Volkswagen Emission Scandal Widens, Research Paper Example

Issue

In the later part of 2015, it was discovered by authorities that Volkswagen, a German automaker who manufactures and sells cars to customers throughout the world, had been cheating required emissions testing by placing devices in its diesel engines that were able to respond accordingly upon testing in order to mask the real results and improve their performance accordingly (Hotten). This has become a controversial scandal throughout the world because it reflects the lengths Volkswagen has gone to in order to mask its responsibilities towards emissions and to eliminate the potential for its cars not passing these inspections in accordance with federal and state laws. A significant flaw in their argument is that the company has touted its emissions record for many years and has been able to sell the public on the low emission record of its vehicles; however, this has not been the case and the company has been caught in an ethically irresponsible and public relations nightmare that is difficult to escape.

Volkswagen was able to fool emissions testers with a software product that could “sense test scenarios by monitoring speed, engine operation, air pressure and even the position of the steering wheel” (Hotten). This set of circumstances represents a serious challenge for the organization, placing its emissions record and its reputation into serious jeopardy. These conditions reflect a need for the organization to examine its core values and to make sense of its decision-making process in regards to emissions testing, as its customers and the public have a right to know why they participated in this process and how it translated into serious and likely to be permanent implications for the organization that will continue to influence its operations and sales, even after the dust has settled and the public has forgotten the details of these actions and subsequent events.

Analysis

Volkswagen faces a serious set of challenges that require its full attention and focus in order to address their decision-making method in regards to emissions testing. One the fundamental questions to consider is why the company chose this method, essentially cheating on the general public and posing a threat to their overall integrity in this manner. These practices pose a threat to the organization and its overall reputation in many different ways, and will likely have a significant impact on the general public’s perceptions of the company for many years to come. Furthermore, it is necessary to better understand the allegations that have been set forth regarding the company and why it chose to act in this manner. Allowing the company to explain its actions is only fair; however, it is not expected that even the most loyal customers will necessarily support the decisions that have been made and the explanations that will be provided as the company moves forward.

The organization has already answered to the allegations by its own emission of these actions, and the resignation of its Chief Executive Officer is a first step towards restitution and to rectify its practices. The primary models affected by the scandal include the Jetta, Beetle, Beetle Convertible, Passat, Audi A3, Jetta SportWagen, Golf, and Golf SportWagen (The New York Times). The automaker has been largely successful in its sales efforts in recent years, meeting the sales figures of one of its largest competitors, Toyota; however, in the wake of the scandal and these allegations, the organization’s value has declined significantly and the sale of the affected models has been stopped in the United States (The New York Times). The organization will struggle to retain its footing in a highly competitive marketplace; therefore, it is necessary to develop a strategy that will limit the number of customers who are likely to leave their loyalty to the organization behind in the coming months and years (The New York Times). The organization will also continue to suffer in other areas, since they must address the emission-related deficiencies effectively and have allocated $7.3 billion to cover the cost of these defects and the significant number of repairs that are required for millions of vehicles (The New York Times). In addition, the organization continues at the U.S. Environmental Protection Agency and the Department of Justice in order to evaluate the deceit within the organization and what penalties the company will have to pay in order to address these misdeeds (The New York Times). Furthermore, actions in Germany are also severe, noted as follows: “Acting on complaints filed by several citizens, as well as officials at Volkswagen, prosecutors in Germany have begun a preliminary investigation against employees, who have not been identified, on suspicion of fraud” (The New York Times). Therefore, the company faces a significant set of challenges that must be addressed as the investigation continues in order to begin the process of salvaging any of its reputation that might remain.

Volkswagen’s misdeeds regarding fraudulence related to emissions testing is a serious concern, as the company has struggled since the actions were revealed to address them entirely in an open and honest manner. Some experts argue that the former CEO, Martin Winterkorn, was privy to these activities regarding emissions testing dating back to spring 2014; therefore, this poses a serious challenge to the integrity of the organization and its ability to adhere to all required standards regarding emissions, and when incapable of these actions, was not forthcoming regarding these activities and the level of involvement and cooperation of the leadership team (Lohr). With these allegations in mind, the CEO is under intense scrutiny regarding his knowledge of these matters and his response to the activities that were taking place within the company over the past 18 months (Lohr).

One of the most recent revelations over the past week is that the initial payout for repairing the faulty emissions errors; however, Volkswagen may be required to pay additional costs in order to repair other vehicles and to have any change of restoring at least some of its reputation in the future (del Pozo). This reflects the importance of understanding the serious nature of these activities and how it may cost the company its reputation on a permanent basis. In addition, as the investigations continue into the company’s misdeeds, it is likely that additional employees at higher levels will be terminated if it is revealed that they were aware of the activities that were taking place within the organization (del Pozo). It is likely that the deception took place across multiple levels, but it is likely that managers will pay the ultimate price for many of these misdeeds.

The enormity of the Volkswagen scandal is somewhat shocking when the numbers are revealed, as 11 million vehicles will require repairs to address its emissions failures (Bomey). The actions taking place within the organization have been substantial and came at a time when the company became the largest automaker in the world for a brief six month period of time (Bomey). These actions represent a deplorable level of decision-making at the highest levels of the organization and will require more than a quick fix or a band aid to recover. There must be a continuous focus on the organization’s recognition of its misdeeds, its level of deception that impacted millions of customers around the world, and the repercussions that are likely to occur as significant penalties are assessed by the United States federal government, as well as those that may occur in other countries. These actions require the company to examine its decision-making and aim to address its deceit in a manner that is truthful, appropriate, and transparent at all levels.

Recommendation

The decisions made by Volkswagen in its various chains of command in regards to emissions testing possess serious ramifications for the organization and for its management team for the foreseeable future. The company has essentially put much of the general public and the authorities into a state of shock regarding their actions, as it was believed prior to the scandal that Volkswagen had one of the most important emissions records in the automobile industry. However, the company now struggles to save face in the eyes of the general public and its most loyal customers, and the response has not been surprising, experiencing a decline in sales and a lack of trust regarding the company and its products. These actions are significant because they demonstrate a lack of accountability within the organization for the decisions that have been made at a high level regarding this scandal, thereby creating a dynamic between the organization and the public that is contentious at best.

It is the responsibility of the Volkswagen organization to thoroughly apologize for its actions in deceiving the government and its customers, which will serve as a beginning step perhaps towards redemption in the future. However, in its current state, the organization appears to be very bleak, with a poor outlook for the future due to these actions and the decisions made regarding these tests. Most importantly, the organization must continue to explain why it made these decisions and how it became a significant issue, and to learn from these serious flaws in judgment in order to make amends in a public manner. At the same time, investigations regarding Volkswagen must continue and will likely reveal additional misconduct at the organization that must be addressed in a timely manner in order to protect the consumer-buying public from any further harm in this regard.

Works Cited

Bomey, Nathan. “Volkswagen emission scandal widens: 11 million cars affected.” USA Today, 24 October 2015:  http://www.usatoday.com/story/money/cars/2015/09/22/volkswagen-emissions-scandal/72605874/

Del Pozo, Marcelo. “Volkswagen CEO says emissions scandal bill could rise.” CNBC, 24 October 2015: http://www.cnbc.com/2015/10/22/emissions-scandal-volkswagen-may-have-to-set-aside-more-funds-if-sales-fall.html

Hotten, Russell. “Volkswagen: the scandal explained.” BBC News, 24 October 2015: http://www.bbc.com/news/business-34324772

Lohr, Julia. “VW emissions scandal: doubts grow over Winterkorn’s involvement. The Guardian, 24 October 2015: http://www.theguardian.com/business/2015/oct/23/vw-emissions-scandal-doubts-grow-over-winterkorns-involvement

The New York Times. “How Volkswagen got away with diesel deception. 24 October 2015: http://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html?_r=0