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a) Explain the scandal, and if you think Volkswagen’s response was adequate?

The Volkswagen Emissions Scandal, broadly called Dieselgate erupted into public view in September
2015 when America Environmental Protection Agency disclosed that Volkswagen had established
software in its diesel engines that would locate after they were being tested for emissions. During
checking out, the software program would spark off the automobile's emission controls to fulfill felony
requirements. However, under everyday using situations those controls were decreased resulting in
emissions as much as 40 instances the authorized limits for pollution inclusive of nitrogen oxides, which
might be dangerous to human health and the surroundings.

The Mechanism of Deception

This deceit concerned around eleven million cars global among 2009 and 2015 and encompassed
numerous VW models, along with Audi and Skoda. The software program, known as a "defeat tool,"
allowed Volkswagen to falsely skip the emissions assessments at the same time as imparting customer’s
vehicles that boasted high performance and low emissions as selling points elements that were pivotal
in influencing consumer selections (Hotten, 2015).

Volkswagen's Response to the Scandal

Volkswagen's reaction to the discovery included numerous steps:

1. Public Apologies: Shortly after the scandal broke, Volkswagen’s then-CEO, Martin Winterkorn,
issued a public apology and admitted the business enterprise had broken accept as true with of
its clients and the general public.
2. Executive Changes: Winterkorn resigned inside days of the scandal's outbreak, and VW pledged
to cooperate with investigators and begin an internal inquiry.
3. Recalls and Financial Compensation: Volkswagen devoted to recalling millions of affected
motors for upkeep to fulfill emissions standards and set apart billions of euros to cover repairs,
criminal claims, and penalties.
4. Legal and Financial Settlements: In 2016, Volkswagen agreed to a large agreement that included
approximately $10 billion to buy again as much as 475,000 affected cars inside the U.S., almost
$five billion to help environmental packages, and $1.2 billion to its U.S. Dealership network.
Globally, prices associated with legal settlements and fines are expected to exceed $30 billion
(Hotten, 2015).

Adequacy of Volkswagen’s Response

Evaluating the adequacy of Volkswagen's response involves considering several factors:

 Timeliness and Transparency: While Volkswagen acted unexpectedly in phrases of leadership

modifications and public apologies, grievance changed into levied on the enterprise for not
being obvious to start with about who was liable for the installation of the defeat devices and
the way excessive up the selection went within the agency.
 Financial Compensation and Rectification Measures: Volkswagen’s financial compensations and
commitments to keep in mind and restore vehicles were big. These actions showed a willingness
to rectify the technical problems and compensate affected events. However the response did
 now not completely deal with the lack of customer agree with and the long-time period
environmental harm because of the extra emissions.
 Changes to Corporate Practices: In reaction to the scandal VW vowed to overtake its corporate
governance and compliance systems. They pledged to decorate transparency and make stronger
their engineering processes. However skeptics argue that deep cultural and operational shifts
are required to repair agree with and save you future misconduct suggesting that VW's
measures, even as tremendous may not be sufficient to cope with the systemic problems that
allowed the scandal to arise.

b) Some commentators contend that there was a problem with Volkswagen’s organisational ethics,
reflect on this.

The Volkswagen Emissions Scandal, additionally referred to as "Dieselgate," not only exposed regulatory
screw ups and technical deceit but also highlighted profound issues in Volkswagen's organizational
ethics. This scandal activates an examination of the ethical subculture inside Volkswagen, where
systemic pressures and values clearly facilitated a breach of legal and moral requirements.

Ethical Lapses at Volkswagen

1. The setup of defeat devices in tens of millions of Volkswagen diesel engines represents a
deliberate try to steer clear of environmental laws and lie to customers, regulators, and the
public about the performance and environmental impact of its motors. This act was now not a
result of oversight or a single worker's choice; it contemplated a broader organizational mindset
characterized by way of a sequence of moral lapses:
2. Profit over Principles: At its center, the scandal turned into fueled by using a corporate method
intensely focused on marketplace dominance. Volkswagen aimed to grow to be the sector's
largest automaker, and this ambition may also have driven the enterprise to prioritize sales and
profitability over compliance and moral requirements. The corporation’s competitive targets
and boom ambitions pressured employees to deliver effects by using any means important,
which include unethical practices (Moon, 2018).
3. Systemic Dishonesty: The use of defeat gadgets required expertise and collaboration
throughout diverse levels of the corporation, implicating control in a systemic breach of accept
as true with. This dishonesty shows a way of life in which unethical conduct was either implicitly
recommended or willfully omitted by way of senior leaders, undermining the ethical standards
predicted of a worldwide agency (Buckingham, 2018).
4. Weak Ethical Controls: The extent and duration of the scandal (2009-2015) advise that
Volkswagen lacked sufficient mechanisms to detect and save you unethical practices. This
deficiency factors to a company governance structure that did not correctly put in force
compliance with moral norms and regulatory necessities.
5. Culture of Fear and Silence: Reports from inner Volkswagen suggested a tradition wherein
employees feared repercussions for speaking out in opposition to corporate misdeeds. This
surroundings stifles the loose flow of facts and enables unethical decisions to go unchallenged,
compounding the hazard of corporate misconduct (Moon, 2018).

Reflection on Organizational Ethics

  Corporate Responsibility: Corporations like Volkswagen have a responsibility to their
stakeholders which includes customers, employees, shareholders, and the groups they function
in to behavior enterprise ethically. Volkswagen's actions betrayed these stakeholders' accept as
true with, specifically harming clients who bought their vehicles below fake pretenses and
groups impacted by using extended pollutants.
 Ethical Decision-Making: Ethical decision-making in business must align with both legal
requirements and ethical ideas. Volkswagen’s selection to set up defeat gadgets became legally
wrong and morally indefensible, showcasing a profound failure in moral selection-making on the
corporation.
 Reputation and Trust: Trust is a crucial asset for any business, mainly in industries reliant on
consumer self-assurance. Volkswagen’s unethical movements no longer most effective resulted
in sizable financial losses however also broken its recognition, a setback that could take years, if
now not many years, to recover fully.

Broader Implications for Organizational Ethics

The Volkswagen scandal serves as a stark reminder of the significance of ethical integrity in business
operations. It underscores the need for companies to foster ethical cultures that do extra than comply
with laws however also promote requirements of honesty and integrity that exceed the ones
requirements. For Volkswagen, rebuilding its moral photo involves profound modifications in its
corporate lifestyle, ensuring transparency, accountability, and ethical compliance are on the heart of all
operations.

c) Read this article on Culture at Volkswagen: and reflect on whether there was also a problem with
the organizational culture at Volkswagen.

The Volkswagen Emissions Scandal, which broke in 2015, gives a revealing case look at into how
organizational tradition can force moral lapses and contribute to company malfeasance. According to
Brandford Shadrach Adams in his analysis, "Understanding Ethical Conduct of International Business
Organizations through Cross-Cultural Lens" (2019), the cultural dynamics inside Volkswagen played a
pivotal function in fostering an environment wherein unethical practices consisting of the emissions
dishonest may want to arise.

Analysis of Volkswagen's Organizational Culture

1. Culture of Performance at Any Cost: Adams points out that Volkswagen's way of life was closely
centered on overall performance and handing over consequences, regularly at any price. This intense
strain to meet excessive performance goals, combined with a reimbursement machine that rewarded
assembly those objectives, likely endorsed personnel to reduce corners and have interaction in unethical
behavior to acquire favored consequences.

2. Aversion to Dissent and Debate: The organizational environment at Volkswagen turned into referred
to to be averse to discuss and dissent. Adams highlights that this cultural trait discouraged open speak
and important discussion, which are crucial for moral choice-making. The lack of open verbal exchange
channels intended that employees could have been less probably to report or challenge unethical
practices out of fear of retaliation or career repercussions.
3. Autocratic Leadership Style: The management fashion at Volkswagen become described as
autocratic, with decision-making tremendously centralized on the top levels of control. Such a
management approach can stifle employee enter and create a climate wherein the ethical implications
of decisions are not safely considered or voiced. This fashion of management may additionally have
contributed to a place of job surroundings where the defeat tool decision may be made and carried out
without sufficient moral scrutiny.

4. Absence of a Whistleblowing Culture: A good sized cultural trouble diagnosed through Adams
changed into the near absence of a whistleblowing way of life inside the employer. The cultural norms
at Volkswagen did no longer encourage or guard individuals who sought to report wrongdoing. Without
powerful mechanisms and cultural guide for whistleblowing, personnel might have felt compelled to
stay silent or complicit within the face of unethical practices.

Reflecting on Organizational Culture and Ethics

The case of Volkswagen underscores the essential function of organizational lifestyle in shaping worker
conduct and moral practices. A subculture that prioritizes consequences over ethical techniques,
discourages open communication, centralizes decision-making, and fails to guide whistleblowing can
grow to be a breeding floor for unethical behavior.

Broader Implications for Corporate Governance

This evaluation suggests that for Volkswagen and indeed any agency to save you future moral breaches,
there should be an essential shift in corporate tradition. Companies ought to try to create environments
where ethical behavior is valued and rewarded, open verbal exchange is endorsed, and moral dilemmas
can be mentioned without fear of reprisal. Leadership ought to learn not handiest to understand the
significance of moral choice-making however additionally to foster a tradition that promotes these
values continuously.

D) What recommendations might assist their board in keeping off comparable scandals within the
destiny?

To save you future scandals much like the emissions cheating debacle, the Volkswagen board need to
enforce complete and systemic changes. These guidelines need to awareness on overhauling the
organizational subculture, strengthening compliance mechanisms, and ensuring transparency and
responsibility in all components of operations.

1. Revise Corporate Governance Structures

Enhance Board Oversight:

 Establish an impartial ethics committee inside the board to supervise compliance with moral
standards and regulatory necessities. This committee must have the authority to audit
organization practices and keep management chargeable for their movements (Ethical
Dilemmas: How Scandals Damage Companies, 2024).

Diversify Board Composition:

  Introduce extra outside directors with diverse backgrounds and know-how in company ethics,
sustainability, and purchaser safety. This diversity can offer clean views and essential oversight
of management choices.

2. Cultivate an Ethical Organizational Culture

Embed Ethical Values:

 Develop a clean, complete code of conduct that outlines anticipated behaviors and moral
practices for all personnel. This code must be essential to all schooling applications and
embedded in the business enterprise's operations.

Promote a Speak-Up Culture:

 Encourage an organizational subculture wherein employees sense secure to record unethical

behaviors without fear of retaliation. Establish robust whistleblowing rules and nameless
reporting channels which are effortlessly available to all employees (Ethical Dilemmas: How
Scandals Damage Companies, 2024).

Regular Ethical Training:

 Implement ongoing education programs that now not most effective recognition on compliance
with laws and guidelines however also on moral selection-making and company social
responsibility. Training should be obligatory for all tiers of the company, in particular control.

3. Implement Rigorous Compliance and Monitoring Systems

Enhance Internal Controls:

 Develop stringent inner controls that screen compliance with environmental standards and
other regulatory necessities. Use generation to enhance the accuracy and effectiveness of these
controls (Heidemeyer, 2024).

Regular Audits:

 Conduct everyday inner and external audits to evaluate compliance with moral standards and
regulatory necessities. Audits have to be conducted with the aid of unbiased parties to ensure
objectivity.
5. Strengthen Transparency and Accountability

Transparent Reporting:

 Commit to transparency in reporting practices, especially concerning environmental effect and

compliance with regulations. Regularly post sustainability reviews which are independently
confirmed.

Accountability Mechanisms:

 Implement clear results for moral breaches and compliance failures. Ensure that these are
enforced continually throughout all levels of the company (Heidemeyer, 2024).

5. Leadership Commitment to Ethical Practices

Lead via Example:

 Senior leaders, inclusive of the board and government management, have to exemplify the
organization’s ethical standards. Their conduct and selections must constantly mirror the values
espoused in the enterprise’s code of behavior.

Incentivize Ethical Behavior:

 Align performance metrics and incentives with moral results. Reward selections and behaviors
that sell lengthy term sustainable success over brief-term profits.

References

Hotten, R. (2015, December 10) Volkswagen: The scandal explained, BBC News. Available from:
https://www.bbc.com/news/business-34324772

Volkswagen’s Emissions Scandal: Lessons for Corporate Governance? (Part 1) (2016, May 17), Oxford
Law Blogs. Available from: https://blogs.law.ox.ac.uk/business-law-blog/blog/2016/05/volkswagen
%E2%80%99s-emissions-scandal-lessons-corporate-governance-part-1

Moon, C. J. (2018) Economics and Ethics. Applying lessons from ENRON to the VW emissions scandal,
ResearchGate. Available from:
https://www.researchgate.net/publication/320234881_Economics_and_Ethics_Applying_lessons_from_
ENRON_to_the_VW_emissions_scandal

Buckingham, I. (2018, March 9) If Volkswagen is suffering, it’s time you took culture management very
seriously. Available from: https://www.linkedin.com/pulse/volkswagen-suffering-its-time-you-took-
culture-very-ian-buckingham/

The purpose of a healthy company’s culture: The Volkswagen example [no date], COSMOS Compliance
Universe. Available from: https://compliancecosmos.org/purpose-healthy-companys-culture-
volkswagen-example

Heidemeyer, C. (2024, April 24) 54 spaßige Retrospektive Methoden für agile Teams in 2024, Echometer.
Available from: https://echometerapp.com/en/retrospective-ideas-agile/

Ethical Dilemmas: How Scandals Damage Companies (2024, January 12), Western Governors University.
Available from: https://www.wgu.edu/blog/ethical-dilemmas-how-scandals-damage-
companies1909.html