Discuss about the Company that faced ethical dilemma.
Every organization is very particular about its reputation in the market. None wants to have a bad image. But there are times when the company faces dilemma and has to go through a rough time. Volkswagen diesel emission case is definitely a good example of Ethical dilemma because due to this dilemma, the company had to bear lots of money to the EPA and to the consumers worldwide (Kansas City, 2016). Ethical dilemma in business is the situation when there lies confusion between any two decisions and the organization cannot seem to make any, be it moral or immoral(KarimiJahromi, 2016). Utilitarianism and Kantianism are the two theories which explains Ethical Dilemma as a different perspective. Volkswagen’s case comparison with the theories are done in this report. Companies must implement rules and regulations to ensure that these types of dilemmas are not faced by them. Compliance policies in all the organizations are important.
Volkswagen (VW) is known to be the largest automobile making company. This German brand has made its mark in the world by selling the best cars with great designs and engines. In September 2015, the EPA (Environmental protection agency) found that VW had a software device attached with their carengines whichcontrolled the emission of Nitrogen Oxide and the car tests were being approved so that the cars can finally go out on the roads. While actually their cars were releasing 40 times more Nitrogen Oxide and it was creating pollution in the environment. VW believed that producing diesel cars would be good, which was just 5 percent of the US market till 2007 (Lynch & Santos, 2016). These were done in all types of cars, be it beetles, Audi A3, Jeta, Golf and Passat. EPA then issued notice for violating “Clean Car Act” and VW agreed that 11 million cars worldwide (Slide Share, 2018) and 5 lakhs in US undergo that software in between 2009 to 2015 (Kansas City, 2016). Earlier when this discrepancy came into picture, VW people said that it was due to a technical mistake but later they also agreed that they were at fault and that all this was done deliberately. Thus, VW had to pay $10 Billion to the US consumers as compensation, $2.7 Billion as a remediation fund and for cleaner vehicle projects they paid $ 2 billion to EPA. In another 44 countries, $600 Billion were paid to settle all the claims (Kansas City, 2016). The company was also charged for attaching that software to the cars of 3-literdiesel engineslike Audi and Porche. Although, VW did not agree to this but the truth was that this technology affected over 10,000 automobiles. (Hotten, 2018). Then again in November 2015, VW said that their cars were some “Irregularities” found in their cars when the tests were run again and that it could impact over 80,000 cars in Europe but later after more investigation that said that it only impacted 36,000 cars. This act broke Volkswagen’s customers trust and it was not simply acceptable by them. The company should not just maintain its image but also should think about its consumers. Good business minds never would hurt their customers as it’s said that customers always come first. They also offered a small amount of $1000 as penalty and assistance for free on the roadside (Kansas City, 2016).It later came into picture that some senior executives including the CEO were also involved in this fraud (Slide share, 2018).
This theory basically comes under those managerial ethics which acts when there is something good to be done for a huge number of people (Barrow, 2015). The main thing that a company can do morally is to keep their customers happy rather than keeping their self interest in mind (My assignment help, 2018). This is a definition of a good business company. According to the founders, Jeremy Bentham and John Stuart Mill, utilitarianism is the amount of goodness done in an action rather than producing any excruciation for others. Volkswagen did put their own interest first and produced the cars that spread environment pollution and nothing good could come out of this treachery. VW even after knowing the negative impact of their doings bought the cars on the road after fooling the laboratory tests. They made good profit by selling huge number of cars but could not stand out in the eyes of their consumers. Overall, Volkswagen lost their goodwill in the market after denying the accusations and then not full heartedly being apologetic to their customers. Hence, the concept of this theory does not apply to this case as there was nothing good in this whole act of treachery. Rather, Volkswagen should not have attached the software and let the diesel emitting cars face the laboratory tests. Environment pollution created by the VW cars was harming the citizens of the country and that is not at all an ethical way of doing things. Going by ethics would have meant a lot to the customers and they would have trusted the brand forever by this act. Utilitarianism helps the organization in understanding that a customer comes first. If they are satisfied with the outcome, then the brand is also safe to play in the market. However, this theory also suggests a punishment so that this should not repeat again in future but VW had to bear more than this punishment. They faced a big loss and the stocks came down like anything. The demand for their diesel cars also went down in a huge manner. The stakeholders were not at a very good position as well as the customers in this case as none of them were benefitted by this act. (Fowler S, 2017).
Kantian Ethics theory was founded by Emmanuel Kant (Arnold, 2012).The theory basically states that any action that is done by the company should only create growth for it and this growth should keep increasing as long as the company is good enough to face its competitors in the market (Neil, 2013). In this case also, the company made lots of profit by pushing out their pollution producing cars on the roads and earned the title of the second largest automobile selling company but they forgot their moral ethics on the whole. Not just the customers but the habitat that we live in i.e. environment was at stake. On moral grounds exploiting the environment is unethical. Also, consumers should know the real standards of the cars the company was providing them with. Hence, the consumers were also cheated. This behavior is also immoral. When the act of fraud is done by any company, not just the higher authorities like the CEO or the founder but the managers and executives are also at fault (My assignment help, 2018). They also know about the wrong doings of the company and by its owners yet they stand still and do nothing about it. The technical managers those who developed the software for the company were also equally at fault. The image of the organization depends on the one’s who take out new ideas to promote it and also the hampering of it belongs to the same set of people. These leaders should definitely think of the benefits that their company is going to provide to its consumers. Trust is a big thing in any of the business. Kantianism says that the company should be on the growth side only by being ethical. It means the long term growth which a company can achieve by gaining the trust of its consumers. When a customer is happy with the products of any company, they put that company on the top list and the image of that company touches the sky. Hence, even before putting the idea into practicality, these leaders should think of the consequences their company has to bear.
This is a process in which leaders or managers takes decisions which are good for the company and it harms no other person as well. It is about choosing between what is ethically right. During the process, the options that are unethical and not the best for anyone should be totally neglected and never be taken. Volkswagen or any other organization should look up to t his process as it helps the company to be ethical and think ethically all the time. This way Volkswagen would never have gone through the loss they went through actually. The ethical decision making involves three simple steps:
For creating the positive environment in the organization, there are three different types of ethical work climate which can be followed.
The positive climate in any company comes when it has a good corporate culture maintained all throughout. When ethics are not right one cannot expect the culture and the climate to turn out positive. Every company has the culture to teach its employees about the work ethics and to follow them by any means (IIA, 2015). Volkswagen did have the intention of the company growth but also it was not in the best interest of its consumers (IIA, 2015). In Volkswagen, there were about 30 people who knew about the software that helped VW passed the test from the laboratory and finally get the cars on the road (IIA, 2015). Now VW is a big company and it has a huge number of employees yet these leaders went for the decision which was unethical and totally neglected the interest of the stakeholders and the consumers too. The top managers in any of the company play a very important part in maintaining the healthy and positive environment. They provide the details of the ethical culture that should be followed in the company. Basically, they put down the foundation of a positive climate for the company. Volkswagen managers and leaders are the example that an organization can lead to the downfall if any illegal act is perused by the company which is not at all in the interest of its stakeholders or the employees. There are surveys where results have shown that the maximum percentage of the image of the company is based on the ethics the company follows. There might have been a chance when if this problem of producing more pollution, if discussed, with its employees, they might have given their valuable suggestions and the problem might have been solved. Giving importance to all the employees is a critical aspect of a good corporate culture. An employee more than feeling cared, wants to be valued in the company because that is why he is working in the company. Some of the employees had to lose their jobs as well. Hence, the company did not provide a good climate for the employees to work in (Delta Net, 2017).
A leader is a person who has the growth idea for him and his team and who would work positively for his team and company (Babalola, 2016). IT is important because the leaders are the people who can take their company to a higher level by taking some good decisions for the company. Leadership skills are of different styles. In case of Volkswagen, there are three leadership styles which if used, would have given the company a good and a long term growth.
All these leadership styles were missing in the case of Volkswagen.
Managing a huge company is in itself is a task beyond taking company out for the growth. People today want to work for the company which provides positive and warm environment to each and every employee. There are many factors that contribute to the success of the company in which the most important is the ethical and positive work environment created by the company. Factors that would have helped in making the climate of Volkswagen positive are:
All these factors would have contributed to Volkswagen’s positive work environment.
Conclusion
This essay has argued about how Volkswagen diesel emission case had put the company in ethical dilemma and the consequences the company had to face. Also, the theories like utilitarianism and Kantianism can help the company with not getting into any dilemma. The positive work environment that a company should have is also mentioned with the factors. Leadership styles and the decision making factors which can contribute to the overall company’s long term growth. Following all the leadership styles, a company can stop itself from facing any dilemma. By creating the positive work environment including the factors discussed above, the company can maintain a healthy and competitive climate and also can provide a good experience for any employee. Growth of a company should be long term rather than short term. A few leaders or managers take advantage of taking unethical decision, which are good for the company short term growth but they do not think about the dilemma that the company will face in the long term. This essay shows as to by just following some simple rules, a company can touch the sky and can keep the trust of the customers forever.
References
Agil., S. O. S., (2011). KANTIAN ETHICS: A CRITIQUE. UNIVERSITI TUN ABDUL RAZAK E-JOURNAL. Vol. 7 (2).
Ahmad., N. H., Ansari., M. A. &Afaqi., R. (2005). ETHICAL REASONING: THE IMPACT OF ETHICAL DILEMMA, EGOISM AND BELIEF IN JUST WORLD. Asian Academy of Management Journal. Vol. 10 (2). PP 81 – 101
Arnold, D. G., & Harris, J. D. (Eds.). (2012). Kantian business ethics: Critical perspectives. Edward Elgar Publishing.
Babalola, M. T., Stouten, J., Euwema, M. C., &Ovadje, F. (2016). The Relation Between Ethical Leadership and Workplace Conflicts The Mediating Role of Employee Resolution Efficacy. Retrieved from https://researchbank.acu.edu.au/cgi/viewcontent.cgi?article=1774&context=flb_pub
Barrow, R. (2015). Utilitarianism: A contemporary statement. Routledge
Blink. (2018). Making Ethical Decisions: Model. Retrieved from https://blink.ucsd.edu/finance/accountability/ethics/model.html.
Cairn. (2018). The Ethical Climate at Work. Retrieved from https://www.cairn.info/revue-rimhe-2013-5-page-15.htm.
Delta Net. (2017). Creating a positive corporate culture – what can you learn from failings at VW?Retrieved from https://www.delta-net.com/blog/2015/10/creating-a-positive-corporate-culture—what-can-you-learn-from-failings-at-vw.
Duke University. (2016). Corporate Culture. [Video File]. Available at: https://www. youtube.com/ watch ?v=7g-BLzjEbXU.
Fowler, S. (2017). What are stakeholders & Ethical Dilemmas? Retrieved from https://bizfluent.com/info-8100582-stakeholders-ethical-dilemmas.html
Freifeld, L. (2012). 6 MANAGEMENT PRACTICES FOR AFFECTING WORKPLACE CLIMATE. Retrieved from https://trainingmag.com/content/6-management-practices-affecting-workplace-climate.
Hotten, R. (2018). Volkswagen: The scandal explained. Retrieved from https://www.bbc.com/news/business-34324772
Iqbal, N., Anwar, S. &Haider, N. (2015). Effect of Leadership Style on Employee Performance. AJBMR.
Jahromi., K. S. &Alvani., M. S., (2016). Ethical Decision Making in Issues Management. IOSR Journal of Humanities And Social Science. Vol. 21 (7). PP 34-39
Kansas City. (2016). VW scandal a case study in bad corporate ethics. Retrieved from https://www.kansascity.com/opinion/editorials/article87287037.html
Lynch, L. J. & Santos, C. (2016). VW EMISSIONS AND THE 3 FACTORS THAT DRIVE ETHICAL BREAKDOWN. Retrieved from https://ideas.darden.virginia.edu/2016/10/vw-emissions-and-the-3-factors-that-drive-ethical-breakdown/. .
Nanjundeswaraswamy T. S. &Swamy D. R. (2014). Leadership Styles. JSS Academy of Technical Education.
Norman, W. (2016). Business Ethics. Retrieved from https://www.hbs.edu/faculty/conferences/2016-newe/Documents/Norman,%20Business%20Ethics,%20IntEncycEthics.pdf.
O’Neill, O. (2013). Acting on principle: An essay on Kantian ethics. Cambridge University Press.
Slide Share. (2018). Volkswagen: Scandal, Ethical and Professional issues. Retrieved from https://www.slideshare.net/hsbj/volkswagen-scandal.
Small Business. (2018). 5 Different Types of Leadership Styles.Retrieved from https://smallbusiness.chron.com/5-different-types-leadership-styles-17584.html.
The Institute of Internal Auditors. (2015). The Effects of Culture on Organizational Ethics. [Video File] Available at:https://www.youtube.com/watch?v=2F-oQAcCvN0.
Wahoos. (2002). Creating a Work Climate That Motivates Staff and Improves Performance. MSH Publications.
Wise Toast. (2018). 12 Different Types of Leadership Styles. Retrieved from https://wisetoast.com/12-different-types-of-leadership-styles/
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order formOnce we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignmentAs soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download