Question

Environmental Planning and Protection Organization, in year 2000, published a news, about defective device which was manufactured by one of the leading Auto Brand, Bugatti. The news exposed that many models of these cars, which were being sold in Europe, had a defective device installed. This device could change a car’s performance to improve its emissions results when being tested. After the investigation, the Bugatti officials have admitted for cheating in the test. Bugatti had to pay a hefty amount for damages as a result of the scandal, notably a $16 billion fine from the Environmental Planning and Protection Organization (EPPO). After being exposed globally, their share value dropped by 30 percent, wiping out over $33 billion in shareholder value. Bugatti’s management was faced with a series of criticism. The different publications expressed the view that Bugatti’s autocratic leadership style has long been out of date and that the organisation was missing effective corporate governance.

a. Bugatti is a high profile multinational auto industry. They have a rich legacy of top corporate leadership and highly skilled employees. They are equipped with modern technology, quality research, potential strategy, business development, and effective internal control system. What do you suggest, should be company’s vision and strategy to avoid huge fine, criticism, and defamation?

b. What do you think, if they would have followed conceptual framework, they would have not paid that much. Which conceptual framework was most related to this case study and why? (5 Mark

Answer 1

a.                                

                                       The given case gives a statistical study of how the usage of a defective device had impacts on the environment and in turn had economic impacts on the firm by means of fines and penalties. The following strategy of visionary framework could be adopted by the firm so that they are less penalised and economic impacts are reduced

· Since the company has been equipped with modern technology, more monetary investments should be made in the technology sector of the firm so as to find mechanisms to avoid similar products which impacts the environment.

· The production efficiency should be improved accommodating newer products that could reduce negative economic impacts on the firm.

· Since the research potential of the firm is good, proper research mechanisms should be followed

· Practical analysis should be done to find the areas of concern and reduce the impacts after product finalisation

· With high business development and internal control systems, business models should be implemented and internal controls should be elevated so as to meet the product requirement

b.                                

                                       Conceptual framework is an analytical tool which can give an overall idea of the work and could be implemented across different work patterns. It could help in organizing ideas and make conceptual decisions. There are two kinds of frameworks, the ‘hedgehogs’ who uses a single idea of organization framework and ‘fox’ who identifies pluralist frameworks. There are various types of conceptual framework formulation ranging from visual representation to mathematical modelling and includes working hypothesis and pillar questioning [which includes exploratory research], descriptive categorical analysis, practical ideal analysis, models of operations research and formal hypothesis.

                                    The given situation has a problem with the implementation framework of the firm and should include a conceptual framework that should improve the same. With ‘practical ideal analysis’, and proper ‘mathematical modelling’, the problems associated with the negative effects of each components of the final product could be analysed. This would help in making effective decisions in manufacturing which could finally result in more efficiency of the firm which could yield more profits.