Volkswagen is one of the companies which faced an internal scandal of ethics in 2014 due to which the integrity of business was dented deeply. The facts of the case revealed that Dan Carder was conducting different emission tests on cars of different brands with a team. The investigation against the company was started when two different car models of Volkswagen were tested. It was revealed the company’s diesel cars were equipped with defeat devices. According to the emission standards in the country, there is a responsibility to every brand in the market to install software in cars with the help of which diesel exhausting could be cleaned (Lynch & Santos, 2016).
It had been observed in the case of Volkswagen, when cars were passed through emission testing process, the software used in the cars was active, but during test it had been seen that software was shut off for improving the performance and economy of fuel. Because of this, it was found that the cars of Volkswagen were releasing 40 times more nitrogen oxide in the air as compared the standard amount of emission of nitrogen oxide and eventually noted as wreaking havoc on the environment. When further testing was performed, it was revealed that the company had embodied this software in 14 models for years. Due to this fault and ethical issue for the company, over 11 million vehicles were recalled by the company. According to the reports, only in the U.S. around 580,000 vehicles of the company were recalled while in Europe 10 million vehicles that had been recalled. The important aspect of the case was that the company took appropriate steps when this scandal was spread publicly (Tabuchi & Ewing, 2016).
The company was trying to take proper measures to correct the mistakes to cope with the damage and loss incurred to the overall image of the company in the international market. There was a greater level of loss faced by the company’s stakeholders in different ways. The effects on stakeholders ranged from a tarnished reputation, environmental issues, changes in the stock market and lost jobs. The facts of the case were that the company lied to the government and the customers regarding the quality of the car’s diesel engine for making higher sales to generate more profit (Gates, Ewing, Russel, & Watkins, 2017).
It is important to note that certain responsibilities of the company regarding the global environment were disregarded by the company. In this way, customers were misguided dishonestly by the company to buy the cars and shareholders were attracted dishonestly to buy the stock, which showed that the company was using unethical ways to increase the sales of the company (Neate, 2015).
An Ethical Evaluation of the Case
By consideration of measures taken by the company, in this entire situation, it can be said that the actions taken by the company are not justifiable. The company never faced such a level of ethical issue by ignoring development of quality diesel engine in the cars and giving priorities to increase the sales only to earn maximum revenue (Hotten, 2015). It is noted that the company sacrificed the integrity of the company as the image of the company was damaged because of such unethical things that could have been dealt with this problem properly by the company. But after many years passing, the company is still dealing with the aftermath of those decisions taken to increase sales. The company has not only lost the trust of investors and government, but also lost its customers. By considering the ethical responsibilities of businesses, it is clear that the company and its directors had the ethical responsibility to manufacture vehicles according to prevailing standards in the local and international market. Before ethical evaluation of the case, it is important to consider important approaches that can be used by the company for taking appropriate decisions in this unethical situation (Coglianese & Nash, 2017). These are given below:
- Utilitarian Approach: according to this approach decisions should be taken that produce the greatest goods for the greatest for example, the actions of Volkswagen to use defeat devices was unethical because it deceived the customers and stakeholders of the company.
- Individualism Approach: when the best interest of individuals promoted then actions are considered ethical. For example, the best interest of stakeholders was not supported by the company by fixing a defeat device in the cars.
- Moral rights Approach: when the fundamental rights of people are not affected by the decisions that the decision is known as ethical. For example, the decision of the company was unethical because it was the basic right of customers to fully know the level of quality and standard of diesel engines (Stanwick & Stanwick, 2017).
According to the code of conduct, it is the responsibility of software engineer of a company to keep public interest in front of everything. The management and the engineers must maintain independence and integrity in making or taking professional judgments and decisions. It is the responsibility of the managers and the leadership of the company to promote an ethical decision-making approach in the company. Another important aspect of protecting the stakeholders from these types of ethical issues is that in the context of professional development, the professional bodies should have to contribute, and it is very important, to develop common standards for industry around the world. In the case of Volkswagen, the trust of stakeholders of a company can be gained back by the company by providing transparency and recognizing the ethical responsibilities (Ewing & Tabuchi, 2016).
References
Coglianese, C., & Nash, J. (2017, sep 15). The Law of the Test: Performance-Based. Yale Jurnal on Regulation, 34(2017), 33-90.
Ewing, J., & Tabuchi, H. (2016, July 21). Volkswagen scandal reaches all the way to the top, lawsuits say. https://www.smh.com.au/business/
volkswagen-scandal-reaches-all-the-way-to-the-top-lawsuits-say-20160720-gq9g3s.html
Gates, G., Ewing, J., Russel, K., & Watkins, D. (2017, March 16). How Volkswagen’s ‘Defeat Devices’ Worked. https://www.nytimes.com/interactive/2015/
business/international/vw-diesel-emissions-scandal-explained.html
Hotten, R. (2015, December 10). Volkswagen: The scandal explained. https://www.bbc.com/news/business-34324772
Lynch, L. J., & Santos, C. (2016, October 17). VW Emissions and The 3 Factors That Drive Ethical Breakdown. https://ideas.darden.virginia.edu/2016/10/vw-emissions-and-the-3-factors-that-drive-ethical-breakdown/
Neate, R. (2015, September 18). Volkswagen under investigation over illegal software that masks emissions. https://www.theguardian.com/business/2015/
sep/18/epa-california-investigate-volkswagen-clean-air-violations
Stanwick, P., & Stanwick, S. (2017). Volkswagen Emissions Scandal: The Perils of Installing Illegal Software. International Review of Management and Business Research, 6(1), 18-24.
Tabuchi, H., & Ewing, J. (2016, July 19). Volkswagen Scandal Reaches All the Way to the Top, Lawsuits Say. https://www.nytimes.com/2016/07/20/
business/international/volkswagen-ny-attorney-general-emissions-scandal.html
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