Business Ethics Issues Of Volkswagen

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Business Ethics Issues Of Volkswagen

INTRODUCTION

This essay will provide a detailed discussion on the emission scandal of Volkswagen which has involved legal as well as ethical issues. Suitable recommendations will be provided for the organisation based on theoretical models to avoid such issues in future.

UNETHICAL BEHAVIOUR OF VOLKSWAGEN

Volkswagen has been accused of violating the emission-related regulations in its cars. The company has installed emission software on its 10.5 million of its diesel cars. These are known as ‘defeat devices’ tends to detect if they were tested. It manipulates the performance and changes the results as per the limits set by the Environmental Protection Agency. However, under normal driving, the software gets switched to another mode which alters the exhaust gas recirculation, injection timing and fuel pressure. This model emits nitrogen oxide that is said to pollute the environment and cause lung cancer. The emission is higher by the federal limit by 40 times (Atiyeh, 2019). Earlier, Volkswagen has been performing marketing activities for its diesel cars at a huge level boasting the low level of emissions. EPA has found that Audi, Jetta, Beetle, Passat and golf are some of the models which have this emission software that includes 11 million cars in countries such as US, UK, Italy, France, Canada, Germany and other countries. Volkswagen has admitted that it has cheated the EPA regulation with the defeat devices. As a result, the company has lost the trust of the public and its customers. The scandal has made the environmental groups, regulators and politicians throughout the world to question its legitimacy. Volkswagen has to recall the affected vehicles in all the countries and the scandal has made the market shares to fall drastically (Hotten, 2015). Therefore, it could be understood that Volkswagen was involved in cheating the regulations. Emissions can affect the health of people and can affect the environment. The scandal has resulted in the loss of market share, trust and reputation of the organisation.

Ethical issues in business happen due to lack of awareness on the importance of ethics. The foundational values for identifying ethical issues are integrity, honesty and fairness. Fraud is one of the ethical issues in business which includes purposeful communication which manipulates or deceives and results in harm to others. It can also be a crime and usually includes accounting fraud, marketing fraud, fraud triangle, puffery and implied falsity (Said et al., 2017). Legal actions have been taken against Volkswagen and consumers have been seeking compensation for cheating on the emissions. More than 470,000 car owners of these diesel-powered vehicles are involved in the case. Already the company has spent over 30 bn for legal activities, compensation and fines after the scandal. Top management of the company has been accused to be involved in fraud for their approvals to fit the cheating devices in the vehicles (Jolly, 2019). Hence, it could be understood from the above scandal of Volkswagen that its leadership has failed to realise the importance of ethics where the values such as integrity, honesty and fairness have been lacking in the activities of the company. This has resulted in ethical issues as it has purposefully misled the consumers by fitting the cheating devices. Also, the regulatory standards have not been met and it has falsified information on emission values. Such activities have harmed the environment as well as society. Therefore, Volkswagen has to avoid involving in such unethical practices in future to ensure its survival in the industry.

RECOMMENDATIONS FOR FUTURE

Ethical decision making

Normative perspectives of ethics can be influential in aspiring followers with ideal goals. To ensure ethical decision making, it becomes important to recognise any ethical issues in a situation before making decisions. The facts are to be obtained, alternative actions have to be evaluated, and decisions could be made. It has to be then tested and the outcomes have to be reflected (Selart & Johansen, 2010). The management of Volkswagen has to incorporate normative perspectives of ethics in its decision making so that such issues could be avoided in future.

Incorporate Ethical values

Volkswagen has to enforce ethical values in its further practices. It can produce zero-emission cars that can reduce the emission levels by a considerable value. The company can emphasise on investing in electric cars with high power batteries. Several manufacturers established around the world for producing batteries could be influential in creating jobs. The EPA regulations have to be followed strictly without any cheating devices and have to be communicated with transparency (Mansouri, 2016). Volkswagen has to incorporate ethical values and strive to avoid any negative behaviour that can affect its reputation. It can involve creating electric cars that can serve the interest of society.

Ethical leadership

Ethical leadership makes the leaders demonstrate conduct by responsible and unselfish behaviour by the following integrity. The importance of ethics has to be realised and the leader has to spread the word to his followers. 4V model of ethical leadership emphasises on values, vision, voice and virtue to influence the actions of followers towards the common good by aligning the internal beliefs and external behaviours (Ahmad, Gao & Hali, 2017). Therefore, Volkswagen has to ensure that the leadership team is ethical with responsible conduct. Stringent measures have to be enforced for assuring the accountability of the leaders in senior management since the approvals for the cheating devices has involved their role as well. Thus, the 4V model could be useful for Volkswagen to ensure that the leaders serve as a guide for the practices in the organisation and prevent such issues in future.

CONCLUSION

From the above analysis, it could be concluded that the Volkswagen emission scandal is a major ethical issue which has compromised all the elements of ethics and acted in the interest of profit maximisation. The cheat devices installed have manipulated the values against the EPA standards and is legally accused as criminal behaviour. Such ethical issues could be avoided by Volkswagen in future through ethical decision making, ethical values and ethical leadership.

REFERENCES

Atiyeh, A. (2014). Everything You Need to Know about the VW Diesel-Emissions Scandal. Retrieved 08 Feb 2020 from, https://www.caranddriver.com/news a15339250/everything-you-need-to-know-about-the-vw-diesel-emissions-scandal/
Ahmad, I., Gao, Y., & Hali, S. (2017). A Review of Ethical Leadership and Other Ethics-Emission Test. International Journal of Science and Engineering Applications, 5(4), 211-216
Hotten, R. (2015). Volkswagen: The scandal explained. Retrieved 08 Feb 2020 from, https://www.bbc.com/news/business-34324772
Jolly, J. (2019). Volkswagen emissions scandal: mass lawsuit opens in Germany. Retrieved 08 Feb 2020 from, https://www.theguardian.com/business/2019/sep/30/volkswagen-emissions-scandal-mass-lawsuit-opens-in-germany.
Mansouri, N. (2016). A Case Study of Volkswagen Unethical Practice in Diesel Related Leadership Theories. European Scientific Journal, 13(29), 10-22.
Said, J., Alam, M.M., Ramli, M., & Rafidi, M. (2017). Integrating ethical values into fraud triangle theory in assessing employee fraud: Evidence from the Malaysian banking industry. Journal of International Studies, 10(2), 170-184.
Selart, M. & Johansen, S. (2010). Ethical Decision Making in Organizations: The Role of Leadership Stress. Journal of Business Ethics, 99, 129–143