Question

The Volkswagen scandal

Did Volkswagen handle its recall ethically? Why and Why not?

Explain how the culture of Volkswagen created this ethical scandal.

While Volkswagen claimed to support ethics and sustainability, how can they recover from this ethical disaster?

What change would you recommend to Volkswagen ‘s crisis management approach? Why?

Do you believe this scandal will lead to tougher: scrutiny of companies environmental claims in the future? Why or Why not?

Can Volkswagen recover from these recall problems? If so how long will that take: What would Toyota have to do to recover fully?

Answer 1

The Volkswagen scandal

Did Volkswagen handle its recall ethically? Why and Why not?

No, Volkswagen did not handle the recalls ethically.

Why not?

Volkswagen took an awful lot of time to finalize when to recall, which cars to recall, whether it is going to be partial or full, whether it required hardware replacements or only a software update or both, letting the car owners decide recall measures and so on. Irrespective of the recall strategy the emissions were itself unethical and approved by the higher management.

Volkswagen took into account the costs of repair and replacements and estimated years before it could happen and even compared an analogy that a full recall is required only if results in serious harm. Environmental damage and mental trauma to eco-friendly enthusiasts is serious damage indeed. Knowing full well that their product was defective, they rolled it out, damaging years of goodwill.

Explain how the culture of Volkswagen created this ethical scandal.

The culture of the company was such that it terrified and bullied its employees into bringing good news and good news only. If there were any confrontations or failures, it was difficult to get it through to seniors without being bullied. Winterkorn is described as being an autocratic leader. The senior executives, supervisory board members and the software engineers who developed the software were all to be blamed for the defective software.

While Volkswagen claimed to support ethics and sustainability, how can they recover from this ethical disaster?

1. Have clear ethical standards and goals.
2. Ensure transparency in interaction on all levels of the management.
3. Better standards set and maintained by the Environmental Protection Authority (EPA)
4. Better control and expectations from R&D, software engineers and mechanical engineers
5. Better micro management policies
6. Better external audits and certifications
7. Deliver what is promised and promise what is delivered

What change would you recommend to Volkswagen ‘s crisis management approach? Why?

1. Have the public interest in mind at all times
2. Ensure that it is remembered that brand image is the reason for people buying their cars
3. Establish a crisis management cell with clear guidelines
4. Have a transparent roadmap in dealing with a crisis
5. Have a good PR team in order to avoid being mocked and to ensure that ethical concerns are handled swiftly and transparently

Do you believe this scandal will lead to tougher: scrutiny of companies environmental claims in the future? Why or Why not?

Yes, this scandal would lead to tougher scrutiny of companies' environmental claims.

Why?

All companies will now be concerned about their brand, because irrespective of whether or not is a big brand like Volkswagen, a scandal is a scandal and consequences have to be faced.

So yes, this scandal will definitely lead to tougher standards and examinations of the claims made by companies in the future.

Can Volkswagen recover from these recall problems? If so how long will that take: What would Toyota have to do to recover fully?

Yes, Volkswagen will be able to recover from these problems. It is going to take a long time in penalties and legal battles. The quick restructuring that has happened is an evidence to this. Volkswagen is now focussed on electric vehicles and it is proving to be good for the company.

Toyota on the other hand reported lesser sales than Volkswagen in the year of the scandal. This was due to the brand image that VW had in Asia. Toyota will have to get into electric vehicles and expand it's horizons in order to capture the market.