Introduction
This paper focuses on Volkswagen’s emissions scandal, the company’s ethical dilemma, and the resulting moral failure. There is also information on a description of the company, the factual background of the problem, and the ethical dilemma. The company’s moral framework is described in deciding on that ethical dilemma. There is an analysis of the ethical framework that the company should have used when the problem arose and how to apply it for them to have reached a better result than what happened. The presentation features the analysis of the company’s code of ethics, its potential use in practical situations, and the conclusions from the discussed ethical dilemma. In other words, the current work aims to examine the emission scandal from an ethical perspective.
Company description: Volkswagen
The selected company is Volkswagen, one of the major automakers globally. Volkswagen produces vehicles, engines, and motorcycles and has a global distribution and presence. According to the estimates of the last two decades, it is one of the most developed and profitable businesses in the European Union. Volkswagen Group owns brands such as Volkswagen, Bentley, Audi, Porshe, Lamborgini, Cupra, Skoda, SEAT, and Ducati (Vega, 2017).
It shows that the auto group is the official owner of several renowned brand names that used to be separate companies. The brand name is German, and the company works according to European laws. At the same time, when Volkswagen Group decides to sell its products worldwide, it adapts the cars to the legal requirements of the target company (Vega, 2017). Localization is an essential component in working on the global market.
Background of the problem
The Volkswagen emissions scandal happened in 2015 when the EPA accused the automaker, the United States Environmental Protection Agency. According to it, Volkswagen violated the Clean Air Act that was initially ratified in 1963 in the United States and is regarded as the significant clean air regulated in America nowadays. The accusation emphasized the cheating of Volkswagen that was connected with the software of emissions controls in diesel engines. EPA stated that the TDI or turbocharged direct injection engines activated the emission control only during laboratory testing (EPA, 2018). In other cases, when the car was actively used, there was no emissions control, and the vehicles showed an emission level more than 40 times higher than the reported one (EPA, 2018). More than 11 million cars sold globally featured the wrong information about the emissions level (EPA, 2018).
Ethical dilemma
The ethical dilemma presented by the situation was connected with the lies about emissions control software. Volkswagen lied consciously about the control of this parameter in their diesel engines. The company was accused of falsifying more than 11 million emission reports globally. Though even more severe, when Volkswagen was charged with conscious deception, it continued to insist that there was no fault in its actions (Neate, 2015).
The automaker’s representatives emphasized for more than a year that the falsification resulted from a technical bug in the software (Jacobs and Kalbers, 2019). The company acknowledged that it was a deliberate deception only after the indisputable proofs of the lies were presented in public (Powell, 2018). Therefore, Volkswagen admitted the deception of clients and the conscious air pollution with their diesel engines only after they had the opportunity to deny the accusations.
Ethical framework that the company apparently employed
The company’s ethical framework in deciding on that ethical dilemma was utilitarianism. This view on ethics supposes that the action is justified when the advantages of the decision are more significant than the disadvantages (Mayer and Siedel, 2012). In this case, the company lied about the level of emissions of their diesel engines because it was an effective advertising campaign, and these numbers helped the automaker sell millions of cars globally. In most cases, the clients need to pay more attention to the level of carbon emissions, and they are not interested in the detailed information on this topic. Volkswagen decided to cheat on the laboratory tests regarded as the objective proof of the car’s characteristics to increase the sales of its diesel engines.
Ethical framework to use
The company should have used virtue ethics when the problem arose. It would allow Volkswagen to preserve its reputation as a company that works according to high ethical standards and respects its clients. The main issue is that the deception of the customers and the violation of the environmental laws shows the neglect of business to the needs of people, making earning money the only critical thing in the work of the company (Mayer and Siedel, 2012).
Therefore, it is destructive to the company’s reputation. Virtue ethics, in turn, suppose the emphasis on the moral laws in the decisions Volkswagen should make. For example, deception and conscious violation of the regulations is not acceptable from the perspective of virtue ethics. The pursuit of happiness and well-being of the clients and humanity corresponds to the principles of virtue ethics. Volkswagen sells cars globally, which means it can affect the well-being of society.
Measures to implement
In the future, the company needs to use the principles of virtue ethics in its decision-making. First, it is critical to remember that reputation is fragile, and a public scandal can ruin it instantly. Second, business leaders need to acknowledge that they should respect the laws (Cruden et al., 2018). Therefore, creating products that correspond to the legal basis of the company where the cars are sold is essential. Environmental laws are an example of the regulations that businesses should consider while localizing the product in the country. The third issue that Volkswagen should implement to avoid this type of problem in the future is acknowledging the mistake when the public or the commission finds it out. The denial of one’s own faults when everyone is aware of the conscious deception is even more destructive for the company’s reputation than the mistake itself.
Code of ethics
The Volkswagen Group’s code of ethics applies to the situation. The main issue was that the business representatives needed to use it in the case. The principle of integrity and high quality of production is described on the company’s official website, and they are continually emphasized in public relations campaigns of Volkswagen. The company had the reputation of being the manufacturer of exceptionally high-quality cars. Therefore, all customers believed in the words that the representatives of the Volkswagen group wrote in the descriptions of their products (Chudler, 2022). The central issue, in this case, was that the company’s leaders were too self-assured that everyone would take the high quality of their cars for granted. They worked in the automobile market for decades, which made them believe in their invincibility.
Lessons for business leadership
Business leadership in any company can learn from this situation that integrity is critical in the organization’s work. It is impossible to provide clients with poor-quality products and tell them they are wrong in their opinion. The second crucial point is the importance of respect for the laws and people, as the example of Volkswagen shows. The manufacturers of cars are aware of the air pollution from diesel engines, and they do everything possible to reduce carbon emissions (Chudler, 2022). In this case, the company decided to cheat its clients and the governments of the countries where the vehicles were sold. It leads to severe problems with the company’s reputation.
Conclusion
The third issue that business leaders should remember is that it is easy to spoil a reputation that is difficult to build. The attempts to deny the evident mistake for a year, as Volkswagen did, led to a severe problem with the corporate image. The public scandal has become well-known, and their attitude to the corporation changed significantly. The logic, in this case, is clear: people think that if the manufacturer deceives them concerning emissions control, it can deceive them about other critical things (Chudler, 2022). Therefore, their safety is challenged, and they should find another car to buy.
References
Chudler, K. (2022). “You are not expected to understand this”: How 26 lines of code changed the world. Princeton University Press.
Cruden, J. C., Engel, B., Cooney, N., & Van Eaton, J. (2018). Dieselgate: How the investigation, prosecution, and settlement of Volkswagen’s emissions cheating scandal illustrates the need for robust environmental enforcement. Virginia Environmental Law Journal, 36(2), 118–184. Web.
EPA. (2018). Inspector general finds EPA improved fraud detection since VW scandal. Inside EPA’s Clean Air Report, 29(11), 22–23. Web.
Jacobs, D. & Kalbers, L. P. (2019). “The Volkswagen diesel emissions scandal and accountability.” CPA Journal. Web.
Mayer, W., Siedel, L. (2012). Business law and the legal environment. Saylor Foundation.
Neate, R. (2015). “Volkswagen under investigation over illegal software that masks emissions.” The Guardian. Web.
Powell, J. K. (2018). The VW emissions scandal: Cities as trust fund beneficiaries. Natural Resources & Environment, 32(3), 26–30. Web.
Vega, G. (2017). Volkswagen: Business as usual. Business & Professional Ethics Journal, 36(3), 285–296. Web.