Volkswagen’s Emission Dilemma

Introduction

Volkswagen Company has been with a lot of challenges over the years, a move which has really affected the productivity of the company. In a bid to understand the ethical issues surrounding Volkswagen, this paper will discuss the Volkswagen’s emission dilemma. 

 Overview of the Company

The Volkswagen (VW) group is comprised of twelve different brands, in seven countries in Europe. These brands include the following: Audi, Seat, Volkswagen Passenger Cars and Commercial Vehicles, Porsche, Bentley, Ducati, MAN, Bugatti, Scania, Lamborghini, and SKODA (Martin, 2017). The company offers a wide array of monetary services, which include customer funding, supplier, banking, hiring and also insurance events and taskforce management. These factors have consequently enabled the company to be able to gain a huge market in different parts of the world, thus making the company to be among the top performing automobiles in the world (Miles, 2017).        

The group aims at drawing together the different component operations which are scattered in its 12 brand groups, thus combining them into a single unit (Clifford, 2017). This move is aimed at reducing the cost of manufacturing different parts, thus allowing the company to be able to manufacture the spare parts of its vehicles as a single unit, hence increasing productivity, and cutting on the costs of having different operations in different parts, which makes it very expensive to run and maintain the different component operations (Miles, 2017).      

Duplication of Volkswagen parts has been a manager problem which the company has been facing, thus aligning the components of VW, will reduce the chances of duplication. In so doing, the company will be able to realize huge profits, which it had failed to acquire due to duplication. In addition, the company will also be in a position to beat most of its competitors, among them being Toyota. As of 2015, VW spent €144 billion on merchandise, supply and raw materials (Amy, 2017). This value is however subjected to drop, as the company will be able to reduce the cost of operation after aligning its components (Miles, 2017).

       Ethical Issue Surrounding VW

VW was found guilty of violating the Clean Air Act in the year 2015, this after a research was conducted by the Environmental Protection Agency (EPA) in the US. VW had programmed its diesel powered engines, in such a way that they only emitted less nitrogen oxide during the regulatory tests in the laboratory (Martin, 2017).  This programming allowed VW vehicles to pass the nitrogen oxide tests, thus meeting the US standards in the laboratory emissions tests. However, the cars would emit 40 times more nitrogen oxide, while on the roads, thus polluting the environment more than other vehicles which had failed to pass the test did. This programming had been deployed in 11,000, 000 VW cars all over the world, and 500,000 cars in the US alone, with the car model of 2009 to 2015 (Clifford, 2017).

This malpractice was discovered after a study was conducted to observe the inconsistencies of 2014 model of cars in the US and Europe, under the support of International Council on Clean Transportation (ICCT). The study would then sum up data obtained from three dissimilar sources on a total of 15 vehicles (Miles, 2017). This made VW to be a target of regulatory investigations in many countries, thus affecting the company’s stock price. In addition, the company lost its market share, a move which move which made the company to encounter very huge losses ever. This gave other companies a position to shine, thus taking over the company’s position in the market.

In the year 2017, VW pleaded guilty of the charges, thus the federal justice ordered the company to pay a bond of $2.8 billion, for deliberately tampering with diesel powered engines, in order to lie to the US government (Martin, 2017). The huge fine dealt a blow to the company, as it was experiencing marketing challenges, thus not being able to gain any profits whatsoever. This was a factor which really affected the functioning of the company, as it could not be able to realize any profits, and it could not also be able to come up with new strategies, due to the financial challenges which it was experiencing (Miles, 2017).

Stakeholders Impacted by the Scandal 

During this period, most stakeholders were affected, as they could not be able to gain profits or otherwise see the need of working for the company (Martin, 2017). For that reason, VW group CEO resigned, whereas the head of brand progress, Audi research and progress head, Porsche research and progress head respectively, were suspended. In addition, employees in different departments of the company were also suspended and sacked (Clifford, 2017). 

Impact of the Decision  

The company’s decision to suspend and sack its employees was ethical, as it allowed the company to conduct an investigation into the matter, thus coming up with the reasons as to why they cheated (Miles, 2017). In addition, in order to gain the trust of its customers, the company had to make such a decision, thus showing that it was the plan of the employees and not that of the company, to cheat. Furthermore, the company was also able to understand what made those employees to cheat, and why they reached such a decision without communicating with the board of directors (Amy, 2017).   

The company was not impacted positively by the decision, as it was required to spend more money in order to hire and recruit new employees to take up the positions left vacant (Clifford, 2017). In addition, the company had to come up with new marketing strategies, a move which required it to spend more money, than it had done before the incident. In as much as the decision was costly for the company, it had its advantages, which helped in shaping the future of the company (Amy, 2017).       

Personal View on Business Ethics

My original view of business ethics was that it was a set of policies which determine the type of services which a company is supposed to offer (Shaw, 2014). In addition, I believed that business ethics protected consumers against being cheated by the manufactures, thus balancing the relationship between manufacturers and consumers, and the relationship between employees and the employers. However, after attending the lectures, I have been able to understand how broad business ethics, and the factors which are entwined within business ethics (Martin, 2017).   

Out of my original views on business ethics, it was evident that my reasoning was different from what business ethics really is (Shaw, 2014). My view of business ethics being a set of rules which protect the services offered to a customer was wrong. However, I was right when I thought that business ethics seeks to enable employees and the management of the company to be able to relate well, due to providing an understanding of the regulations of employers. Thus my reasoning was similar to the work which business ethics does.  

Conclusion

This paper has discussed the ethical issues which affected VW group. In the paper, it was evident that VW was faced with an emission scandal, whereby the company was found guilty of programming its TDI engines, in such a way that they would pass the emission tests. After the tests, the vehicles would emit 40 nitrogen oxide 40 times more. In addition, the paper also discussed the impact which the scandal had on the company’s stakeholders, and the impact of the company’s decision regarding the issue. Finally, the paper concluded with a personal view on business ethics.   

Reference

Miles, B. (2017). Thousands of Drivers Suffer Loss of Power following VW Emissions ‘fix’: The Guardian.

Guilbert, G, Jack, E, Karl R, & Derek, W. (2017). How Volkswagen’s ‘Defeat Devices’ Worked: The New York Times.

Russel, H. (2015). Volkswagen: The Scandal Explained: BBC News.

  Clifford, A. (2017). Everything you Need to Know about the VW Diesel-Emissions Scandal: Car and Driver.

Karl. (2017). The Volkswagen Group is systematically Refunding Owners for EGR Failures after the Emissions ‘fix’: Hypermiler.co.uk.

Martin, S. (2017). VW Emissions Scandal: Unfixed Cars could be deregistered in Germany: Auto Express.

Amy, B. (2017). VW’s Software Fix for Dieselgate Cars causing Performance, Fuel Efficiency Problems, Drivers say: ABC News.

Shaw, W. H. (2014). Business ethics. Boston, MA: Wadsworth, Cengage Learning.