Essay on Volkswagen Ethical Scandals

Introduction

Business social responsibility and ethics is a common area in modern-day society. It is well established that this is an area that has been receiving enormous attention in modern-day society. Goel and Ramanathan (2014) in a study that intended to establish the concepts of corporate social responsibility outlined that there have been numerous studies in this area in the past years. The attention in this area is triggered by the importance that the topic has in governing the activities of companies in modern-day society. On the other hand, the Stanford Encyclopedia of Philosophy (2016) outlined that business ethics is an important aspect of modern-day society. It is a topic that is relevant to most people and entities in society. Businesses are always concerned with offering goods and services for profits. Due to this arrangement, a conflict may arise where a company only focuses on maximizing the profits and rules out some ethical conduct standards. On the other hand, studies have outlined that leaders in an organization play a vital role in ensuring that the actions of the organization are in line with all the required standards such as ethical standards.

One of examples that depict th concepts of corporate ethics and social responsibilities is the Volkswagen emission scandals as outlined by McCormick (2018). Despite outstanding periormane in the past years, previous sources have outlined that the company has been manipulating their cars to pass emission tests while the vehicles have been polluting the air. This became a famous sandal that led to the prosecution of some leaders. It is well established that there are numerous aspects that led to this. Below table presents a SWOB analysis of the company based on the organizational structure.

Based on the above strengths, weaknesses, opportunities and barriers, it is well established that the company has been striving to get back its position regardless of these scandals. Below is the detailed information about the strengths, weaknesses, opportunities and barriers (SWOB) of the organization.

Barriers of the Volkswagen Company Actions

From the case of the Volkswagen Company, it is well established that the company participated in the decisive activities to maximize their profits. It is due to their claims that the company achieved great sales in the market. In light of this concept, the company called this initiative strategy 2018. However, from these actions, it is well established that the company also failed in numerous ways. This brings forth the counter-argument of the concepts of corporate social responsibility. As previous studies established that companies have to focus on maximizing profits, it is well established that ethical conduct is also as important as maximizing the profits by the organization. This is also the case in the Volkswagen Company. It is well established that if the company considered that their product would pollute the environment, they would re-think their decisions however harsh the consequences would be. Therefore, it is well established that Volkswagen as a company failed to attain its goals due to these cases on their decisive actions.

Companies’ decision making is often the responsibility of the executive team. On the other hand, strategies of increasing sales and maximizing profits have to be developed with the leaders in the organization. However, ethics among the leaders and the members of the executive team plays a vital role in ensuring that the overall operations by the organizations are up to standards as per the required standards of ethics. According to Brown and Trevino (2006), the aspect of ethics and leadership is an area that has not been receiving enough attention in recent years. It is well established that leaders can, therefore, focus in this area for them to increase efficiency in their leadership operations. First and foremost, it is well established that there have been numerous scandals on business operations. Studies have previously linked this status in the corporate world with the nature of leaders and their ethical standards.

Executive Aspects and Company opportunities

Badaracco (1992) outlines the aspects of the roles of executive members in an organization. It is well established that the members of the executive teams in organizations play a vital role in shaping the actions by the organizations. Most of the cases of unethical business operations are always linked to some actions by the leaders in the organization. This is a factor that was also observed in the Volkswagen Company’s cases. From the case investigated, it is well established that this was an aspect that came out too light in the cases by the company. Due to the accusations made in the court about the company, Winterkorn, the CEO of the Volkswagen company, and Oliver Schmidt the company’s top emissions compliance manager appeared in court for these accusations. This was a case that was considered fraud and the accusations outlined that the company’s executive’s committed these acts intentionally to boost the sales of their product.

Different sources have outlined the possibility of firms engaging in unlawful acts to make more income. This is a common concept in society. Most of the companies are profit-making institutions. They engage in their respective activities to make profits. This is a factor that can bring forth the conflict of interest when it comes to corporate social responsibilities and business ethics aspects. Some companies always focus on maximizing profits Ad in the long run, the companies end up ruling out some basic ethical conduct. Kolstad (2007) outlined that there are great reasons as to why companies should not always focus on maximizing their profits. According to Kolstad (2007), studies from the past years have attempted to establish that corporate executives should focus on maximizing the profits for the shareholders. Since the famous sandals of the organization, Volkswagen Company has to ensure that the upcoming leaders are up to standards in terms of ethical requirements.

Corporate Structure (Weakness)

The study by Brown and Trevino (2006) outlined that the personal qualities and the factors like Authentic, spiritual, and transformational leaders play a vital role in ensuring that leaders have high ethical standards. From the case presented by McCormick (2018), it is well established that the leaders of the Volkswagen Company appeared in court to represent the company. This is because the unethical acts occurred in the organization on their watch. First and foremost, the study presents the corporate structure of the organization as an unusual one. The Volkswagen company was governed by a mix of family members, labor finance, and government ownership. This structure of governing the organization has been the main root of corporate problems and unethical behaviors. According to a corporate governance expert, this company was governed like a soap opera ever since it started.

This was considered as one of the possible factors that greatly contributed to the unethical acts by the organization. On the other hand, the investigations outlined that the unions and the owners of the company we’re working closely together in the organization. This brought forth the influence of committing unethical acts for corporate financial gain. On the other hand, the company leadership was focused on the labor party and this caused the executive members of the company to neglect some business factors. In addition to all the above aspects, it is well established that the board had no efficient decision-making factors. It was argued that the board did not make independent decisions; therefore, the company’s decisions were made based on the company’s leadership and decision makings constructs. The influential structure greatly contributed to unethical actions. From this setup, it is well established that the sectors in the organizations that were supposed to take care of the company’s ethical needs would look the other way round when it comes to maximizing the profits (Stewart, 2015).

Strategy 2018 (Opportunity)

Winterkorn announced that Strategy 2018 was a strategy that was initiated to assist boosts Volkswagen’s sales of diesel cars. According to the market analysis conducted by the company, the CEO Winterkorn outlined that the strategy 2018 was a term used to refer to a plot to achieve the greatest sales in the organization; however, the success of this plan entirely depended on the ability of the company to sell their products in the United States. Chairman Piech forcefully backed the plan. This is a plan that involved dramatic improvements in the sales of the organizations and the logs of the Volkswagen cars. This would, therefore, call for the organization to increase its sales by ten million cars per year. On the other hand, the standard of diesel car operation in the United States is that the car should not emit much gas to pollute the environment. According to Grojean, Resick, Dickson, and Smith (2004), organizations play a vital role in establishing a value-based climate. Leaders in organizations have to participate actively in promoting the climatic conditions while maximizing production.

From the scandals of the organization, it is well established that the company manipulated the computer codes in their cars to give out false results on the number of emissions produced by the car. According to the Volkswagen executives, the company would achieve top rank and defeat Toyota and GM if it focused on selling their products in the American market. It was argued that this is a factor that would be boosted by manipulating the values such that the cars are accepted in the environmentally-conscious segment of the American republic. In line with the corporate responsibilities of ensuring that its operations and products do not pollute the environment, it is well established that the Volkswagen Company was not up to standards in terms of their ethical conduct. In addition to that, the corporate leaders play a vital role in ensuring that the operations of the organizations are in line with the climatic and the basic environmental needs of the countries in which the companies operate. Therefore, this is a factor that presents the Volkswagen Company as an unethical company.

Key (1999) brings forth the aspect of organizational culture in the management of the organization. It is well established that corporates have a specific culture. This presents the fact that companies can be identified by their culture. It s well established that companies can be considered ethical as per their modes of operation. From the operation of the Volkswagen Company, it is evident that the company had a strange organizational culture. First and foremost, the structure of the organization did not support proper operations in terms of ethical standards. On the other hand, it is well established that the actions by the organization to manipulate the readings of the emissions to maximize profits were not ethical. I addition to that, the announcements by the CEO of the organization on Strategy 2018 presents the fact that the company has a profit-making as its priority, This means that the organization can rule out some important aspects just to make profits.

Conclusion

From the Volkswagen company case, it is well established that companies and ethics are a common concept that scholars as well as specialists have to expound on. Companies are often money-making institutions. Studies have outlined that the executives of a company have to come up with efficient strategies to maximize profits. However, this concept can be viewed from different angles. The fact that companies can overlook other important needs and focus on profits is well documented. On the other hand, studies have outlined that company leaders play a vital role in ensuring the operations of the organization are ethically correct. Also, the culture of the organization and its structure has great potential for influencing decision making. All these factors are well presented in the case of the Volkswagen scandals. It is well established that the Volkswagen Company failed in its responsibilities due to all the above aspects. Therefore, using the SWOB analysis of the organization, it is well established that the main causes of the Volkswagen problems stems from leadership methods and company culture.

References

Badaracco, J. L. (1992). Business Ethics: Four Spheres of Executive Responsibilities. Spring, California Management Review, 34(64), 64.

Brown, M. E., & Trevino, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly, 17, 595 – 616. DOI:10.1016/j.leaqua.2006.10.004

Goel, M., & Ramanathan, P. E. (2014). Business Ethics and Corporate Social Responsibility – Is there a Dividing Line? Procedia in Economics and Finance. 11, 49-59. https://doi.org/10.1016/S2212-5671(14)00175-0

Grojean, M. W., Resick, C. J., Dickson, M W., & Smith, D. (2004). Leaders, Values, and Organizational Climate: Examining Leadership Strategies for Establishing an Organizational Climate Regarding Ethics. Journal of Business Ethics 55, 223–241.

Key, S. (1999). Organizational Ethical Culture: Real or Imagined? Journal of Business Ethics, 20, 217–225,

Kolstad, I. (2007). Why Firms should not always maximize profits. Journal of Business Ethics, 76, 137 – 145. DOI 10.1007/s10551-006-9262-7

McCormick, E. (2018). Volkswagen’s Emission Scandals. How Could it Happen? Instead. The business school of the World. INI465.

Stanford Encyclopedia of Philosophy (2016). Business Ethics. Retrieved from https://plato.stanford.edu/entries/ethics-business/

Stewart, J. B. (2015). Problems at Volkswagen Start in the Boardroom. New York Times. Retrieved from https://www.nytimes.com/2015/09/25/business/international/problems-at-volkswagen-start-in-the-boardroom.html