Business Ethics and Responsible Management of Volkswagen

Organization Selected : Volkswagen


Business ethics and responsible management consider different kinds of ethics concern for individual's moral judgement for right and wrong things. In this consideration, decisions are taken within the business that made by individual or groups and it is also influence by the culture of company. It creates significant benefits to a business and develop corporate social responsibility as well (Quarshie, Salmi and Leuschner, 2016).

Present study based on the case of consumer deception in which ethical behaviour has been identified and focused to create appropriate link with several judgements. For gaining insight information of the present report, it covers about the present case which consider effective judgement and make solution for the problem. Furthermore, it contains ethical theories and demonstrate to show leading with different ethics of the case.


A. Ethical dimensions

Ethical dimensions of the issue

Volkswagen the group of America deceived consumers with false advertising that promoted clean diesel (Barrett and, 2015). Thus, they were later discovered as to be fit emission defeat devices that is illegal. The complaint has also been filed in federal court in terms of deceiving consumers by selling or leasing more than 550000 diesel cars that were actually based on the claims that were absolutely false. They claimed that the car were having quality of low emissions, environmental friendly, easily meet the value of emissions and would also maintain high value in terms of reselling. The company has to offer the compensation to consumers who bought the car or leased the car between year 2008 and 2015.

Factors included

The factors that were contributed towards the decision in terms of Volkswagen engineers includes the following-

Pressure- The pressure was in intense manner from the top. The 25 page code of conduct of Volkswagen on which the employees that were involved were trained in ethics, were seemed as irrelevant when they were compared with the autocratic leadership style of management and also towards the goals that was single minded in order to get succeed at any cost. Further, the reputation of the company was at stake. In addition to this, the consequence of failure for the economy and image of the German in terms of design and also in manufacturing sector would become substantial.

Opportunity- There was the presence of the opportunity in terms of cheating. The engineers of the cited company started receiving and coming up with new solution coincidentally with the directive (Whiteman and Hoster, 2015). The diesel engine management system was sold that helped in detecting about testing of the vehicles and also about emission controlling devices that turns on. This was basically based on the understanding that it will be used for testing internally as the use in vehicles was illegal that was sold to public. Thus, the cars in modern world actually operates with about 100 million lines of the software code, that makes it easy in order to hide the code of software that is cheating.

Rationalisation- It was known by the engineers that the defeat devices has been installed by the Volkswagen that helped the company in cheating on the enacted emission standards that were new in market. They rationalised that if they cheated then the punishment would be light as at that time the punishment was merely a fine of $120,000.

As all three parts of dangerous triad are present, there arises a situation in which the employees of a particular company begin to engage in behaviour that is unethical.

Company think the role of business in society

The company has to undertake some social responsibility that involves conducting activities of business in accordance with the functions and principles that is easily recognised and also accepted easily by the society (Russell, Gates, Keller and Watkins, 2016). Thus, on behalf of business the managers of Volkswagen has to discharge various social responsibilities. This is concerned with adoption of such a business policy, procedures and also the decisions that are made so there is maintenance between social objectives and values. The main importance of this is to bring harmonisation in terms of economic and social among the objectives that are in multiple numbers and also among the resources that are limited. Thus, social responsibility is discusses with respect to employees, shareholders, creditors, investors, customers, government and also the society in large.

Key stakeholders

The shares of Volkswagen has been affected as they have lost third of their value and about 22 million euros (Holland, Mansur, Muller and Yates, 2016). A litigation group of finance is backed by the US hedge fund Elliot Management has contact with the top 200 investors of Volkswagen that launches a claim in terms of damage claim in Germany as soon as February. The Germ,an lawyer filed a lawsuit on behalf of retail investors. This unethical practice led the Volkswagen led towards the slump in share value in dramatic way. The emission scandal wiped the value of the company by billion dollars. This has led to the devastating series of critical consequences towards its direct and indirect stakeholders. This is still going under the process of investigation. This investigation is done by various authorities with the main aim of identifying actual impacts in order to come out with the solutions that is suitable in finalising the case.


It is evident that the root of this scandal that is unethical goes back to the culture of business and the structure of the company (Ewing, 2015). Thus, the business ethics that is compliance based like approach of Volkswagen declines in order to treat the employees in ethical manner and also the employees that faces dilemmas of loosing jobs or those taking unethical actions, the cited company thus obtains the result in reverse manner. In addition to this, the employees' action plays crucial role in terms of success and failures of business so it becomes essential in order to value the employees and also to improve the workers' morale that may lead in accomplishing any type of task in ethical manner. Thus, in the practices that are value based there is no existence of hierarchy but the employees of the cited company may work as a team in order to achieve the result that has been desired or expected. Moreover, it helps in promoting the democracy in the company that means the executives have freedom in terms of voicing their complaints to the head or senior of the company that might result in high productivity.

Further, to avoid such type of scandal in occurring in the future, the Volkswagen is being recommended that they must value their each and every members that are involved in the company through the value based approach. In addition to this, it has also been recommended to the selected organisation in ensuring the level of pollutants and emissions that they are under control.

B. Choose TWO ethical theories and demonstrate that you can apply these to the case to show how your chosen theories lead you to a view on the ethics of the case.

The chosen case is based on Consumer deception case in Volkswagen, in deceptive advertising also known as false advertising, refers to a manufacturer's use of puzzling, misleading or stating untrue statements while promoting a product. The company and its manufacturers accused the car makers of false and deceptive advertising. Researchers identified that, vehicles emitted as much as 40 times the amount of allowable nitrogen oxide under US standards at the time of real world driving conditions. It was also found that the company mislead consumers purposely in one of the most egregious cases of false advertising, the auto-mobile sector has ever seen (Sahni and Nair,2016). It has been determined that cases of consumer fraud occur when a company is deceptive, creates false claims. However, there are various theories that can be applied in this case of consumer deception, the major two theories are described below:

Deontology theory of ethics - The morality of conduct is treat by this theory, as being independent of consequences. This doesn't mean that consequences are not important instead the non-consequentialist position is that consequences are not sole determinant of rightness. This theory set special emphasis on the connection between duty and the morality of human actions. Furthermore, the theory makes use of rules to differentiate right from wrong. The theory is considered to be simple to apply. It only requires that people follow the norms and perform their duty. Under this duties may need a moral agent to commit some act or omit some act. Therefore, it is essential to distinguish between various types of duties.

This theory is an ethical framework that depends on the predefined sets of norms and policies for the accurate functioning of a system in the environment. Hence, the theory is best suited for implementing in the case of consumer deception as the theory is based on the checklist which involves certain rules to be followed while performing a particular task. This theory can also be applied in this case because these are the standards UK must establish that keeps advertising and fraud companies from hurting others, because in the context of this theory's belief, hurting others is not right. Further, it has been observed that ethics are difficult to define, as what one person thinks is ethical and right, that might be very different in someone else's thoughts (Vitell and Hunt, 2016). From a person's point of view, ethics could be defined as his/her own introduced standards of right and wrong. This implies that, everyone's ideas regarding what is ethical vary. In addition, there are situations where something people know is wrong, like misleading consumers, suddenly becomes right to marketers. Therefore, the theory can be applied to this case as minimum time is needed to decide between right and wrong.

Utilitarianism theory – The Utilitarianism theory states that an individual needs to think about each and very party involved in in a situation or event and it is important to consider the effect of one's action on the parties(Vaughn, 2015). According to this theory of ethics the organisations or businesses such as Volkswagen, needs to take care of every stakeholder while analysing the positive and negative impact of their business activities. The positive impact should be more as compared to negative influences in each and every decision that is made so that it can be considered ethical by Utilitarian. In the emission case in Volkswagen, the complexity becomes obvious. It can be stated that Volkswagen was involved in an unethical behaviour and was proved to be practising bad business ethics. The company admitted that it manipulated emissions test data and utilised illegal defeat device in few vehicles. Volkswagen is one of the leading car manufacturers in the world that too from a country known for its developed industrial and engineering powers . It was a shocking and unbelievable news for its stakeholders that the company has been involved in illegal practices. In context to utilitarian, Volkswagen would look at the results or outcomes. More focus would be on the good results or the benefits rather on the negative outcome. As per this theory the actions of the company are right if they tend to produce happiness for the large number of customers, Higher performance vehicles would certainly please the customers and healthy sales would help in pleasing each and every employee (Russell, 2016). These results would be measured with higher importance that the pain of those small number of individuals who will create respiratory issues as a result, mainly when none of the laws are being breached. According to this concept, Volkswagen may try to adjust their business actions with their values. A issue with utilitarianism and problem Volkswagen would face with their changes practices is that it focus on the ways to objectively measure these results. As a theory with no socio political sympathy or commitments for specific groups of people, it does not consider the severity of the health conditions of the minority. Hence, it may be a helpful theory for Volkswagen on which to base their defence.


A. What makes an ethical leaders

Ethical leaders foster sense of community and team spirit within the business. When I performed as ethical leader, I will be able to strive and accomplish goals. It is not only personal goals that are concerned about but also genuine efforts also develop benefits in the entire business. Ethical leadership must be implemented by each person in management position to lead and foster in particular environment to maintain trust and respect with workers and executives (Borglund, Frostenson and Helin, 2018). Firstly, I need to define and align morals that assists to grow and treat others to be treated as supportive. Society get more progress with conventions change and often causing value to shift. It is the biggest challenge ethics face in our culture. I required asking myself what matters need to perform as individual and align it with priorities as a leader.

Furthermore, hire people with similar ethics so that common goals and objectives can be successfully established. With hiring process and maintain vision statement, better job ensure to find and aligned with values for increasing experience. I need to perform in every race and sexual orientation which includes different values so that it contain and create very diverse and respectful work culture and team will be aligned around certain ideals. Different experience and perspective also assists to make solution to challenges that helps to share value in critical perspective (Doherty, Meehan and Richards, 2015). Along with this, I need to promote open communication which is one of the important perspective of ethical leader. I believe that one of the important responsibility for modern business is to create open communication within the environment so that people can encourage and make several changes in policies with take stand on current issues.

B. How to manage high ethical standard by manager

As a manager, I need to perform several functions and operations that can be increasing positive results and outcomes. With this regard, employees are getting pay, benefits and work schedule with fair behaviour (Doherty, Meehan and Richards, 2015). Management is also responsible for encourage such behaviour with reward and assess that these are pursuit or not. Ethics programs assists to maintain moral course in turbulent times so that attention in the business ethics also promoted with fundamental change. For both kinds of businesses profit and non-profit, it must be successfully develop to make changes so that there is no clear moral compass to guide leaders with complex conflicts to know what is right or wrong. Continuing attention to ethics at workplace shows consistently that assists to perform functioning at workplace (Haski-Leventhal, Pournader and McKinnon, 2017). Furthermore, I need to promote cultivate strong teamwork and productivity that assists to align employee behaviours with priorities ethical values that are preferred by leaders of the enterprise. An organisation also find surprising disparity at workplace with ongoing attention and values. It also builds openness, integrity and community. Critical ingredients of strong teams in workplace also communicate several benefits so that staff members feel strong alignment between their values and organisation.

Furthermore, I need to focus on the ethics program that can be support with growth and meaning. As a result, confidence also successfully admit and deal to measure effectiveness at workplace. Ethics program also suit to breach contract so that gap between stated corporate culture and actual practice that create significant legal as well as ethical implications (Rasche and Gilbert, 2015).

Organisational values and methods of compliance

In order to make ethical organisation and behaviour from unethical consideration, it can be stated that preferred values and ensure organisational goals can be successfully build with values. As a result, efforts are also made to record values and developing policies with procedure. In this regard, overall efforts is very useful for several other programs that can be consider at workplace and required behaviours to aligned with values. It includes quality management, strategic planning and diversity management. Total quality management is successful method that can be implement to include higher priority on certain operating values such as trust among shareholders, performances, reliability, etc. (Borglund, Frostenson and Helin, 2018).

Ethics management techniques are highly useful for managing strategic values to expand market share, reduce costs, etc. Diversity is more important perspective that acknowledge different values and perspective. This program also requires recognising and applying diverse value and perspective in different activities on the basis of sound ethics management program. Another method can be determine to create overall benefits of ethics programs that assists to managing standards at workplace legitimized managerial actions, strengthens coherence and balance of the organisation's culture. It assists to improve greater consistency in standards and qualities of products (Hibbert and Cunliffe, 2015).


From the above report, it can be concluded that business ethics and responsible management consider important role in the business. With this regard, significant outcomes can be successfully build that assists to focus on the greater consistency in standards and qualities of products. It helps to cultivate greater sensitivity that create impact of enterprise values and messages. Furthermore, it summarised about things that make ethical leaders to gain more desired level of results. In this way, open communication mainly implemented that assists to focus on the managerial actions and activities.

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