The paper 'The Volkswagen Emissions Scandal" is an outstanding example of a management case study. One of the most prominent and widely discussed global business incidents in recent times is the Volkswagen emissions scandal. The Volkswagen emissions scandal is commonly also referred to as the diesel emissions scandal, the diesel-gate or the emissions-gate. The Volkswagen emissions scandal began on September 18th 2015 when the EPA (the United States Environmental Protection Agency) provided the German manufacturer, the Volkswagen Group, with a notice for violating the Clean Air Act (Burki 2015). The EPA discovered that the Volkswagen Company had deliberately programmed its TDI (turbocharged direct injection) diesel engines so that particular emissions controls could only be activated during emissions testing in laboratory settings (Schiermeier 2015).
The programming thus allowed for the emissions of Volkswagen vehicles to satisfy global standards when placed under regulatory tests, while during actual driving, the vehicles emitted up to 45 times more emissions. According to Krall and Peng (2015), in the model years, that is, 2009-2015, figures indicate that the Volkswagen had used this programming for over 10 million motor vehicles worldwide, with the United States, for example, one of the most affected nations in the world (about half a million vehicles affected therein). Apart from the massive compensation fees, the investors feared the huge amounts of fines that would potentially be imposed by the regulators on the company as a result of the finding, as well as the ensuing damage to the company’ s reputation which would have negative impacts on its market share in the consequent financial years (Schiermeier 2015).
Immediately after the news broke, the stock price of the company diminished in value by about 30%.
Martin Winterkorn, the then CEO of Volkswagen Group resigned in the wake, while Wolfgang Hatz (head of Porsche research and development), Ulrich Hackenberg (head of Audi research and development) and Heinz Jakob Neusser (brand development head) were all suspended (Burki 2015). The company immediately announced its intentions to utilize up to 20 billion dollars on correcting the emissions issues and refitting the vehicles concerned through its planned recall initiative. The Volkswagen emissions scandal raised global awareness concerning the high levels of pollution/ emissions from motor vehicles built by various companies across the world which are often prone to exceeding the legal limits of emissions during actual driving.
The surveys conducted by the ADAC and the ICCT confirmed deviations in real-world driving emissions in the Fiat, Citroen, Hyundai, Jeep, Renault, and the Volvo, with other diesel emissions scandals possible (Crê te 2016). The scandal provoked assertions that machinery which is controlled through software could be easily manipulated, and therefore such software source codes ought to be made public in order to reduce instances of cheating (Krall and Peng 2015).
Recently, on the 21st of April 2017, a United States Federal judge ordered the Volkswagen Group to pay a criminal fine of 2.8 billion dollars for rigging their diesel-driven cars to provide erroneous emissions results. Crisis Management and Communication by the Volkswagen Even though the then CEO of the Volkswagen Group, Martin Winterkorn, resigned following the allegations of cheat devices, the company initially chose to defend their innocence and deny any wrong-doing on their part. In a statement released by the committee members of the Volkswagen Group, following extensive deliberations, the members denied any knowledge of possible software devices aimed at cheating emissions tests (Crê te 2016).
This was not the only flaw in the initial response system of the Volkswagen Group. Besides initial denials, the Volkswagen Group also initially largely ignored its over half a million employees as well as those who work for the company’ s suppliers. At the time, the employees were distracted and scared, with friends and family inquiring from them what had happened. This inevitably hurt employee morale and productivity as the crisis management plan of the Volkswagen Group had little concerns for the employees.
Moreover, because of the flurry of inquiries from the employees’ friends, professionals and families, the company could have used the employees to help calm the situation and preserve the then shaky reputation of the Volkswagen Group. However, the company gave no focused attention or responses to the employees concerning the unfolding international scandal. Surprisingly, when the Volkswagen Group did make references to the employees, it did so through public statements that reckoned that employees who had taken part in the scandal would be investigated and prosecuted promptly (Krall and Peng 2015).
Burki, T. K. 2015, Diesel Cars and Health: The Volkswagen Emissions Scandal, The Lancet Respiratory Medicine,3(11), 838-839, doi:10.1016/s2213-2600(15)00409-9
Crête, R. 2016, The Volkswagen Scandal from the Viewpoint of Corporate Governance, European Journal of Risk Regulation,7(01), 25-31, doi:10.1017/s1867299x0000533x
Krall, J. R., & Peng, R. D. 2015, The Volkswagen Scandal: Deception, Driving and Deaths, Significance,12(6), 12-15, doi:10.1111/j.1740-9713.2015.00861.x
Schiermeier, Q. 2015, The Science behind the Volkswagen Emissions Scandal, Nature, doi:10.1038/nature.2015.18426
Warford, E. 2016, Ethics in the Classroom: The Volkswagen Diesel Scandal, 2016 ASEE Annual Conference & Exposition Proceedings, doi:10.18260/p.26741