Volkswagen Case Study – Analysis, Damage To Reputation, And Strategies For Recovery

Analysis of the Case Study

Ethics can be defined as the part of moral philosophy, which is responsible for involving systematization, defending as well as providing recommendations of various concepts of correct and incorrect conduct (Lacan 2013). It mainly focuses on values after comprising issues related to human morality. These are moral principles, which eventually govern the behaviour of an individual or even conducting any activity. It is the system of various moral principles and are responsible for affecting how people are making decisions as well as leading their behaviour.

In September 2015, Volkswagen announced that they have made 600000 cars with defeat devices for enabling emission tests. Then they announced that they have fitted these devices in 11 million cars worldwide. After few days, they published the statement of facts as the part of an agreement with the respective US Department of Justice. As per this document, these engineers had faced major difficulty in building the diesel engine, which had the capability to achieve higher performances after keeping the emissions in regulatory standards. The engine was made in such a manner that could allow emissions beyond legal limits; hence the managers have supported the system utilization, despite of protest from several multiple workers. The organization has eventually decremented their reputation with this type of activity.

Every organization should maintain their reputation in the subsequent sector and this could only be done by maintenance of work ethics (Noddings 2013). In 2004, Coca Cola has faced similar situation regarding their scandal with mineral water. The following report outlines a brief description on the case study of Volkswagen with proper analysis and relevant details.

Volkswagen has unethically implemented few devices after claiming that they could pass any emission test (Frank 2013). However, in reality, the design was made for the purpose of reducing emissions while testing and are not all effective and allowed emissions, higher than the legal limits while driving on road. Volkswagen even claimed that a couple of software engineers has made these devices. They did not follow ethics in their work. Several concepts like good or evil, virtue or vice, right or wrong and justice or crime. Descriptive ethics, moral psychology and value theory are majorly related to this ethics (Fromm 2013). These were not followed by Volkswagen and hence they lost work ethics. The main aim of this analysis is to know about the people responsible for such unethical activity in the business of Volkswagen. Moreover, the measurement of the damage caused to the reputation of this organization should also be analysed. Finally, relevant strategies would be provided for dealing with these significant reputation issues in the organization of Volkswagen.

The organization of Volkswagen has faced major reputational damage for their unethical act of implementing ineffective devices within their cars claiming to have emission free engines (Peters 2015). Such incidents could easily affect the reputation of the company and there is major impact on the financial sector and shareholders of that particular organization. Disruption was one of the major effects of such cause in Volkswagen. Since, Volkswagen is within public light and had several customers worldwide, they have considered about their stakeholders and take any decision (Crane and Matten 2016). Customers are also stakeholders and hence it was important to take consent from them. The detailed description of the factors affecting this case study are as follows:

Measuring Damage to the Reputation of Volkswagen

Customer satisfaction is one of the most important and significant requirement in any business. They are solely responsible for contributing success and failure in the business. It is extremely vital for tracking this factor and then working on the improvements for making these customers more loyal towards the business. In this particular case study of Volkswagen, due to the huge reputational backlash in Volkswagen, the share prices were down and they were suffering from huge losses (Sorokin 2017). Moreover, the government of the United States had imposed penalty on Volkswagen and this created a major issue for them. The customers, after knowing that they were being deceived by this popular car manufacturing company, chose to share their personal views over the social media platforms that had further damaged the organizational reputation (Keown 2016). This was mainly because there was a lack of communication between the customers as well as the organizational staffs. Since, they have cheated the customers by providing unethical devices, it is their duty to communicate properly with the customers and justify themselves so that the customers do not feel deceived any more.  Due to the back step of these customers, Volkswagen had to lose their reputation in front of the media and rest of the world (Crane and Matten 2016). A proactive damage limitation process was being required by various trained staffs.

The second important factor or point for this Volkswagen case study is their decrease of revenue (Nussbaum 2013). Revenue is the amount of money that any organization earns or brings in before any expense is being taken out. This revenue comprises of service and product sales on account and even in which the customer is paying cash. Volkswagen earned their economic engine, business growth, credit and confidence from the revenue (Frank 2013). Being one of the most significant organizations in car manufacturing industry, there were the strongest financial impacts on the organizational sector. Revenue should be incremented to a higher level; however, as soon as the news came out in public, the respective organizational revenue has decreased in the company. There was a flat or decline in sales growth and this affected their continued growth to a major extent. The custom, sale as well as expenses on the compensation could even had lead them to organizational failure (Moor 2017). However, luckily such situation did not arise and the company was able to regain their previous position effectively and efficiently.

The next important and significant factor that had strongly affected the entire case study of Volkswagen is the respective organizational manager (Dewey 2016). Manager performance is required to be stronger for proper recognition of employee performance. In this particular case study of Volkswagen, the respective project managers were responsible for checking the effectiveness and efficiency of the implementation of the new emission test devices. Since, the first objective of these managers was to bring out profit in their business by answering to the organizational expectations (Trevino and Nelson 2016). While passing the test, the workers or staffs of this specific organization has opposed eventually; however the managers did not listen to them and decided to launch the unethical devices for their personal profit. Although, with this activity, initially Volkswagen earned profit and popularity through media; after few days, media released a statement of facts and the truth came out through this matter of facts and the case study was known to all (Gatens 2013). This specific activity demonstrated that even the managers were unethical in Volkswagen, which damaged reputation majorly.

Customers

The fourth or the final factor that had a strong effect or impact on this particular case study of Volkswagen was shareholders (Trevino and Nelson 2016). These shareholders are individuals, who legally own maximum shares of stock within any public and private corporation. Since, they were responsible for owning shares in the company, they had full right to know about the issues within the company. Similarly, any important decision should be undertaken after consulting with them (Bennett 2016). The respective organizations sell their shares of stocks as well as partial ownership within the business. They are responsible for bringing profit objectives and short term orientation. This particular factor is majorly linked with the previous point of revenue as stakeholders helps to have a solid stock value in business (Lacan 2013).  In Volkswagen case study, the shareholders knew about the unethical defective pieces, however, they did not protest anything, rather supported the activity. Since, any activity within the company could not be undertaken with proper permission from the investors or shareholders, the mentioned individuals of Volkswagen case study were equally involved in the scam (Fromm 2013). This was being covered by media and the rest of the world got to know about unethical means within their company and their reputation was damaged.

The above mentioned four factors clearly depict that the organizational reputation was damaged to a great level and should have been rebuilt or checked properly.

Conclusion

Therefore, from the above discussion, it can be concluded that Volkswagen has built their diesel engine with difficulty and this engine comprised of the core capability of providing better performances although after keeping the emissions in regulatory standards. A mechanism was being engineered for reducing emissions during tests, however such emissions were far beyond the legalized limits while car driving. Several protests were raised from the workers although the managers of Volkswagen supported utilization of the system. This was not at all ethical since, the reputation was damaged to a high level. The organizational managers did not follow work ethics and thus had to lose few of their clients. The above report has clearly outlined the brief discussion on the case study of Volkswagen and the ethical considerations of this particular case study. Moreover, proper analysis is also done for understanding the responsibilities of shareholders and managers are also described here with relevant details.

Volkswagen could easily improve their reputation from the issues faced by them with the help of few recommendations. These recommendations are as follows:

1. i) The first and the foremost recommendation for this particular organization is that they should contribute to the economic as well as social development of their customers. Since, they have not maintained ethics while implementing the devices in their cars, it is highly recommended that the future cars should be made after following each and every regulation and ethical rule. This would help them in gaining their position in the market as the customers and government would understand that there is no unethical activity in the cars.
2. ii) The second important and significant recommendation for the company of Volkswagen is that they should foster growth and innovation within their cars. This would be helpful for them for learning and adding subsequent value and hence they would become more successful. The shareholders and the managers of Volkswagen should bring out changes, however by following ethics in the work. This particular recommendation would also be effective for them for bringing competitive advantages in their business and hence they earn profit eventually.

iii) The next significant and noteworthy recommendation for this organization of Volkswagen is that they should value their employees and staffs. As per the case study, the workers of this specific company has resisted for such unethical work and did not want to make the devices; however the organizational managers supported the system for their profit and hence allowed such work in the organization. If they would had listened to their workers, such issue would not have been raised and they would not have faced any problem.

References

Bennett, J., 2016. The enchantment of modern life: Attachments, crossings, and ethics. Princeton University Press.

Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Dewey, J., 2016. Ethics. Read Books Ltd.

Frank, A.W., 2013. The wounded storyteller: Body, illness, and ethics. University of Chicago Press.

Fromm, E., 2013. Man for himself: An inquiry into the psychology of ethics. Routledge.

Gatens, M., 2013. Imaginary bodies: Ethics, power and corporeality. Routledge.

Keown, D., 2016. The nature of Buddhist ethics. Springer.

Lacan, J., 2013. The ethics of psychoanalysis 1959-1960: The seminar of Jacques Lacan. Routledge.

Moor, J.H., 2017. What is computer ethics?. In Computer Ethics (pp. 31-40). Routledge.

Noddings, N., 2013. Caring: A relational approach to ethics and moral education. Univ of California Press.

Nussbaum, M.C., 2013. The therapy of desire: Theory and practice in Hellenistic ethics. Princeton University Press.

Peters, R.S., 2015. Ethics and Education (Routledge Revivals). Routledge.

Sorokin, P., 2017. Social and cultural dynamics: A study of change in major systems of art, truth, ethics, law and social relationships. Routledge.

Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.