Volkswagen Group : The Legal Issue

Firstly, from the view of company, Volkswagen scandal is result from the misuse of CSR that the company regarded it as a marketing tool. Although Volkswagen promised to persuade CSR as their corporation culture, the reality turns out to be opposite. Volkswagen equipped defeat devices on cars deliberately to pass environmental tasks and actually the defeat device emitted nitrogen oxide approximately 40 times of standard (Dans, 2015). This behaviour can be explained as "green-washing", which means the real performance is different from the test results (Eric, 2015). The motivation of deception largely depends on corporation’s aggressive goal called “Strategy 2018” , which aim to increase annual sales to ten million cars by 2018 (Volkswagen, 2014). Therefore, Volkswagen needs to lower the price to be competitive to its competitors and one task is to reduce cost of production. Volkswagen used CSR concept to cover unethical actions. It demonstrates that Volkswagen focused on persuading the short-term target rather than its customers, long-term reputation and environment (Bansal, King & Seijts,

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

Volkswagen is under investigation following reports from the EPA that they had installed software into their engines that deceived emissions testers. Furthermore, engineers updated this software in 2014, claiming that they were improving the vehicles. James Liang, a senior engineer who had worked for Volkswagen for 30 years, admitted to investigators in September of 2016 that he had designed the software in question. Further investigation has revealed that this conspiracy may have involved executives of the company. It is unknown to the public whether Liang was acting under orders when he designed the software or he decided to create it on his own to meet requirements his superiors gave him. Both rule utilitarianism and Kantian duty ethics

The company had a lot of pressure to get their diesel vehicles on the road which were advertised as having low emissions and being overall better for the environment. Volkswagen created a ‘defeat device’ which allowed them to cheat their way through the emissions test and get their vehicles on the road quickly without having to address the issue. When they were caught, the company admitted to having over 11 million cars world-wide containing this device and were releasing emissions up to 40 times the legal limit in the United States. Volkswagen planned on recalling some of the vehicles privately before the scandal was revealed, but once it was found out, all the cars were reimbursed but the company also had to pay fines for each car that violated the standards (Hotten, 2015). While the company did experience quite a financial loss as a result of this large-scale scandal, no individual people were punished or convicted of anything due to the fact that it is nearly impossible to pinpoint who is at fault. Due to the fact that they are a large, relatively wealthy company, they figured it would be easy for them to get away with what they did, because of the way white-collar crimes are approached by the criminal justice system. Had a company or individual of lower economic status tried to attempt a similar crime, the punishments would have been more severe and individual persons would have been picked out and punished for the crimes committed, likely resulting in job loss or

Loss of reputation and sales; fines for VW → loss of status and being made responsible for the scandal

In this case, I am not sure on who’s side I am on, legally speaking that is (not that I am a juror). The Prosecution needs to prove Volkswagen acted with Mens rea (a guilty mind), to prove they have acted criminally. That is an interesting quandary when regarding a company, what constitutes corporate consciousness?

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

Companies betrayed their employees, consumers, supplies, shareholders, and the government by using unethical techniques and being dishonest to keep their company on top. For example, Volkswagen Company is now in a business ethical dilemma, because the company wanted their latest cars to pose as a diesel friendly. In 2015, “the Environmental Protection Agency (EPA) found that many Volkswagen cars being sold in America had a defeat device or software in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the U.S. VW has had a major push to sell diesel cars in the U.S, backed by a huge marketing campaign trumpeting its cars’ emission. The EPA’s finding cover 482,000 cars in the US only, including the VW-manufactured Audi A3, and the VW models Jetta, Beetle, Golf and Passat. But VW had admitted that about 11 million cars worldwide, including eight in Europe, are fitted with the so-called “defeat device” (Russell Hotten).” “Volkswagen had been intentionally and scandalously cheating on their nitrogen oxide (NOx) emissions for

VW has a very expensive, hard lesson to learn and an even harder task trying to regain the trust they lost with the ineffective apologies and lack of truthful communication at the beginning of the emissions scandal. Many people still love and trust VW, but many are angry, hurt, and very distrustful of anything VW says or does. VW will need to become a very strong and open communicator to survive this scandal, and rebuild lost relationships…if possible. Rebuilding these lost relationships with sincere, open communication might save a once great company that has fallen from its

A “Green Police” eco check. They are rummaging through cars looking for all non-recycler, and making it their main priority. With canopies up, mopeds patrolling and k-9s sniffing for plastic and styrofoam, they are out to catch non-recycler and throw them in jail, where they rightfully belong. Not recycling and being “green” is a big crime these days. An Audi A3 TDI is passed up, and sent on its way, due to its “greenness,” and greatness. The Audi isn’t even looked at, or searched. The police already knew that it was eco friendly. Everyone in line wishes they could have the Audi A3 TDI right now, due to its eco friendliness, its slick looks, and save you two hours of sitting in traffic due to eco random eco checks. So what's so good about the Audi A3 TDI, it’s eco friendly

In the ‘diesel dupe’ case, the action considers the installation of the ‘defeat device’ within diesel engines. This will affect a range of stakeholders, however, three primary stakeholders include: (1) the Volkswagen Group (VWG), (2) the consumers of diesel cars, and (3) Volkswagen Group shareholders.

The people at the West Virginia had tested vehicles as well as the EPA (Patel). Volkswagen chose to include rout programming device to cheat the system to pass the testing laws. Volkswagen as a corporation was basically trying to cut the cost of engines to be built by limiting the NOx emission system that controls how much dirty chemicals that goes into the air (Patel).By the company putting this device in their cars they were trying to cut down the cost that they would have to spend, at the same time Volkswagen cars had better performance. The ethical question would be is it really worth it to CHOSE to overlook the laws to save money on cash (Patel). "We expected better from Volkswagen," said Cynthia Giles, the E.P.A's. colleague manager for the Office of Enforcement and Compliance. She called the automaker's activities "a danger to general health of our

It is not hard to see that the scandal would cause a horrid blow to VW’s image. Until the incident, VW had, like many other German companies, the reputation of “German engineering” (Robertson, 2013). However, instead of using that innovation to develop diesel-fueled cars compliant with U.S. standards, it decided to try to scam its way in the market. Not only did the company admit to having 11 million cars with software intended to cheat tests (Gates, Ewing, Russell & Watkins, 2017), it also plead guilty to “destroying evidence in an elaborate cover-up” (VW Admits Emissions Cheating and Cover-up, 2017); building further distrust among its consumers.

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

After the announcement of the emissions scandal, Volkswagen is fumbling to figure out how to pick up the broken pieces of its brand image. Volkswagen had ruined the trust of all of its stakeholders. The announcement of the cheated emissions test has crushed Volkswagen’s stock price by almost 20%, which implies an almost $27 billion loss in market value. This scandal required the recall of 11 million cars with an expected cost of over $25 billion in penalty fees and the cost to fix recalled vehicles. This scandal of much higher than stated emissions directly contradicted with Volkswagen’s branding of a clean emission diesel vehicle. It could not have gotten much counter-intuitive. Volkswagen has spent 45% of its television advertising budget directly focusing on Volkswagen’s products’ low emissions. That marketing budget is now valueless. However, most importantly, Volkswagen upset its customer base. The owners of these recalled vehicles not only feel lied to and betrayed, they have to take time to bring their recalled car in to get fixed. But, one of the biggest complaints is the loss of resale value totalling nearly $5000. This may disrupt repeat customers and