The paper "VW’ s Battle with Contractors gets Unusually Messy by Geoffrey Smith " is an outstanding example of a business article. This paper evaluated an article titled “ VW’ s Battle with Contractors gets Unusually Messy” by Geoffrey Smith published on 22nd August in the Fortune. The paper will evaluate the above-mentioned article on different parameters. This paper will start by providing the different arguments raised in the article which will be followed by the corporate governance issues raised. The paper will then provide the reasons for the article to be in the media and provide my personal opinion on the same.
This will thereby help to understand the entire framework and highlight the different corporate governance issues which were presented in the article. Arguments raised in the article The article highlights the manner in which Volkswagen is treating its suppliers and the manner in which their relationship is being impacted. Volkswagen which has already been affected by the emission scandal is looking to reduce cost but not looking towards job cuts. This has forced the management to look at other ways where they are looking to reduce cost by having more bargain with the suppliers.
Volkswagen while looking to tackle the issue has looked at canceling contracts with the premise that the goods supplied by the contractors are of poor quality and don’ t meet the standard requirements. This is on the backdrop that Volkswagen has already canceled the contractual obligation with two of its suppliers and the suppliers have already manufactured the goods. This has led to a battle with the suppliers and suppliers are not willing to supply any products and have already filed a case in the court. The situation is impacting the overall business as the brand image has already been affected by the emission scandal and the situation has become worse as the sale of cars has grown in the local market but sales of Volkswagen have been negative.
This is resulting in a tussle between the suppliers and the car manufacturer as it could lead towards legal action on the car manufacturer as they will have to provide compensation to the suppliers due to contractual obligations being not met.