green tech chips and diesel engines. This is in contrary to the moves of many other car makers, who are pursuing electric cars in the American market. The American market thought of diesel engines as secondary and insignificant (Ziegler). The Environmental Protection Agency’s Tier ii emissions standards had high bars for diesel emissions that would be extremely difficult to reach. There was a heavy burden for Volkswagen 's engineers to create a quantum leap in the diesel engine in terms of emissions and fuel economy. To cut these emissions Volkswagen would need to use an effective but bulky and expensive system in its cars. However cheating the emissions tests would be fairly easy due to the lack of

With billions of dollars invested and hundreds of thousands of Americans employed (Department of Commerce, n.d.), the automobile industry has a vast influence in the United States. Since the time Henry Ford developed the assembly line production (Statista, n.d.) the industry has grown into a global market with no signs of slowing down. Top car companies are constantly searching for new innovations to set them apart from their competitors. Among those companies is Volkswagen (VW). A company which strides in emissions and fuel efficiency turned, not only to be false, but caused a severe amount of damage (Ewing, 2016).

Groups negatively affected by Volkswagen’s actions include the company and its stockholders, consumers and their buying

In 2013, Volkswagen was ranked number eight from Forbes in regard to the top companies with the best reputations for Corporate Social Responsibility (Smith, Forbes, 2013). Volkswagen had a reputation for “innovation, corporate citizenship and economical, environmental and social sustainability” (Volkswagen, 2013) and many people trusted the company and the way that they conducted their business. This all changed in 2015, when just as many automakers did before them, they surrendered to their greed and

The Board took note of a lack of emphasis in the Marketing Plan on Volkswagen’s green technology, as this is one of the company’s greatest strengths. Volkswagen has made significant efforts to increase efficiency, and has created the world’s most fuel efficient 5-seat vehicle, the Polo. The Board emphasized the fact that green technology appeals to American consumers. The company has leveraged this in other parts of the world and has had success, and The Board felt strongly that by implementing the current Marketing Plan, the company would be missing out on highlighting an important aspect of the brand.