The paper "Volkswagen Cheating Emissions Tests" is a great example of a business case study. Volkswagen is a German automaker that was founded in the late 1930s. Over the years, the company has expanded towards many other western countries, becoming one of the most successful automobile companies in the industry. With more than 40 models that have been designed by the company, the company has been able to make global sales of more than 10 million cars in the year 2015. A major business aspect of the organization has been to manufacture vehicles that are more environmentally friendly than their predecessors.
However, the company, like many in the automotive industry, has experienced challenges in designing such cars. In September 2015, the Environmental Protection Agency (EPA), an environmental regulatory agency of the United States, revealed that the company had installed cheating emissions tests, which were used to provide false evidence of the cars’ emission levels (McGee, 2017). The incidence sparked international backlash, which led to significant financial losses for the company along with a long-term taint in the long-term global reputation. The company responded to these claims by denying the cheating tests, and rather blaming the incidents on technical errors.
However, on further investigations, the company was eventually able to respond to these claims. The company was determined to have violated the Clean Air Act through circumventing the regulations controlling nitrogen oxide gases in their 2008-2009 and Audi models. Description of the Incident The claims of diesel emission violations surfaced in mid-September 2015. The EPA had made the discovery of the software a month prior to making it public. According to the EPA, Volkswagen had installed software known as the Engine Control Unit, which would be able to detect the time when the cars are being inspected.
The software, which came to be popularly coined as the ‘ defeat device’ was installed in millions of the Volkswagen cars, in order to cheat the EPA emission testers into thinking the cars were more environmentally friendly and complied with the environmental provisions. On a global scale, the cars that had this software installed were estimated at 11 million. The defeat device, which was a subtle part of the vehicles’ software system, worked through sensing test scenarios through monitoring the speed, operation of the engine, steering wheel position, and engine operation, among other features.
Volkswagen manufacturers had intentionally set up the program turbocharged direct injection that activated these emission controls. Upon sensing, the software would prompt the vehicle to go into safe mode, which allowed for the testing to occur. However, the safe mode of the vehicles was designed in such a way that the full performance that is carbon emissions would be minimized (McGee, 2017). In essence, the engine ran below the normal level of performance and power, which ultimately reduced the levels of emissions.
However, the safe mode would be automatically turned off once the car was on the road. The EPA estimated that without the safe mode on, the vehicles emitted 40 times more carbon gases above the threshold stipulated in the environmental regulations. Researchers who found out about the device termed it as one of the most sophisticated in the automotive industry.
CNBC, 2015, After a year of stonewalling, Volkswagen finally came clean, Retrieved from http://www.cnbc.com/2015/09/24/how-volkswagen-fought-epa-on-emissions-cheating-claims.html
Gates, G., Ewing, J., Russel, K., & Watkins, D, 2017, How Volkswagen’s “defeat devices” worked, International New York Times. Retrieved from https://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html
Hotten, R., 2015, Volkswagen: the scandal explained. BBC News, Retrieved from http://www.bbc.com/news/business-34324772
Lovelace, B, & Wang, C., 2016, Volkswagen to recall 83,000 vehicles to settle allegations of cheating emissions tests, CNBC, Retrieved from http://www.cnbc.com/2016/12/20/volkswagen-strikes-deal-to-address-80000-polluting-diesel-vehicles-judge-says.html
McGee, P, 2017, How VW’s cheating on emissions was exposed. Financial Times, Retrieved from https://www.ft.com/content/103dbe6a-d7a6-11e6-944b-e7eb37a6aa8e?mhq5j=e1