Volkswagen Scandal And CSR Essay

BMW’s main competitors on the UK market are Daimler Ag well-known with Mercedes and Maybach, Vauxhall Motors offering Opel, Ford, Audi and Volkswagen Group UK. Ford has been first on the market share for the last two years (See AppendixB), attracting the customers with a combination of price, power and efficiency. Ford’s engine technology plays a key role, reducing both running costs and emissions while delivering rewarding levels of power and performance (Ford, 2015). This model may serve as an example to BMW in terms of considering emissions causes and the public sensitivity of this matter. After the recent emission scandal Volkswagen has lost positions among the leaders in the industry and people lost their trust and respect of the company. According to estimates, the cost of the entire dieselgate scandal for Volkswagen, including government fines and settlements, private settlements, recall expense, and future loss of sales, could be up to $34.5 billion (Trefis, 2015). According to the previous source, BMW’s diesel emission was also questioned, in particular, the model X3 was reported to be eleven times above the European norms which led to a 10% decline in BMW’s stocks. Further investigations will follow in BMW’s case but nonetheless it is a serious issue and a sign that the company must be very careful with its offered products, otherwise, BMW may follow Volkswagen’s collapse. Mercedes is arguably the toughest and the most challenging competitor to BMW as both

Volkswagen’s dishonesty has been detrimental to the company’s reputation. Had Volkswagen been truthful in its response to the issue, the damages might not have been as bad. If the company had exercised care, justice, and respect for people’s rights, consumers might even mitigate their negative perception of the company when purchasing a new car. Only time will tell whether Volkswagen will ever reclaim its

In today’s society we often come to many debates on several issues that go on in our world today. Recently there was an ethical debate on whether or not it is ethical to release vehicles with software that defeats emission testing by the EPA. Volkswagen is being accused of using illegal software designed to hide emissions during testing by installing cars with a software. The EPA accused Volkswagen of using the device in nearly over a half a million cars (Davenport). The cars are reportedly to have been installed with a software that had the ability to turn off the emissions controls when driving normally and turns them on when the vehicle is undergoing an emissions test. With all of these assumptions of Volkswagen cheating the emissions testing does that question their ethical corporate responsibility?

On September 18, 2015, the Environmental Protection Agency (EPA) accused Volkswagen of cheating on the emissions tests (epa.gov). Volkswagen had become extremely popular around the world due to the advertising on the eco-friendly car. Volkswagen was advertising on the Super Bowl commercials, social media and much more. For seven years they had a false advertisement. It was a false advertisement because everything they were advertising was invalid. People were being lied about what they were purchasing. Volkswagen had installed a software into the diesel engine (Goodman, 1). A deontologist, utilitarian and virtue ethicist could describe the action taken place by Volkswagen on a philosophical view. A deontologist, utilitarian, and a virtue ethicist have different ways of describing what is good and bad. Good means pleasant or enjoyment and bad means unpleasant or low standard. Although, all the three major

A car is spewing deadly carbon dioxide, forty times more than the car next to you. Piling onto many recent scandals in Europe, Germany’s Volkswagen has cheated emissions tests. The scandal has sparked enormous stifle across the world and turmoil in the company. The Volkswagen company started when Adolf Hitler gave the order to have the small middle-class car to be produced. VW produced the Beetle in the 1930s to much of Germany’s population. After the end of the third Reich, Volkswagen spread and became a large job creator in Germany as well as an international brand (Morning Edition). Volkswagen prioritization of the European market, led them to bet their future on green tech chips and diesel engines. This is in contrary to the moves of many other car makers, who are pursuing electric cars in the American market. The American market thought of diesel engines as secondary and insignificant (Ziegler). The Environmental Protection Agency’s Tier ii emissions standards had high bars for diesel emissions that would be extremely difficult to reach. There was a heavy burden for Volkswagen 's engineers to create a quantum leap in the diesel engine in terms of emissions and fuel economy. To cut these emissions Volkswagen would need to use an effective but bulky and expensive system in its cars. However cheating the emissions tests would be fairly easy due to the lack of

Today, we live in a world that’s vastly interconnected. Something that happens across seas can affect a whole nation, several nations, or even all of them. Recently Volkswagen was put in the hot seat when they were caught imputing software into their diesel vehicles, that makes it show a different emissions output than was accepted by the EPA. They called this device the, “defeat device.” Thusly all of their vehicles that were diesel were marketed as low emissions which turned out to be a lie. The article on bbc.com states, “The engines emitted nitrogen oxide pollutants up to 40 times above what is allowed in the US.” This is a huge blow to the company as far as public opinion goes. They lost the trust of millions of people around the world. They have been producing allegedly clean diesel emissions for a long time now and even included that in their advertisements. Because of this scandal they were forced to recall millions of diesel vehicles with this device causing them to lose over $2.5 billion. Their first quarterly loss in the past 15 years. This sounds like a lot of money but the EPA is still considering fining Volkswagen for each car they produced and lied about. The amount they are considering charging them is roughly $37,500 for each car which leads to a maximum fine of $18 billion. That’s more than the value of most of the cars, which really shows how seriously they are taking this. Even for a giant like VW that is a massive blow financially. From now on every

 In May of 2014, John German discovered, and went public about the Volkswagen emissions scandal (Kretchmer, 2015). John German is a senior co-lead for the International Council on Clean Transportation. Mr. German has worked for the Washington-based Environmental Protection Agency for 13 years, which indicates that he knows what the requirements and enforcement are. German partnered with West Virginia University and conducted the ICCT study. During the ICCT study, German noticed detrimental nitrogen oxide emission levels; which leads him to think Volkswagen diesel cars were malfunctioning. German felt vehicles were malfunctioning because they were passing emissions testing, yet the vehicles had up to 35 times permitted levels of nitrogen oxide.

Growing environmental concern and pressures for car companies to undertake sustainable practices has led to uncertainty (De Moraes, 2016). Movement in regulation and consumer preferences towards environmentally friendly production has a cost burden (Hirsh, Kakkar, Singh and Wilk, 2015). Encouraging companies to misrepresent data; Volkswagen falsified emissions tests (The Economist, 2015a).

According to the Volkswagen organizational values, a for-profit business organization must "legitimize" their operations and their membership in society by respecting social concerns beyond just technical legal compliance; it must consider how its operations affect society economically and socially, and how they affect the global biosphere ecologically, and most of all, how the business operations of the organization contribute positively to the broadest global concerns.

In September 2015, The Environmental Protection Agency (EPA) found “defeat device” installed in Volkswagen vehicles sold in the United States (US), which resulted in violating the Clean Air Act. This device was installed in the diesel engines of the cars. It had the capability to not only detect when the car was being tested for emissions, but to improve emission results in order to pass emission standards in the US. As a result, EPA issued a Notice of Violation to Volkswagen.

In 2015, between September 18 and September 28, the market capitalization of Volkswagen AG (FRA: VOW) fell from $95 billion to $60 billion. This staggering loss is not commonly seen in stock markets, especially in “blue chips” companies. The massive loss in share price is linked to the emission cheating scandal shaking the fundamentals of one of the biggest car manufacturing in the world. Even months after the occurrences the environmental, governance and social impacts of such misbehavior from Volkswagen’s actions are still largely unclear. It is not possible to know to what extent such activities will affect the company’s shareholders in the long run. In the short run it is possible to observe large government fines and a series of unnecessary extra costs incurred by the company in order to perimeter the damages (Burki, 2015).

Volkswagen ethically broke the law by installing these software systems in their vehicles that lower the NOx levels in the engine of their vehicles ranging from 2009-2015. According to BSIC, “At the core of this scandal are the so-called “defeat devices” installed by Volkswagen on some 11 million cars worldwide. At the moment legal charges have been brought up on roughly 482,000 diesel vehicles operating in the US under VW and Audi badges.” This investigation started to occur in 2015. According to BSIC “When the software dented that it was being tested, it would change to an alternate engine configuration, lowering toxic NOx levels in exchange for a drop in performance and fuel economy.” Since this discussion about what Volkswagen did, they have lost a lot of their business. Consumers are not going to want to buy vehicles from this company any more because of how much money it would cost them to get their car fixed.

The main motivation behind CSR is the potential benefits that firms can derive when they are perceived by their stakeholders as a socially responsible organization (Tian, Wang, and Yang, 2011). In other words, the benefits of a certain company will be harmed if customers perceived its irresponsible activities. As an example, after the exposure of its emission scandal, Volkswagen, which was viewed as a responsible beforehand, encountered a 37% stocks price slump within two days. However, good CSR activities can still cause positive influence on Volkswagen’s reputations to minimize the lost in its reputation. After the scandal, Volkswagen said that it would recall around 8.5 million diesel-engine cars in the European Union and it would give $1,000 to some owners of diesel VW and Audi cars that do not achieve the emissions limits in the United States. As a positive results of the mentioned CSR actions, suggested by CNBC on October 20th 2015, over two thirds of German consumers, out of the 1,000 German adults questioned in an online survey, believe that the embattled German carmaker still builds "outstanding" cars and that the emissions scandal was overdone. Motivated by the importance of CSR in practice, many researchers have investigated the potential effect that CSR has on customer behavior and response, such as customer satisfaction (e.g., Luo and Bhattacharya,

Back in September of 2015 “ the Environmental Protection Agency (EPA) found that many VW 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 US” (Hotten). Based on our text the management ethics organizational characteristics, ethical norms, motives, goals, orientation toward law and strategy can fall into the three approaches to management ethics: immoral, amoral and moral. While the VW scandal is a complex case ultimately, “the EPA has said that the engines had computer software that could sense test scenarios by monitoring speed, engine operation, air pressure and even the position of the steering wheel. When the cars were operating under controlled laboratory conditions - which typically involve putting them on a stationary test rig - the device appears to have put the vehicle into a sort of safety mode in which the engine ran below normal power and performance. Once on the road, the engines switched out of this test mode” (Hotten).

Volkswagen plans to grow in Chinese and Indian markets (De Moraes, 2016). They also aim to double sales in America by 2018 (Kresge and Weiss, 2015), by following their "clean diesel" strategy (The Economist, 2015a: 15). Nevertheless, the 2015 emissions scandal destroyed this ambition (Farrell, 2015). Widespread recalls and suspended sales led to a loss of market share (Kresge and Weiss, 2015) and fostered a bad reputation within America (The Economist, 2015b).