Scandals of Volkswagen and Mitsubishi †Free Samples to Students

Question: Discuss about the Scandals of Volkswagen and Mitsubishi. Answer: Introduction The report will discuss in detail about the Volkswagen and ethical scandal which represents the failures associated with corporate social responsibility. The organization has been deliberate enough to set out on a specific design which works as a means to completely circumvent the control of the emission with a stratagem also called at the top level with the focus on providing the organization with an advantage which is unfair by nature over all competitors that was known as the worlds top car manufacturer where the large part that is based on environmental friendly cars. This scandal or the rejection or any ethical standards in manufacturing like engineering that has led to lot of scandals like resignation of the CEO along with head of Audi in RD department and engine chief of Porsche (Rhodes, 2016). All these actions make it clear that the CSR department of the company must have understood the current course of actions. The chain of command further led to the growth of specific lin es associated with software that can put the engine into evaluation mode and later return it dirty mode are also based on record and where all the evaluation must be also be documented well. It is important to understand here that people who were responsible can be recognized and must be found at every level all across the company. Background information about Volkswagen Volkswagen is one of the leading automobile companies in the world and it is also considered as the biggest car manufacturing in Europe. The base of the company was established in Germany in a city called Wolfburg and there are almost three lakhs and fifty thousand employees that are able to manufacture almost twenty two thousand vehicles every day. The production sites are situation in places like Europe, Africa, Asian and USA. The car business was segmented in two groups Audi and Volkswagen from 2002. The first set of production consists of brands like Bugatti, Bentley and Akoda in first brand group. The second set group of brand consists of SEAT, Audi and Lamborghini (Smith and Palmqvist, 2016). The company also aspires to increase the focal point for the business along with decreasing the cost of production and also improves the level of profitability. The PDM which is also known as product data management for this company will be able to chain the team for engineering as well as operating at many locations that can enlarge all across the place. From the perspective of IT, there is high scale of division on geographic location which is actually apparent associated with information management, contact and accessibility. Key issues in Ethics/ CSR and its impact on Volkswagen business In 2015, the company has been featured as emission based scandal as a lot of mistakes that can be understatement and the justice department of USA has also sued the company in the federal court where the efforts taken by the company are questioned in order to restore the overall credibility as well as accusing the organization based on impeding along with obstructing the inquires and provide with incorrect information. The company also operating with staggering eleven million diesel vehicles because the 2009 model with software known or termed as defeat device utilized to cheat with number of tests in emissions when it was not evaluated and the vehicles manufactured by the company emit forty times above the permissible limit especially nitrogen oxide pollutants (Zhukova, 2016). This is why, scandal based on emissions that can be disturbing case based on systematic fraud by the corporate that has harmed consumers health, government and the well-being of people in the communities with Volkswagen has been provided the license to function. The influence of such crisis lasts for a very long period of time and the market value of the company is dropped by twenty three percent by the year 2015 and it is also important to admit to cheating associated with diesel emission. The sales of the company in USA have diminished almost twenty five percent by 2015. The total cost estimated in this case of scandal is above eight billions of dollar. It is also very challenging to fix all the invisible as well as long term harms for the company like the negative influence on trust of the brand along with its reputation. Level of customer satisfaction, morale as well as loyalty of employees and confidence of investors was also at stake. In addition, there are number of externality influences and there is also deception which is also perpetrated by the company and it also tarnish the goodwill of other competitors and corporations are also associated with many unrelated industries however, the company has also undermined the trust of people in the organization and raised the cynicism of consumers about the concern of green washing and other concepts (Jung and Park, 2017). The company has rigged or damaged the diesel engines to falsely test the emissions which are shocking by nature. It is important to understand here that the business leaders may not be right all the time but the case Volkswagen is on another level. The misbehavior by the corporate was baffling and the business sustainability and CSR or business leadership became a big question mark for the society. There is a popular myth in finances which says that the goal of the company is based on increasing the overall value of the shareholder. The myth is also based on believing that the present investors must care just about the price of the stock and it must not impact the society. Most probably this myth was based on the company decision to install this software called as defeat software from sudden market reaction where the share prices further dropped where billions were wiped from the overall value of the company. Therefore, all kind of unethical approach always destroys the overall value of share (Zhukova, 2017). Volkswagen actions to address the issues The company is still trying to cope up with the damage and the company can still salvage itself from the issue but the action taken by the company is not taking the right steps. There are multiple other examples which can be become a perfect example for the company like when Nike faced public outrage and mass boycott against labor practices adopted by the company and from that time the company has implemented worked on the image and it has turnaround completely. The company has also settled and forced a proper code of conduct for number of practices associated with labor and hire professionals from outside in order to audit the suppliers and raise the level of transparency for the labor based practices by discussing the performance for the yearly CSR activities. The company was later applauded for the current leadership that partners with independent sectors for companies like Fair Labor Association to focus on industry based changes or transformations in building sustainable chain o f supply (Zhukova, 2017). The company took an important step in rectifying situation, the company kept around six billion of Euros to utilize towards fixing the automobile so that it can comply with the standard of pollution. This also seems as a big amount of money and in real life, it is almost equal to half year profit of the company. The company is also facing a lawsuit of three billion euro and could possibly face a lot of prosecutions. In fact in US, the company is also facing many types of fines which are raising the amount of compensation. It is also important to understand that the market of Europe has taken almost forty percent of the profit of the company while US only account for six percent of the current unit sales. Therefore, the challenges in the market are much more crucial as per the agenda of the company. At the same time, standards for diesels in this continent are not properly tested as well as enforced for USA. The company has provided so many apologies; compan y has also announced a recall for all the automobiles with diverse engines of TDI. The top managerial staff like CEO had to resign immediately and other managers were also suspended after the scandal (Zhukova, 2017). The head office of the company in Germany and other parts of the world were also raided and investigated. In addition, it is also impossible to say that just a few people were the active part of manipulating the present software. Most probably, the company has taken a bad or wrong decision which was later accompanied by wrong strategy however; the scandal was very big to call it as an accident. Companies also has an accountability to be more honest as well as open to owners should be responsible for the stakeholders. At the same time, this was more than a simple issue for a simple solution. This case consists for more complicated theories that also deal with the varied theories. Recommendation Re-branding: in last so many years, the company has become an international brand and it is one of the biggest car organizations all across the world. There are some companies who also believe that scandal must be forgotten very soon and other directors of the company have discussed the possibility of reinitiating the organization under new brand name (Crte, 2016). When the company reinitiate with new name, this may further improve the level and image of the brand to have an organization which is small and more effective than the present group of Volkswagen. The concept of re-branding further makes it easier for the organization to speed up the level of effectiveness program with potential to save the image of the company. The concept of rebranding can be very expensive by nature and it is also a risky business, since it can decrease the negative publicity that has also caused by any kind of scandal. It is also important to understand here the concept of rebranding must aim on so man y exterior transformations however it also changes in different aspect of the organization. Joining an agency for independent verification: the company has an internal team to evaluate emission of vehicles and the company must also partner with other agency for independent verification in order to build the trust of the consumer. There are some agencies where the company should consider partnering up and it includes the World Business council for development in a sustainable manner along with associations like Fair Labor Association, Federal Trade commission and many more (Zhang et al., 2016). Posting a Bond: this method should also regain the trust of consumers is for the companies to post a bond that make sure in the public that this kind of thing will never happen again. It is also an indicator for trust and credibility for the people of the company. The company can also state that if there is any kind of fraud done again by the company or within boundaries of the company, they will have to pay compensation for it to European Commission automotive industry (RAHUMAN, 2017). This will further encourage the regulators of European Commission should be strict and the audit must be thorough by nature. The money should also be utilized towards the RD associated with green automobiles with decarburization for so engines in a conventional manner and IT infrastructure. The bond also requires to be established at with high amount so that customers will understand that the company must regret the fraud or cheating the standards for emissions. The company is big with so many assets and many popular brands and therefore to finance the bond, the company should sell one of their brands. Conclusion This case of Volkswagen is an example on how any businesses must not be approached the strategy of social responsibility and sustainable development. In order to deceive stakeholders by paying treating sustainability and lip service with this phase is never going to provide a true or right kind of value for the organization nor for the community. At the same time, it must be engendered by major amount of cost and expenses. As per research where value of business is developed when the social responsibility and sustainable development must be embedded in the culture of the organization and strategies for the core business (Severinaite, 2017). When this is done in right manner, the organization should also gain advantages from a more corporate image which is favorable for the customer loyalty with high morale for employees and increased learning for organization and effective core competencies. Reference Crte, R., 2016. The Volkswagen Scandal from the Viewpoint of Corporate Governance.European Journal of Risk Regulation,7(1), pp.25-31. Jung, J.C. and Park, S.B., 2017. Volkswagens diesel emissions scandal.Thunderbird International Business Review,59(1). RAHUMAN, M.R.A.H., 2017. Corporate Social Responsibility: Does it Really Matter? Case study on Emission Scandals of Volkswagen and Mitsubishi.International Journal for Innovation Education and Research,5(7), pp.24-39. Rhodes, C., 2016. Democratic business ethics: Volkswagens emissions scandal and the disruption of corporate sovereignty.Organization Studies,37(10), pp.1501-1518. Severinaite, I., 2017. From Greenwashing Machine to Mean Green Sustainable Machine: Recommendations For Building Credibility in CSR Communications.Journal of Promotional Communications,5(1). Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. More than words: Expanding the taxonomy of greenwashing after the Volkswagen scandal.Journal of Business Research,71, pp.27-37. Smith, J. and Palmqvist, J., 2016. Emission: ImpossibleCSR Protocol: A quantitative study of brand trust and the Big Five personalities. Zhang, B., Marita, V., Veijalainen, J., Wang, S. and Kotkov, D., 2016. The Issue Arena of a Corporate Social Responsibility CrisisThe Volkswagen Case in Twitter.Studies in Media and Communication,4(2), pp.32-43. Zhukova, V., 2016. Volkswagens 2015 crisis. A new challenge for CSR and excuse for consumers scepticism. Zhukova, V., 2017.Volkswagens 2015 crisis. A new challenge for CSR and excuse for consumers scepticism: Communication and actions that could reduce consumers scepticism. GRIN Verlag.