volkswagen scandal case study solution

What Is a Case Study?

When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to learn all about case studies.

At face value, a case study is a deep dive into a topic. Case studies can be found in many fields, particularly across the social sciences and medicine. When you conduct a case study, you create a body of research based on an inquiry and related data from analysis of a group, individual or controlled research environment.

As a researcher, you can benefit from the analysis of case studies similar to inquiries you’re currently studying. Researchers often rely on case studies to answer questions that basic information and standard diagnostics cannot address.

Study a Pattern

One of the main objectives of a case study is to find a pattern that answers whatever the initial inquiry seeks to find. This might be a question about why college students are prone to certain eating habits or what mental health problems afflict house fire survivors. The researcher then collects data, either through observation or data research, and starts connecting the dots to find underlying behaviors or impacts of the sample group’s behavior.

Gather Evidence

During the study period, the researcher gathers evidence to back the observed patterns and future claims that’ll be derived from the data. Since case studies are usually presented in the professional environment, it’s not enough to simply have a theory and observational notes to back up a claim. Instead, the researcher must provide evidence to support the body of study and the resulting conclusions.

Present Findings

As the study progresses, the researcher develops a solid case to present to peers or a governing body. Case study presentation is important because it legitimizes the body of research and opens the findings to a broader analysis that may end up drawing a conclusion that’s more true to the data than what one or two researchers might establish. The presentation might be formal or casual, depending on the case study itself.

Draw Conclusions

Once the body of research is established, it’s time to draw conclusions from the case study. As with all social sciences studies, conclusions from one researcher shouldn’t necessarily be taken as gospel, but they’re helpful for advancing the body of knowledge in a given field. For that purpose, they’re an invaluable way of gathering new material and presenting ideas that others in the field can learn from and expand upon.

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The Volkswagen Emissions Scandal – Case Solution

The Volkswagen Emissions Scandal case study tells the story of the admission of Volkswagen to have deliberately installed a device on its cars to pass the tests imposed by the government. Stakeholders are wondering how such a scandal could have happened at Volkswagen.

​Luann J. Lynch; Cameron Cutro; Elizabeth Bird Harvard Business Review ( UV7245-PDF-ENG ) July 21, 2016

Case questions answered:

Case study questions answered in the first solution:

• Identify the relevant corporate governance issues and practices and problems at Volkswagen.
• Apply corporate governance theory relevant to that industry/profession and the identified issues and problems.
• Provide recommendations for improving the corporate governance practices of Volkswagen in order to resolve the identified problems.

Case study questions answered in the second solution:

• Evaluate the business ethics focusing on the Volkswagen Emissions Scandal.

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The Volkswagen Emissions Scandal Case Answers

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EXECUTIVE SUMMARY – The Volkswagen Emissions Scandal

This report examines the corporate governance practices of the German automotive multinational Volkswagen AG in relation to the revelation of the diesel-engine emissions scandal by the U.S. Environmental Protection Agency (EPA) in 2015.

The Analysis focuses on how a money mindset and negligence towards other elements of 3P’s (People, Planet, and Profit), which are embedded in corporate structure, ownership composition, Supervisory Board (SB), and Corporate culture, leads to decisions that serve the interest of power-hungry shareholders at the expense of other stakeholders.

This paper presents identified issues and impacts that contributed to the firm’s choice to move forward with a decision that led to the Volkswagen Emissions Scandal, a disastrous scandal for the corporation.

The finding reveals power imbalance and abuse of power from dominant shareholders, the Porsche-Piëch family, the intrusion of Lower Saxony (German Government) to ensure national employment, risk of labor inclusion on SB under the Co-Determination Act, and company culture focusing only on profit led to unethical conduct of ‘implanting cheating device,’ hence displaying the firm’s poor Corporate Governance procedures.

Furthermore, analytical research has been done using two prominent theories in this field – Agency Theory and Stakeholder Theory. Using Agency Theory, it is found that the presence of the controlling shareholder in Volkswagen induces principal-principal problems by exploiting opportunities catered to their interest at minority shareholders’ cost.

In addition, Germany’s two-tier board system that ideally separates jobs is not effective for Volkswagen due to the dominance and abuse of power from major Shareholders in regard to controlling the direction of management activity.

On the other hand, the Principal-Agent Problem also exists due to the presence of the Government as the second-largest shareholder of the firm ever since World War II. This intrusion is negative for Volkswagen due to a conflict of interest between the Government and Shareholders – focus on welfare or increase shareholder returns.

The inclusion of labor representatives in SB is also risky due to the possibility of these representatives exercising decisions based on their personal interests and maintaining their jobs.

In view of Stakeholder Theory, it is found that Volkswagen’s intention to save profits by carrying out activities that are unethical backfired, causing the firm to incur a massive loss and damage its brand image. Therefore, the company’s long-term sustainability can only be achieved if the company aligns its profit intentions with the ethical intentions of serving People and the Planet.

To improve good corporate governance practices at Volkswagen, this report provides various recommendations to modify internal governance procedures.

Firstly, setting a contract that specifies clear expectations and roles. Following this, the firm will benefit greatly by having regular evaluations and instilling a whistle-blower protection system managed by a third party.

Secondly, in order to increase performance, reformation of the structure of SB needs to be conducted by having more independent members and professionals hired as government representatives and allowing other representatives on the nominee committee to limit majority shareholders’ power.

Lastly, to restore its brand image and gain stakeholders’ trust, Volkswagen must rebrand and plan on fulfilling corporate social initiatives that will gear the firm toward strategic success and sustainability in the long run.

1. Company Overview

Businesses cannot be successful when society around them fails (Lawrence,2013)

A business can only succeed if its environment is feasible enough to promote growth and sustainability. Both external and internal stakeholders play an important role in ensuring success. To achieve this, interests should be aligned ideally, which is not the case in Volkswagen due to the difference in ideas, leading to conflicts.

1.2. Volkswagen History

Volkswagen is a German automotive multinational corporation thriving on global fame. This brand is managed by vital players, ensuring the firm’s success from its humble beginnings.

The “Deutsche Arbeitsfront” (the German Labor Front), the British Military Government, and Porsche played an important role in the history of Volkswagen’s development in its early days, starting with the design of Volkswagen’s car by Ferdinand Porsche on June 22, 1934. The establishment of the company was supported by the German Labor Front on May 28, 1937 (Volkswagen, 2008).

During World War II, Volkswagen was intended to be the main vehicle producer for the German Army. However, as time went on, the German Government began privatizing the firm in the 1960s, leading to the company’s rapid growth afterward.

1.2.1 Two-Tier Board and Co-Determination Act 1976

As a publicly listed German company (Aktiengesellschaft or AG), Volkswagen has a two-tiered board structure: an Executive Board (EB) headed by a CEO and a Supervisory Board (SB) headed by the Chairman. The EB is, inter alia, responsible for managing day-to-day operations and proposing a business strategy and dividends to the SB, whereas the SB is responsible for appointing, supervising, and firing the SB, as well as setting dividends and voting on major decisions.

The German system of corporate governance is very unique due to the Co-Determination Act of 1976. This law stipulates that companies must allow their stakeholders, including employees, to share their interests and considerations in making company decisions, and the composition of the SB must be in the same number between shareholder representatives and employee representatives. (Fauver, 2006).

Furthermore, in terms of the election mechanism, the shareholder representatives are chosen at the shareholders’ general meeting while the employee representative is elected either in the direct ballot or through delegates.

In the case of Volkswagen’s SB composition, which employs more than 20,000 people, the law requires Volkswagen to have 20 seats: 10 seats for shareholders and 10 seats for employees. As for the employee representatives, the seats are allocated into three factions: labor unions, workers, and managerial employees’ representatives (Mertens, 1979).

Once the SB is formed, all of the members choose the chairman and vice chairman at the first meeting. The first vote requires a candidate to have a two-thirds majority to be elected, and if no candidate succeeds, then the shareholder representative will elect the chairman, and the employee representative will elect the vice-chairman.

An illustration of the election process of the SB and EB is depicted below in Figure 1:

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VOLKSWAGEN EMISSIONS SCANDAL -A CASE STUDY REPORT

by TJPRC Publication

2018, TRANSSTELLAR JOURNALS

'Volkswagen (VW) Emission Scandal' considered as unitary of the highest profile scandal in the automotive industry and it will cause a profound impact not only on the German economic system but also in Europe. This scandal came to the news on 18 th September 2015. This scandal shows that how to achieve profit with a short span of time is disastrous and how the business happening in today's time will damage the environment. The purpose of this report is to dissect and identify the main organisationalbehaviour factors, which could be responsible for the adverse effect. It also provides an explanation of the problems, analyse the organisation's response and provide the robust recommendations, which could help future leaders learn and apply in future business.

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There is a well-constructed scholarly review that provides a sustained critique of corporates’ governance and ethical practices that had been long studied and theorised. This research participates to those papers through the usage and emphasis of its critique and analytic research as the foundation of tackling the Volkswagen emission scandal. The “defeat device” did not only violate the Clean Air Act and cheat people into false carbon emissions test, but also the bigger picture is outlined with regards to various effects on stakeholders. This document attempts to address these issues from a pluralism perspective using various ethical perspectives as well as critically analysing and addressing the Elements of Volkswagen’s governance structure. Some recommendations are also outlined as possible guidelines for Volkswagen.

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In the VW diesel scandal, automakers were found to be cheating with emission data, by e.g., tampering with on-board detection systems. We have calculated changes in the energy use and emissions of carbon dioxide equivalents that would arise through several options open to automakers, to ensure that the emission of nitrogen oxides is kept within the standards. Several studies show how manufacturers have also significantly underreported vehicles' actual fuel consumption. We explain our derivation of new factors for energy consumption and greenhouse gas emissions from diesel-and gasoline-powered passenger cars, as well as their electric hybrid varieties. The results of the analysis show that energy consumption and emissions of carbon dioxide equivalents will increase in the range of 18–21% for passenger cars with diesel and hybrid diesel engines, while for cars with gasoline and hybrid gasoline, the addition is 9–10%. The analysis highlights an environmental dilemma of current car technology, but also the path-dependent ways of thinking that have been prevalent within the automotive sector. From a sociotechnical sustainability transitions perspective, Dieselgate can be viewed as a case of " regime resistance " , whereby incumbent actors seek to maintain the status quo.

Shani.D. Carter

2018, Volkswagen - the Failure of Perfection and Moral Hazard: What Price Victory? International Journal of Business & Applied Sciences, 7(1), 35-48.

In the year 2015, it became publically known that Volkswagen employees created and deployed software designed to thwart emissions testing equipment, and in this paper, we use moral hazard theory to explain the causes of employees' motivation. Volkswagen employees' high internal locus of control and high elasticities of behavior to rewards were united with executives' low expectations of disclosure and high expectation of rewards to create strong incentives to use deceitful emissions systems. Employees' engaging in utilitarian, moral hazard based behaviors succeeded in increasing revenue for many years. Subsequent to disclosure of the deceit, Volkswagen's short-term and long-term financial performance were negatively impacted. Volkswagen's goal to be the largest automobile supplier in the United States was unattainable by ethical means, but employees' nevertheless pursued that goal which ultimately led to a significant decrease in company performance as measured by stock price and market capitalization.

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Car production is a kind of activity that affects environment, society and global economy to a large degree. The most negative impact can be observed in the first of mentioned fields. Every day automotive companies consume big amount of energy and resources. What is more, their final products are considered as one of the main pollution sources. Nevertheless many car producers made effort to minimize negative external effects of their businesses. Year by year various CSR classifications and rankings showed that those efforts were resultful but Volkswagen emissions scandal and anti-diesel lobby shed new light on car industry in the terms of CSR. The aim of the article is to review CSR activities undertaken by Audi AG. Literature review and report analysis performed within the case study shows that the company is active in the field of ecology, society and corporate governance. In many terms Audi AG can be considered as the one of global CSR leaders. It is characterized by wide range o...

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The world has witnessed corporate scandals of monstrosity magnitude. The Enron Scandal, the Nike Sweatshop scandal and the recent Johnson and Johnson baby talc in 2018 are some dishonors that reshaped the business world and reinvigorated the importance of business ethics. Indeed, supranational and national movements such as the Global Reporting Initiatives have responded to these scandals by imposing stricter corporate reporting to instill greater transparency and corporate responsibility. Ironically, despite unwavering efforts, corporations are still blatantly flouting regulations. The Volkswagen “diesel dupe” crisis is a stark reminder of the inherent weakness of current regulations. Despite Volkswagen’s staunch adherence to those stringent reporting guidelines, they breached ethics to the core, creating a tsunami of vehicle recalls, massive social, political and legal repercussions. Volkswagen’s cheat device is a ‘creative destruction’ that challenged the fundamental usefulness o...

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This paper examines Volkswagen Group's (Volkswagen) emission control cheating device scandal as a case of ineffective decision-making, goes into the details of the circumstances as well as decision criteria of the case, critiques the behaviors related to the incident, and brings into discussion the alternative actions that help unravel the complex underpinnings of ethical, rational decision-making in modern corporations like Volkswagen. In the Volkswagen case, leadership decisions likely reflected a more intuitive model. While Volkswagen engineers had experienced the problem of controlling emissions, the team should have executed more rational decision-making by extending market research, reassessing goals, and formulating more alternatives.

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Abstract This paper analyses the regulatory approach adopted by the US federal courts and agencies and the EU with regard to control of emissions from cars and environmental responsibility. Volkswagen A.G. (hereinafter referred to as VW) appeared as one of the most responsible car-maker according to sustainability index rating. Despite a well-established code of conduct was in place, the company has been exposed to the biggest pollution scandal, which unveiled many shortcomings of emissions tests which involve several car makers, certification companies, the US and the EU regulatory authorities. However, it’s worth remembering that in May of 2014, after a group of researchers from West Virginia University and the International Council on Clean Transportation found discrepancies in the actual emissions levels of VW cars compared to their stated levels, California and federal authorities ordered VW to fix the problem. The company falsely claimed it had improved. VW, the world's largest car maker, admitted in September 2015 to using so-called "defeat device" software to cheat regulatory nitrogen oxides emissions tests in some 11 million cars worldwide. The devices allowed the cars to spew up to 40 times the permissible limits of nitrogen oxide during normal driving, but this was hidden during emissions testing. Nevertheless, other car manufacturers, including Fiat, Renault, Mercedes, Opel, and Ford, were subsequently also found to have been “optimizing” test results, with on-the-road nitrous oxide emission levels 5-10 times higher than legal limits permit, exposing European citizens to dangerously high levels of pollution. Additionally, VW faces an array of legal challenges in Germany and worldwide relating to the software, installed mainly in own-brand vehicles, but also in cars made by Audi, Skoda and Seat, among its stable of 12 brands. Only in the US German manufacturer was charged with deceiving U.S. regulators in order to obtain the necessary certificates to sell the Subject Vehicles and the Porsche Vehicles in the US as well as with selling the Subject Vehicles and the Porsche Vehicles in the US know that these vehicles did not meet U.S. emissions standards. Also the company was deceiving VW's U.S. customers by marketing the Subject Vehicles and the Porsche Vehicles as "clean diesel" and environmentally friendly knowing that the diesel vehicles were intentionally designed to detect, evade and defeat U.S. emissions standards; and was concealing these facts from U.S. regulators and U.S. customers. This paper proceeds in three parts. Part I details the VW scandal and emissions testing in the United States, the U.S. vehicle certification process, and the U.S. treatment of defeat devices. Part II argues that VW’s emissions-test trickery is illegal under the US law in the context of criminal and civil settlements. The next part I discuss the EU regulations at issue for VW, Europe’s diesel pollution problem. Furthermore, it analyzes the consequences of deeming VW’s cheating legal in Europe, and recommends ways to improve the EU’s auto regulatory system It is worth to remember that in the Germany the official investigations that have taken place in the meantime – especially in the case of Audi – and the recent decision of the Stuttgart Regional Court on judicial procedures of capital market communication), it is relevant that VW itself admitted the use of the manipulation software on September 3, 2015.

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The strongest global brands can suffer loss or even ruin in the event of crisis. The effective management of communications during crisis is essential to ensuring that trust is rebuilt and dented brand image is quickly repaired. This study qualitatively evaluated how communication strategies were employed by Volkswagen and Mitsubishi to recent corporate cases.Guided by Coombs and Benoit’s crisis management theories, the study compares both strategies in terms of: timeliness of response, media selection and rhetoric of messages. Analyses of primary and secondary data show that both Volkswagen and Mitsubishi breached corporate values and were not transparent to stakeholders worldwide. The study argues that Volkswagen ignored early warnings, thus resorting to post-crisis communications using varieties of media with a mixture of apology and sales marketing activities. Mitsubishi’s response strategies were timelier and voluntary. Mitsubishi employed fewer media and maintained rhetoric with a strong appeal to pathos

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In 2009, my family bought a new Volkswagen Jetta diesel relying on high scores this model received for its environmental characteristics. I don't recall the rating service we used, but the top-rated passenger car along this dimension was the Toyota Prius, and the VW Jetta came in a close second. We preferred the performance and "pick up" in driving the Jetta. In 2015, however, we learned along with millions of other owners of VW automobiles one reason for the difference in performance: VW had lied. Our Jetta did not deserve the high ratings it received for its environmental characteristics because VW had intentionally installed software designed to fool routine government testing. A "defeat device" programmed the engine to run with lower emissions when tested, but then shifted during normal driving conditions to spew into the atmosphere twenty to forty times more harmful nitrogen oxide than permitted under the relevant environmental regulations in the United ...

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LINH NGUYEN DUONG

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The automotive sector must meet strict regulations to increase mobility while reducing emissions to demonstrate environmental stewardship. Trust in the promise of a sustainable Fahrvergnügen was broken with recent scandals like Dieselgate denting the confidence of regulators and consumers. Overpromising on sustainable innovative technology resulted in unethical behavior, deceit, and failure to meet promised standards. We consider to what extent societal disapproval was evident in the stock market reaction to these events. We sampled 41 announcements (1984 to 2016) and observed a mean stock market reaction of -1.01%. There was no difference in the stock reaction in firms failing governmental vs. voluntary standards and more negative reactions for events following Dieselgate or when compensation was offered. The severity of the reaction to unethical misuse of environmental credentials should encourage maintaining promised environmental performances as a macromarketing strategy.

The European automotive industry is undergoing deep structural transformations. In addition to the twin challenge of mastering the digital and ecological transition, it has to deal with the effects of the COVID-19 containment measures. All these changes are taking place within highly globalised value chains that have resulted from excessive offshoring and thus affect workers beyond single nation states or the European Union alone. The shift to electric mobility and the advancement of digitalisation will fundamentally restructure the value chains of the European automotive industry. This transformation poses multiple challenges to workers and to the organisations representing them. This brochure discusses those challenges from a labour perspective. More specifically, it explores what transnational solidarity means in this context and what role industrial policy needs to play in this process. On this basis, the brochure suggests concrete policies and measures which workers and their representative organisations should fight for, and identifies possible coalition partners for the social-ecological transformation of the European automotive industry.

SSRN Electronic Journal

P. Bala Bhaskaran

South Asian Journal of Business and Management Cases

The case is structured around the Volkswagen (VW) fiasco wherein large number of cars sold by the company was found to violate the emission norms of EPA significantly. The case traces the origin and history of the firm. Then the case narrates accidental observation of the violation of the emission-norms and response of the firm to the situation. The case contrasts the responses of other firms in the industry who were affected by similar, albeit much smaller level, violation of emission-norms. The case explores the possible courses of punitive actions and the overall impact on each of the stakeholders. The case leaves the reader to explore the responsibilities of each stakeholder and the need to balance the expectations and impacts from the course of action that need to be followed.

Adenekan Dedeke

Abstract: In early 2008, the CEO of In early 2008, the CEO of Volkswagen announced a 10-year plan that called for tripling the company’s U.S. sales by 2018. The executive gave marching orders to engineers to come up with a new technology that would enable VW to lower emissions of the new cars. The engineers failed to come up with a device that could do the job. Instead they deployed a defeating software would defeat the testing process. The 2009 VW Jetta clean diesel was launched in April 2008 and followed by the introduction of similarly equipped VW Golfs and Audi A3s. Over 145,000 vehicles were sold in the U.S. in three years. The scheme was eventually exposed, costing the company millions of dollars. This paper describes the organizational reasons why the emissions cheating occurred. It also provides recommendations regarding how organizations could prevent similar behaviors from occurring in future.

Carla Smink

The car industry currently faces increasing regulatory pressure to improve both its methods in production and the sustainability of its products. Many car manufacturers have adopted proactive environmental strategies and it is common prac-tice to implement an Environmental Management System (EMS) at production facilities. However, the car has an impact on the environment at each stage in its life cycle. The car is considered to be one of the most polluting consumer products. This article investigates how the car industry has dealt with both process-oriented and product-oriented environmental policies and to what extent these two policy concepts have been inte-grated. We have conducted case studies of BMW and GM with interviews at the headquarters of the par-ent companies and with production plants in South Africa to analyse how they attempt to integrate process- and product-oriented strategies. Key words: car industry, process-oriented policy, product-oriented policy, BMW, General M...

Carlos Zorrilla

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Jens Warsen

2013, Lcm 2013

Jeremy De Zilwa

How the leadership team of Volkswagen tackled the Eco incident, and managed the crisis. Lessons learnt and ways to take leadership.

Sevil Bayçu

Frequently experienced crises have adverse effects on the corporations although the reasons for their occurrence and their characteristics are variable. As the corporations develop certain response strategies in connection with such crises also affecting their stakeholders in addition to them, media publicly carries the news in connection with crises. The objective of this research which has been carried out by taking as a starting element the point where crisis, corporations and media intersect, is to study the press releases by Volkswagen as part of the crisis over exhaust emission on the basis of the strategies of responses to crisis and demonstrate how the crisis is publicly covered by media in the context of crisis framing and toning. Accordingly, 116 crisis related news contained in five largest circulating newspapers in Turkey as well as 29 press releases as posted on both international and Turkey websites of the company have been analyzed. According to the results of the re...

Muhammad Wasim

The purpose of this consultancy report was to implement two change management models to provide progressive resolution for VW’s current problem. The report first conducted different analysis such as SWOT, PESTEL and Porter’s Five Force analysis to examine the current position of the company and how competitive it is. Then, the problem of the company discussed in detail such as the impact of the issue on VW, how it is related to the culture of the company and what new strategy VW needs to implement to handle the problem. Moreover, the report suggested two change models a) Kotter’s 8-steps change management model and b) William Bridges’ transition model.

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Home » Management Case Studies » Business Ethics Case Study: The Volkswagen Emissions Scandal

Business Ethics Case Study: The Volkswagen Emissions Scandal

Over the last few decades, there has been great concern regarding the sustainability and conservation of the environment. Environmental pollution and globalization have become the concern of most environmental protection agencies. The harmful and mortal effects of nitrogen oxide, which is a pollutant found in car exhaust have led the Environmental Protection Agency (EPA) to tighten emission control considering the attention paid to conservation and saving the green. These concerns have made the EPA constantly announce restrictions for standard emissions for all types of vehicles the sports car, heavy-duty trucks, automobiles, and other types of cars. These stringent measures are necessary considering that nitrogen gas emitted is harmful to human health and results in diseases such as asthma, premature death, bronchitis, and respiratory and cardiovascular.

In 2015, the scandal regarding diesel cheat damaged the image of the Volkswagen Company. In light of the discovery of the diesel dupe of Volkswagen in 2015, the mechanism’s aim was to alter the detection of nitrogen oxide gas in Volkswagen diesel engines. The test of the emission of nitrogen oxide in the lab was thirty-five times more on the road hence endangering the lives of the people. The leadership of Volkswagen decided to take a shortcut in the production of their internationally recognized brand. This rigging scandal has had a bad reputation for Volkswagen leading to a series of consequences for its direct and indirect stakeholders. The harmful and mortal effects of nitrogen oxide, which is a pollutant found in car exhaust have led the Environmental Protection Agency (EPA) to tighten emission control considering the attention paid to conservation and saving the green. The management decided to pursue short-term needs forgetting the future prospects of the company.  The leadership of the company made a complete gamble with the stakeholder’s trust and resources. The cheat was in line with the stringent measures initiated by the EPA. These stringent measures are necessary considering that nitrogen gas emitted is harmful to human health and results in diseases such as asthma, premature death, bronchitis, and respiratory and cardiovascular. The Volkswagen Company’s reputation was severely damaged by the scandal leading to low revenue and other effects including law suites.

The scandal clearly reflects corporate misbehavior on the part of Volkswagen. The automakers manufacturing fuel-efficient diesel cars in the United States faced hardships due to these new stringent emission regulations. Volkswagen is among the automobile makers in the United States market that were new stringent regulations. However, in the year 2015, the EPA announced that Volkswagen was a diesel dupe following its strategy to deceive the emission test. Volkswagen managed to deceive the test by showing less emission in its engines than what the engine emitted in the real sense. Therefore, this article is aimed at analyzing the extent to which this issue of diesel dupe has ruined the reputation of Volkswagen.

The Impact the Diesel Dupe had on Volkswagen

In the previous year before the rigging scandal, Volkswagen was among the leading automobile producer in the automobile industry just second after Toyota Company. However, Volkswagen’s admission of guilt in the scandal had a series of effects on it and its operations and the company. The scandal severely damaged the company’s reputation in the automobile industry. Building a reputation in the business world takes time but destroying it is often fast, therefore, this has led to the Volkswagen Company bringing in three public relations company companies to help manage the crisis from Germany, Britain, and the United States. The implications of this deceit by Volkswagen leave the company in a bad condition considering that it has to deal with different regulations since the company is an international brand.

The Role of the Managers

Good leadership has three pillars that support it which are commitment, character, and competencies . Therefore, if any of these three values is not present then there is bound to be problems for the stakeholders, the manager, and the entire organization. In any organization, corporate social responsibility and sustainability have proven too challenging. This follows as managers are faced with the challenge of the tradeoff between the long and short-term decisions. This tradeoff often poses decisions between the survival of the business and its annual compensation, between long-term environmental factors and quarterly profits, and between short-term and long-term goals. Business schools must learn a better way to teach students about these tradeoffs and ways of handling them not ignore them. Resilience is key to financial sustainability. Therefore, business is capable of surviving natural disasters or financial crises. Moreover, the manager’s relationship with the employees, the environment, and the community results in resilience. Therefore, it is important that businesses not work against the institutions that enable their long-term success. However, the antithesis of sustainability is what the Volkswagen Company showed in 2015 through diesel dupe. It does not make any sense for the managers of Volkswagen to create this shortcut and be comfortable thinking it would lead to long-term success. The deception played on the consumers and the regulators compromised the long-term needs and success of the company despite achieving the short-term needs.

The decision the managers made regarding the tradeoff between short and long-term was surely misguided. Volkswagen is a company surrounded by competent staff and the managers are well educated and have vast experience in the industry. Therefore, tabling an argument that there was a shortage of expertise would be wrong and misguided. The strong desire of the managers to succeed at whatever cost is what brought this predicament to the company. They did everything with a sense of urgency and approached the challenges faced by the company with passion and vigor. The decisions these managers made, it is a case of failure in leadership. Research has concluded that drive, temperance, courage, humanity, collaboration, humility, integrity, accountability, justice, transcendence, and judgment are all qualities of a good leader and must all work together since using overusing one trait may result in liability. These traits are essential considering they enable a leader to think things through before making a decision. Moreover, the trait of justice helps in knowing the importance of giving back to society that ensures the success of the business and not harming them like in the case of Volkswagen.

Threatening People’s Health

In case the scandal regarding the cheat device would not occur, sixty people would have died a premature death in the United States alone by the end of 2016 due to the additional pollution the Volkswagen cars produce. The 428,000 Volkswagen and Audi diesel cars manufactured produced more nitrogen oxide gas forty times more than the standard allowed by the Clean Air Act in the period between 2008 and 2015. Researchers have concluded that every six years the cars Volkswagen and Audi produce an excess of about 36.7 million kg of nitrogen oxide, which is very bad for the environment and the health of human beings considering diseases like cardiovascular diseases and other respiratory diseases are caused by this emission.

Moreover, the research also stated that sixty people between the age of 10-20 are endangered by these emissions. Additionally, the effects of these emissions would result in the United States spending about $450 million on people over six years in the period between 2008 and 2015. There would be 140 premature deaths in the event Volkswagen failed to recall vehicles manufactured from 2015 onwards. Moreover, the Volkswagen diesel cars would cost about $840 million in health costs. Finally, acid rains are caused as a result of nitrogen oxide production in the atmosphere which leads to the destruction of property, and natural resources and badly affects the health of humans.

Drop in Volkswagen Sale

A bad reputation ruins businesses beyond recovery. Just as expected, Volkswagen faced a severe decline in revenue since the diesel cheat scandal. The scandal resulted in customers switching to its competitors disabling the sales of Volkswagen vehicles. For the first time since the year 2002, Volkswagen sales plunged throughout the world due to a bad reputation. Furthermore, the scandal affected every aspect of the Volkswagen brand considering even the share values slumped. The slump in share value started declining immediately after the scandal was revealed resulting in a one-third drop. The decline in revenue was expected considering no one wants to be associated with a company facing a scandal and no customers would buy products that cause health problems.

In light of the diesel scandal discovery, it is clear it was an act of pure conmanship. The company decided to make profits at the cost of its customers and the environment. This scandal clearly created a complicated situation for the stakeholders of the company. The actions of Volkswagen management were unethical to the business world leaving a bad name for the company. The management decided to pursue short-term needs forgetting the future prospects of the company. The scandal left the company in a series of cases including a violation of the Clean Air Act and a series of international laws. The leadership of the company made a complete gamble with the stakeholder’s trust and resources. The company had already established itself worldwide hence such a scandal cost it a huge price considering it would take a long time for it to get back to its glory days. The leadership of an organization is vital as it plays a significant role within the organization and its decisions may make or break the organization, therefore, in this case, Volkswagen’s leadership made a grave mistake.

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The Volkswagen Emissions Scandal Case Study Solution Analysis

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The Volkswagen Emissions Scandal Case Study Solution & Analysis. Get The Volkswagen Emissions Scandal Case Study Analysis & Solution. Contact us directly at buycasesolutions(at)gmail(dot)com if you want to order for The Volkswagen Emissions Scandal Case... More

The Volkswagen Emissions Scandal Case Study Solution & Analysis. Get The Volkswagen Emissions Scandal Case Study Analysis & Solution. Contact us directly at buycasesolutions(at)gmail(dot)com if you want to order for The Volkswagen Emissions Scandal Case Solution, Case Analysis, Case Study Solution. Luann J. Lynch, Cameron Cutro, Elizabeth Bird Less

Email us for Any Case Solution at: [email protected] The Volkswagen Emissions Scandal Case Study Solution & Analysis The Volkswagen Emissions Scandal Case Study Solution & Analysis. Our tutors are available 24/7 to assist in your academic stuff, Our Professional writers are ready to serve you in services you need. Every Case Study Solution & Analysis is prepared from scratch, top quality, plagiarism free. Authors: Luann J. Lynch, Cameron Cutro, Elizabeth Bird Get Case Study Solution and Analysis of The Volkswagen Emissions Scandal in a FAIR PRICE!! Steps for Case Study Solution & Analysis: 1. Introduction of The Volkswagen Emissions Scandal Case Solution The The Volkswagen Emissions Scandal case study is a Harvard Business Review case study, which presents a simulated practical experience to the reader allowing them to learn about real life problems in the business world. The The Volkswagen Emissions Scandal case consisted of a central issue to the organization, which had to be identified, analysed and creative solutions had to be drawn to tackle the issue. This paper presents the solved The Volkswagen Emissions Scandal case analysis and case solution. The method through which the analysis is done is mentioned, followed by the relevant tools used in finding the solution. The case solution first identifies the central issue to the The Volkswagen Emissions Scandal case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution. The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. The solution consists of recommended strategies to overcome this central issue. It is a good idea to also propose alternative case study solutions, because if the main solution is not found feasible, then the alternative solutions could be implemented. Lastly, a good case study solution also includes an implementation plan for the recommendation strategies. This shows how through a step-by-step procedure as to how the central issue can be resolved. Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] 2. Problem Identification of The Volkswagen Emissions Scandal Case Solution Harvard Business Review cases involve a central problem that is being faced by the organization and these problems affect a number of stakeholders. In the problem identification stage, the problem faced by The Volkswagen Emissions Scandal is identified through reading of the case. This could be mentioned at the start of the reading, the middle or the end. At times in a case analysis, the problem may be clearly evident in the reading of the HBR case. At other times, finding the issue is the job of the person analysing the case. It is also important to understand what stakeholders are affected by the problem and how. The goals of the stakeholders and are the organization are also identified to ensure that the case study analysis are consistent with these. 3. Analysis of the The Volkswagen Emissions Scandal HBR Case Study The objective of the case should be focused on. This is doing the The Volkswagen Emissions Scandal Case Solution. This analysis can be proceeded in a step-by-step procedure to ensure that effective solutions are found. In the first step, a growth path of the company can be formulated that lays down its vision, mission and strategic aims. These can usually be developed using the company history is provided in the case. Company history is helpful in a Business Case study as it helps one understand what the scope of the solutions will be for the case study. The next step is of understanding the company; its people, their priorities and the overall culture. This can be done by using company history. It can also be done by looking at anecdotal instances of managers or employees that are usually included in an HBR case study description to give the reader a real feel of the situation. Lastly, a timeline of the issues and events in the case needs to be made. Arranging events in a timeline allows one to predict the next few events that are likely to take place. It also helps one in developing the case study solutions. The timeline also helps in understanding the continuous challenges that are being faced by the organisation. 4. SWOT analysis of The Volkswagen Emissions Scandal An important tool that helps in addressing the central issue of the case and coming up with The Volkswagen Emissions Scandal HBR case solution is the SWOT analysis. The SWOT analysis is a strategic management tool that lists down in the form of a matrix, an organisation's internal strengths and weaknesses, and external Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] opportunities and threats. It helps in the strategic analysis of The Volkswagen Emissions Scandal Once this listing has been done, a clearer picture can be developed in regards to how strategies will be formed to address the main problem. For example, strengths will be used as an advantage in solving the issue. Therefore, the SWOT analysis is a helpful tool in coming up with the The Volkswagen Emissions Scandal Case Study answers. One does not need to remain restricted to using the traditional SWOT analysis, but the advanced TOWS matrix or weighted average SWOT analysis can also be used. 5. Porter Five Forces Analysis for The Volkswagen Emissions Scandal Another helpful tool in finding the case solutions is of Porter's Five Forces analysis. This is also a strategic tool that is used to analyse the competitive environment of the industry in which The Volkswagen Emissions Scandal operates in. Analysis of the industry is important as businesses do not work in isolation in real life, but are affected by the business environment of the industry that they operate in. Harvard Business case studies represent real-life situations, and therefore, an analysis of the industry's competitive environment needs to be carried out to come up with more holistic case study solutions. In Porter's Five Forces analysis, the industry is analysed along 5 dimensions. • These are the threats that the industry faces due to new entrants. • It includes the threat of substitute products. • It includes the bargaining power of buyers in the industry. • It includes the bargaining power of suppliers in an industry. • Lastly, the overall rivalry or competition within the industry is analysed This tool helps one understand the relative powers of the major players in the industry and its overall competitive dynamics. Actionable and practical solutions can then be developed by keeping these factors into perspective. 6. PESTEL Analysis of The Volkswagen Emissions Scandal Another helpful tool that should be used in finding the case study solutions is the PESTEL analysis. This also looks at the external business environment of the organisation helps in finding case study Analysis to real-life business issues as in HBR cases. • The PESTEL analysis particularly looks at the macro environmental factors that affect the industry. These are the political, environmental, social, technological, environmental and legal (regulatory) factors affecting the industry. Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] • Factors within each of these 6 should be listed down, and analysis should be made as to how these affect the organisation under question. 7. VRIO Analysis of The Volkswagen Emissions Scandal This is an analysis carried out to know about the internal strengths and capabilities of The Volkswagen Emissions Scandal . Under the VRIO analysis, the following steps are carried out: • The internal resources of The Volkswagen Emissions Scandal are listed down. • Each of these resources are assessed in terms of the value it brings to the organization. • Each resource is assessed in terms of how rare it is. A rare resource is one that is not commonly used by competitors. • Each resource is assessed whether it could be imitated by competition easily or not. • Lastly, each resource is assessed in terms of whether the organization can use it to an advantage or not. • The analysis done on the 4 dimensions; Value, Rareness, Imitability, and Organization. If a resource is high on all of these 4, then it brings long-term competitive advantage. If a resource is high on Value, Rareness, and Imitability, then it brings an unused competitive advantage. If a resource is high on Value and Rareness, then it only brings temporary competitive advantage. If a resource is only valuable, then it’s a competitive parity. If it’s none, then it can be regarded as a competitive disadvantage. 8. Value Chain Analysis of The Volkswagen Emissions Scandal The Value chain analysis of The Volkswagen Emissions Scandal helps in identifying the activities of an organization, and how these add value in terms of cost reduction and differentiation. This tool is used in the case study analysis as follows: • The firm’s primary and support activities are listed down. • Identifying the importance of these activities in the cost of the product and the differentiation they produce. • Lastly, differentiation or cost reduction strategies are to be used for each of these activities to increase the overall value provided by these activities. Recognizing value creating activities and enhancing the value that they create allow The Volkswagen Emissions Scandal to increase its competitive advantage. 9. BCG Matrix of The Volkswagen Emissions Scandal Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] The BCG Matrix is an important tool in deciding whether an organization should invest or divest in its strategic business units. The matrix involves placing the strategic business units of a business in one of four categories; question marks, stars, dogs and cash cows. The placement in these categories depends on the relative market share of the organization and the market growth of these strategic business units. The steps to be followed in this analysis is as follows: • Identify the relative market share of each strategic business unit. • Identify the market growth of each strategic business unit. • Place these strategic business units in one of four categories. Question Marks are those strategic business units with high market share and low market growth rate. Stars are those strategic business units with high market share and high market growth rate. Cash Cows are those strategic business units with high market share and low market growth rate. Dogs are those strategic business units with low market share and low growth rate. • Relevant strategies should be implemented for each strategic business unit depending on its position in the matrix. The strategies identified from the The Volkswagen Emissions Scandal BCG matrix and included in the case pdf. These are either to further develop the product, penetrate the market, develop the market, diversification, investing or divesting. 10. Ansoff Matrix of The Volkswagen Emissions Scandal Ansoff Matrix is an important strategic tool to come up with future strategies for The Volkswagen Emissions Scandal in the case solution. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products. • The organization can penetrate into existing markets with its existing products. This is known as market penetration strategy. • The organization can develop new products for the existing market. This is known as product development strategy. • The organization can enter new markets with its existing products. This is known as market development strategy. • The organization can enter into new markets with new products. This is known as a diversification strategy. The choice of strategy depends on the analysis of the previous tools used and the level of risk the organization is willing to take. 11. Marketing Mix of The Volkswagen Emissions Scandal The Volkswagen Emissions Scandal needs to bring out certain responses from the market that it targets. To do so, it will need to use the marketing mix, which serves Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] as a tool in helping bring out responses from the market. The 4 elements of the marketing mix are Product, Price, Place and Promotions. The following steps are required to carry out a marketing mix analysis and include this in the case study analysis. • Analyse the company’s products and devise strategies to improve the product offering of the company. • Analyse the company’s price points and devise strategies that could be based on competition, value or cost. • Analyse the company’s promotion mix. This includes the advertisement, public relations, personal selling, sales promotion, and direct marketing. Strategies will be devised which makes use of a few or all of these elements. • Analyse the company’s distribution and reach. Strategies can be devised to improve the availability of the company’s products. 12. The Volkswagen Emissions Scandal Strategy The strategies devised and included in the The Volkswagen Emissions Scandal case memo should have a strategy. A strategy is a strategy that involves firms seeking uncontested market spaces, which makes the competition of the company irrelevant. It involves coming up with new and unique products or ideas through innovation. This gives the organization a competitive advantage over other firms, unlike a red ocean strategy. 13. Competitors analysis of The Volkswagen Emissions Scandal The PESTEL analysis discussed previously looked at the macro environmental factors affecting business, but not the microenvironmental factors. One of the microenvironmental factors are competitors, which are addressed by a competitor analysis. The Competitors analysis of The Volkswagen Emissions Scandal looks at the direct and indirect competitors within the industry that it operates in. • This involves a detailed analysis of their actions and how these would affect the future strategies of The Volkswagen Emissions Scandal . • It involves looking at the current market share of the company and its competitors. • It should compare the marketing mix elements of competitors, their supply chain, human resources, financial strength etc. • It also should look at the potential opportunities and threats that these competitors pose on the company. 14. Organisation of the Analysis into The Volkswagen Emissions Scandal Case Study Solution Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] Once various tools have been used to analyse the case, the findings of this analysis need to be incorporated into practical and actionable solutions. These solutions will also be the The Volkswagen Emissions Scandal case answers. These are usually in the form of strategies that the organisation can adopt. The following step-by-step procedure can be used to organise the Harvard Business case solution and recommendations: • The first step of the solution is to come up with a corporate level strategy for the organisation. This part consists of solutions that address issues faced by the organisation on a strategic level. This could include suggestions, changes or recommendations to the company's vision, mission and its strategic objectives. It can include recommendations on how the organisation can work towards achieving these strategic objectives. Furthermore, it needs to be explained how the stated recommendations will help in solving the main issue mentioned in the case and where the company will stand in the future as a result of these. • The second step of the solution is to come up with a business level strategy. The HBR case studies may present issues faced by a part of the organisation. For example, the issues may be stated for marketing and the role of a marketing manager needs to be assumed. So, recommendations and suggestions need to address the strategy of the marketing department in this case. Therefore, the strategic objectives of this business unit (Marketing) will be laid down in the solutions and recommendations will be made as to how to achieve these objectives. Similar would be the case for any other business unit or department such as human resources, finance, IT etc. The important thing to note here is that the business level strategy needs to be aligned with the overall corporate strategy of the organisation. For example, if one suggests the organisation to focus on differentiation for competitive advantage as a corporate level strategy, then it can't be recommended for the The Volkswagen Emissions Scandal Case Study Solution that the business unit should focus on costs. • The third step is not compulsory but depends from case to case. In some HBR case studies, one may be required to analyse an issue at a department. This issue may be analysed for a manager or employee as well. In these cases, recommendations need to be made for these people. The solution may state that objectives that these people need to achieve and how these objectives would be achieved. The case study analysis and solution, and The Volkswagen Emissions Scandal case answers should be written down in the The Volkswagen Emissions Scandal case memo, clearly identifying which part shows what. The The Volkswagen Emissions Scandal case should be in a professional format, presenting points clearly that are well understood by the reader. Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] 15. Alternate solution to the The Volkswagen Emissions Scandal HBR case study It is important to have more than one solution to the case study. This is the alternate solution that would be implemented if the original proposed solution is found infeasible or impossible due to a change in circumstances. The alternate solution for The Volkswagen Emissions Scandal is presented in the same way as the original solution, where it consists of a corporate level strategy, business level strategy and other recommendations. 16. Implementation of The Volkswagen Emissions Scandal Case Solution The case study does not end at just providing recommendations to the issues at hand. One is also required to provide how these recommendations would be implemented. This is shown through a proper implementation framework. A detailed implementation framework helps in distinguishing between an average and an above average case study answer. A good implementation framework shows the proposed plan and how the organisations' resources would be used to achieve the objectives. It also lays down the changes needed to be made as well as the assumptions in the process. • A proper implementation framework shows that one has clearly understood the case study and the main issue within it. • It shows that one has been clarified with the HBR fundamentals on the topic. • It shows that the details provided in the case have been properly analysed. • It shows that one has developed an ability to prioritise recommendations and how these could be successfully implemented. • The implementation framework also helps by removing out any recommendations that are not practical or actionable as these could not be implemented. Therefore, the implementation framework ensures that the solution to the The Volkswagen Emissions Scandal Harvard case is complete and properly answered. 17. Recommendations and Action Plan for The Volkswagen Emissions Scandal case analysis For The Volkswagen Emissions Scandal, based on the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis, the recommendations and action plan are as follows: • The Volkswagen Emissions Scandal should focus on making use of its strengths identified from the VRIO analysis to make the most of the opportunities identified from the PESTEL. Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

Email us for Any Case Solution at: [email protected] • The Volkswagen Emissions Scandal should enhance the value creating activities within its value chain. • The Volkswagen Emissions Scandal should invest in its stars and cash cows, while getting rid of the dogs identified from the BCG Matrix analysis. • To achieve its overall corporate and business level objectives, it should make use of the marketing mix tools to obtain desired results from its target market. Email us for Any Case Solution at: [email protected] Note: This article is just a sample and not an actual case solution. If you want original case solution, please place your order on the Email.

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Lessons Learned from Volkswagen Crisis Management Case Study

Crisis management is a critical aspect of maintaining a company’s reputation and trust in the face of unexpected challenges. 

One such notable case is the Volkswagen crisis, which sent shockwaves through the automotive industry and beyond. 

The emission scandal, involving the deliberate manipulation of emissions tests, not only tarnished Volkswagen’s brand image but also resulted in severe financial consequences. 

We present Volkswagen crisis management case study that we delve into Volkswagen’s crisis management approach, analyzing their initial response, communication strategies, and the role of leadership.  

Whether you’re a business leader or simply interested in corporate reputation management, this blog post offers valuable lessons and recommendations for navigating crises and safeguarding brand integrity.

Let’s dive in and learn more about this

Background of the Volkswagen crisis 

At the heart of the Volkswagen crisis was a shocking revelation that rocked the automotive industry and shattered the trust of millions of customers worldwide. 

In 2015, it was uncovered that Volkswagen had been involved in a large-scale emission scandal, where the company deliberately installed software in their diesel vehicles to manipulate emissions test results. 

The software, known as a “defeat device,” allowed the vehicles to detect when they were being tested for emissions and adjust their performance accordingly to meet regulatory standards. However, during real-world driving conditions, these vehicles emitted significantly higher levels of pollutants, such as nitrogen oxide (NOx), than what was permitted by environmental regulations.

This scandal, initially discovered by researchers and later confirmed by regulatory authorities, exposed the extensive deception and unethical practices within the company. It affected millions of Volkswagen vehicles globally, resulting in severe environmental implications and public health concerns. 

The revelation not only impacted the reputation of Volkswagen but also shook the confidence of customers, shareholders, and the entire automotive industry.

The emission scandal quickly evolved into a full-blown crisis, necessitating a comprehensive crisis management approach to mitigate the damage and regain trust.

Impact on Volkswagen’s Brand Image and Financial Performance

The emission scandal had a profound and far-reaching impact on Volkswagen’s brand image and financial performance.

The revelation of intentional deception and violation of emission standards shattered the trust that customers, stakeholders, and the general public had in the company.

Volkswagen, once hailed as a symbol of engineering excellence and environmental responsibility, was now viewed as a company willing to sacrifice ethics for competitive advantage.

The damage to Volkswagen’s brand image was significant. The scandal tarnished the company’s reputation for reliability, honesty, and environmental consciousness. Consumers felt betrayed and questioned the integrity of Volkswagen’s entire product line.

The negative media coverage and public scrutiny further eroded the brand’s credibility, leading to a substantial decline in customer loyalty and sales.

Financially, the impact was devastating. Volkswagen faced hefty fines, legal settlements, and costly recalls to address the affected vehicles. The company incurred billions of dollars in expenses related to legal proceedings, compensations, and repairing the damages caused.

The market value of Volkswagen plummeted, leading to a significant decrease in stock prices and investor confidence. The financial repercussions extended beyond the immediate aftermath of the scandal, with long-term consequences for the company’s profitability and market position.

The combination of reputational damage and financial losses made it imperative for Volkswagen to implement effective crisis management strategies to mitigate the impact and begin the process of rebuilding trust with stakeholders.

The recovery process would require not only addressing the immediate fallout but also implementing long-term measures to regain credibility and restore the brand’s reputation.

This documentary also further explains different aspects of the Volkswagen crisis.

Initial response and handling of the crisis by Volkswagen

Volkswagen’s initial response to the emission scandal was widely criticized for its lack of transparency and accountability. When the news broke, the company’s initial reaction was denial and deflection, attempting to downplay the severity of the issue. Volkswagen initially attributed the discrepancies in emissions to technical glitches and procedural errors rather than deliberate manipulation.

As the evidence against the company became overwhelming, Volkswagen eventually admitted to the intentional use of defeat devices in their vehicles. The CEO at the time, Martin Winterkorn, issued a public apology and acknowledged the breach of trust. However, the response was perceived by many as too little, too late, and lacking genuine remorse.

Volkswagen’s communication strategy during the crisis was also heavily criticized.

 The company struggled to provide clear and consistent messages, leading to confusion and further erosion of trust. The lack of timely and transparent communication only fueled speculation and intensified public outrage. Customers, shareholders, and regulatory bodies demanded greater accountability and transparency from the company.

Furthermore, the crisis exposed a failure of leadership within Volkswagen. The top management, including Winterkorn, faced allegations of negligence and a lack of oversight. The perception of a corporate culture that prioritized profits over ethical conduct further damaged the company’s credibility.

Evaluation of communication strategies used

Volkswagen’s communication strategies during the emission scandal were widely criticized for their inadequacy and lack of transparency.

Here are some key aspects of Volkswagen’s communication strategies that require evaluation:

• Lack of Transparency: One of the major shortcomings of Volkswagen’s communication was the lack of transparency. Initially, the company failed to disclose the true extent of the issue, instead opting for vague explanations and downplaying the severity of the emissions manipulation. This lack of transparency eroded trust and further damaged the company’s reputation.
• Delayed Acknowledgment: Volkswagen took a considerable amount of time to acknowledge its wrongdoing and admit to the deliberate use of defeat devices. This delay in accepting responsibility created the perception that the company was not genuinely remorseful and had tried to cover up its actions. Such delays can significantly hinder crisis management efforts and exacerbate the negative impact on stakeholders’ trust.
• Inconsistent Messaging: Volkswagen’s communication during the crisis suffered from inconsistencies. Different statements from various company representatives and executives created confusion and diminished credibility. In a crisis, it is crucial to provide consistent and unified messages to ensure clarity and maintain trust.
• Insufficient Customer Communication: Volkswagen’s communication with affected customers was also a point of contention. Many customers felt left in the dark, unsure of the implications for their vehicles or the steps being taken to address the issue. Proactive and transparent communication directly with customers could have helped alleviate concerns and demonstrate a commitment to resolving the situation.
• Lack of Empathy and Apology: Another notable shortcoming was the perceived lack of genuine empathy and apology in Volkswagen’s communication. While a public apology was eventually issued, it was widely viewed as insincere and reactive rather than proactive. Effective crisis communication requires a heartfelt apology and acknowledgment of the impact on affected stakeholders.

Role of Volkswagen leadership in managing crisis 

Following are some of the key roles that Volkswagen leadership played during the crisis:

• Initial Denial and Lack of Accountability: The leadership at Volkswagen initially denied the allegations and downplayed the severity of the emissions scandal. This response reflected a lack of accountability and transparency, which further eroded trust and escalated the crisis.
• CEO Resignation: As the scandal unfolded, Martin Winterkorn, the CEO of Volkswagen at the time, resigned from his position. This leadership decision demonstrated a sense of accountability and was seen as an acknowledgement of the failure in overseeing the company’s actions. However, some critics argued that the resignation came too late in the crisis management process.
• Public Apology and Admissions: Following the resignation of Winterkorn, leadership at Volkswagen, including the newly appointed CEO Matthias Müller, issued public apologies and admitted to the deliberate use of defeat devices. While the apologies were seen by some as reactive, they were still an important step towards accepting responsibility and beginning the process of rebuilding trust.
• Implementation of Remedial Measures: Under new leadership, Volkswagen took steps to address the crisis. The company initiated massive recalls of affected vehicles, introduced technical fixes to comply with emission standards, and invested in the development of electric and hybrid vehicles to shift towards cleaner technologies. These actions demonstrated a commitment to rectifying the issue and investing in more sustainable practices.
• Legal Settlements and Fines : Leadership at Volkswagen also engaged in negotiations with regulatory authorities and affected stakeholders to settle legal disputes and pay fines. This involvement in legal proceedings was a critical responsibility of leadership to resolve the crisis and mitigate financial damage.
• Cultural and Organizational Changes: The crisis prompted Volkswagen’s leadership to initiate cultural and organizational changes within the company. They aimed to foster a more transparent and ethical culture, emphasizing compliance and accountability. These changes were aimed at preventing similar incidents in the future and rebuilding the organization’s integrity.

Lessons learned from Volkswagen’s crisis management Case Study

Following are six key lessons that orgnaizations can learn from Volkswagen crisis management case study: 

A. Importance of transparency and honesty in crisis communication

The Volkswagen crisis highlighted the criticality of transparency and honesty in crisis communication. Attempting to conceal or downplay the severity of the issue can significantly exacerbate the crisis and erode trust further. Openly acknowledging the problem, providing accurate information, and maintaining transparency throughout the crisis are crucial for rebuilding trust and credibility.

B. The significance of swift action and accountability

Volkswagen’s crisis management highlighted the importance of taking swift action and demonstrating accountability. Delays in acknowledging and addressing the issue can prolong the crisis and deepen public distrust. Taking immediate steps to rectify the problem, such as recalls, technical fixes, and accepting responsibility for the wrongdoing, helps mitigate the damage and shows a commitment to making amends.

C. Building and maintaining trust with stakeholders

The crisis underscored the essential role of trust in maintaining strong relationships with stakeholders. Volkswagen learned the hard way that once trust is lost, it takes significant effort and time to regain it. By prioritizing open and honest communication, delivering on promises, and implementing measures to prevent future incidents, companies can rebuild trust with customers, employees, shareholders, and regulatory bodies.

D. Strengthening ethical practices and corporate culture

The Volkswagen crisis shed light on the need for stronger ethical practices and a culture that prioritizes integrity. Organizations must foster a culture where ethical conduct is valued, promoted, and consistently upheld. This includes implementing robust compliance mechanisms, encouraging whistleblowing, and ensuring ethical behavior permeates all levels of the organization.

E. Crisis preparedness and proactive measures

The Volkswagen crisis emphasized the importance of crisis preparedness and proactive measures. Organizations should develop comprehensive crisis management plans, including scenario analysis, risk assessments, and communication strategies. Being proactive in identifying potential risks and implementing preventive measures can help mitigate the impact of a crisis and enable swift and effective response.

F. Continuous learning and improvement

The crisis served as a reminder that organizations must continuously learn from their mistakes and improve their practices. Conducting post-crisis evaluations, analyzing the root causes, and implementing corrective actions are essential for preventing future crises and strengthening the resilience of the organization.

Final words 

The Volkswagen crisis management case study serves as a poignant reminder of the critical importance of effective crisis management in safeguarding a company’s reputation and stakeholder trust. The lessons learned from this case can guide organizations in navigating crises and mitigating their impact. Transparency, honesty, and swift action are essential in crisis communication, while accountability and a strong ethical foundation are vital for rebuilding trust. 

Building and maintaining trust with stakeholders requires consistent effort and a commitment to delivering on promises. By prioritizing crisis preparedness, proactive measures, and continuous learning, organizations can enhance their resilience and minimize the likelihood and severity of future crises.

About The Author

Tahir Abbas

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