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Jordyn Freed

Rob Nicholls
TABL2712
3 June 2016
What Went Wrong at Volkswagen?
Introduction:
Trust is something that can take a company years to establish among its consumers, but one
scandal can completely demolish the loyalty a business has with its shareholders. One company
that can prove this statement to be true is the commercial car company Volkswagen,who lost the
respect of many when it was announced that Volkswagen had been cheating environmental
emissions test. Whenever a company is found to be dishonest one question arises from the
public, why? By all accounts Volkswagen seemed to be a successful, ethical company that valued
the loyalty and trust of its consumers. The idea that a well-functioning company would put
monetary gains ahead of the environment and its stakeholders left many unsettled. In addition,
why didn't any of the company's employees blow the whistle on the illegal conduct? At least
some of Volkswagen's workers must have felt guilty about the illegal actives the company was
partaking in, but it was not until an outside party called the company into question that the
scandal became public. Furthermore, it is very likely Volkswagen violated its codes of ethics and
conduct by their unethical, secretive, and dishonest actions. Ultimately, in order to increase
profitability, Volkswagen used unethical and illegal actions by manipulating its cars fuel systems
when they were being tested, and this led to a broken loyalty and trust of its stakeholders. In this
scenario, the company cannot justify its immoral actions because of its failure to consider the
triple bottom line, its stakeholders, and broken code of ethics.
The Ends Justifying the Means
As far as the public knows, Volkswagen was not in any financial trouble at the time the company
first started experimenting with ways to cheat the emissions test. Everyone can make a mistake
from time to time, but the enormity of Volkswagen's mess up is baffling. How can a successful
company put its reputation on the line just to increase profitability? The risks of this decision
clearly outweighed the potential rewards, but when money is on the line people can get selfish
and fail to see the big picture. The short-term result of duping the emissions test resulted in
Volkswagen earning more money, and becoming more competitive with other diesel car
companies such as Toyota. However, after the truth came out about how Volkswagen was
cheating the emissions tests the company was caught up in a huge scandal. Because
Volkswagen's outcome was not for the greater good or affected many people in a positive way, it
is impossible for the company to defend their actions. If Volkswagen's end goals were less
selfish, it may have been possible for it to defend its immoral means. Since this is not the case,
Volkswagen had no other choice other than to admit its wrong doing, and beg for forgiveness
from its customers. In a BBC World News online article written by business reporter Russell
Hotten, he quotes VW America Boss, Michael Horn, who says, "We've totally screwed
up"(Hotten n.pag). Although this statement seems a little unprofessional and very simple, the
weight of a company admitting they messed up without trying to provide excuses is very
powerful. This quote demonstrates that the company knows what it has done is morally wrong,
inexcusable, and the only way to move on is to acknowledge its unethical conduct. When or even

if Volkswagen is forgiven by its consumers and the public it will take a lot of apologizing and
huge actions to get back to where the company once was.
The Triple Bottom Line
It is expected that the law is the minimal standard of ethics that a business most follow; however,
it is the hope that businesses will go beyond what is necessary of it. In regard to Volkswagen, the
company failed to follow the law which ultimately means it also did not follow any ethical code
while deceiving the emissions test. Although this is not always the case, it is in this situation
because Volkswagen failed to act with at ethical actions or moral intent. In addition to the law, a
company should also consider the "triple bottom line" when making any decision, and this refers
to a business's responsibility to people, the environment, and profitability of the business. When
a company considers all aspects of the triple bottom line it is more likely that it will engage in
ethical conduct because it has to consider how its actions will effect many different people,
involved and uninvolved in the company, and the environment. However, when examining the
situation with Volkswagen it is apparent that the only part of the triple bottom line considered by
the company was its profit. Although earning money is an important part of any business it
should not be the only thing considered when making decisions for a large corporation. This is
especially true when the decision could have damaging repercussions in the future. Whatever
profit was considered in the short term was ultimately lost once the scandal broke out. In
addition, Volkswagen's profitability plummeted once people found out that they had been
deceived, and the company was forced to pay vey large fines. Therefore, even though the
company my have seen a spike in sales at first, once Volkswagen was caught breaking the rules it
not only lost money, but also its reputation as an honest company.
By deceiving the emissions test, Volkswagen became more competitive in the diesel car industry
and was thus able to earn more money. Again, the idea of becoming more profitable outweighed
any other concern that the company should possess such as the other two components of the
triple bottom line. For example, the cheating of the system led to the environment being harmed,
and people being misled. Because Volkswagen rigged its emissions test there was not an accurate
account of pollutants being admitted from its cars. This led to third parties being very confused
as to where these extra bad fuels were coming from. If the United States did not have strict rules
and testing in place then it is likely that Volkswagen would have gotten away with its cheating of
the emissions test. However, America's Environmental Protection Agency (EPA) was able to
catch Volkswagen in its deceiving act when the cars were tested under normal circumstances.
This revealed that Volkswagen cars were emitting pollutants about forty times over the limit,
which means Volkswagen not only deceived its consumers, but also broke the law (The
Economist n.pag). Although, Volkswagen's cars in the states were found to be cheating emissions
systems it is unclear what the company's cars in Europe are doing. This is because in Europe the
rules of testing diesel engines is much less strict, and typically testing is done by the companies
themselves instead of a third, unbiased, company. Therefore, it is much easier to get away with
deception and trickery without ever getting caught. However, it is the hope that Volkswagen
learned its lesson with the scandal in America, and would not try to lie to its consumers again.
There are laws set in place so that companies do not cause too much harm to the environment,
but even with these rules the environment is not being protected as much as it should.By
Volkswagen cheating emissions test it not only broke the law, but harmed the environment in

ways it could not fix. In addition to failing its responsibility to the environment, VW also let
down many people, specifically its stakeholders.
Stakeholders
As a company, Volkswagen has many external and internal stakeholders that makeup the brand
and that it has to report to. A stakeholder is anyone who is invested in a business in someway.
The definition is very broad because many different people have something to lose or gain in a
company's ventures. In addition, there are two different types of stakeholders: internal and
external. An internal stakeholder is someone who is committed to a business, and an external
stakeholder is someone who is effected by the decisions of the internal stakeholders and the
business as a whole. When running a company it is imperative to consider perspectives from
both types of stakeholders because this will lead to a business with strong,dedicated workers, and
a large fan base of loyal, potential customers. Volkswagen's internal stakeholders are comprised
of the business's owners, managers, and employees. Whereas the external stakeholders of the
company would be customers, shareholders, suppliers, society, and even the government.
Volkswagen's external stakeholders are comprised of larger, more diverse categories because one
business can effect so many people directly and even indirectly.
When examining what went wrong at Volkswagen, it is important to look at the different levels
of employment. For example, it is of value to know where in the chain of command the business
became corrupted. This would allow outsiders to know who could have or should have blown the
whistle on Volkswagen's illegal conduct. In addition, it would also excuse other employees from
having dirty hands or being involved in the scandal. Out of the three internal stakeholders, it is
likely that the higher up positions such as owners and managers corrupted the smaller positions,
the employees. In the article The Volkswagen Emission Scandal: A Case Study in corporate
misbehavior authors, Tima Bansal, Michael King, and Gerard Seijts, write, "While it is still too
early to know where to lay the blame in the VW scandal, leadership failures of this type are often
due to a failure in character, not a lack of competencies or commitment" (Bansal, King, and
Seijts n.pag). Although, it is unclear whose at fault for Volkswagen scandal, it is likely that it
came from a higher up portion. The person in charge wanted the company to succeed and would
do whatever it took to make this possible. However, cheating the system ultimately put the
company in a losing situation once it was discovered that the engines had been fixed during the
emissions test. Therefore, even though the people in charge wanted what's best for the company,
they failed to achieve this in a fair, moral, and legal way. It could also be possible that smaller
positions were kept completely in the dark about the company's illegal conduct so that the
information was less likely to be shared. This is because every employee of a business has the
right to blow the whistle on said company when there is a threat to the public or the company is
engaging in wrongdoing. Although, blowing the whistle is a right, it can still be risky and cause
negative repercussions to the person who brings the negative attention to light. For example,
employees such as engineers probably did not receive the option of cheating emissions tests if
they wanted to keep their jobs where as sales representatives might have been unaware of what
was going on in the company. The outside world may never know what the exact situation with
Volkswagen is, but it is important to still consider all possibilities.
Outside of Volkswagen's internal stakeholders, it hurt a lot of innocent people directly that only
supported the brand such as its shareholders, customers, and suppliers. Volkswagen's

shareholders provided monetary assistance to the company, and ultimately lost a lot of money
when the scandal of the emissions tests was brought to light. This is because shareholders have
stocks in a company so if the company loses money than the shareholder will also feel a loss. In
addition to shareholders, the consumers of Volkswagen who bought the diesel cars with lying
emissions systems felt cheated by the company because they were not receiving the item that
they thought. Even customers who have other Volkswagen products may be weary if the
information of said products is truthful. By deceiving people Volkswagen lost its most loyal
supporters and in a matter of seconds destroyed a reputation that had been untarnished for so
long. Volkswagen's suppliers also felt the negative consequences of the scandals because even
though they did not mean to, they now were part of a product that deceived so many. In addition
if sales were to go down for the company then Volkswagen would need less parts from their
suppliers which would lead to a loss of profit for the companies.
In addition to people who were directly hurt by the lies from Volkswagen, there are also those
who were indirectly effected such as society as a whole as well as the government. Whenever a
scandal is exposed to the public people become paranoid and concerned that they may be getting
cheated as well. In addition, Volkswagen's case effected society because of the extra pollutants
that we're going into the atmosphere that people could have been ingesting. In fact, according to
an article by Jenna Krall and Roger Peng, it is believed that's excess pollutants could have
actually led to deaths of those in the United States (Krall and Peng 15). Therefore even those
who had never even been involved with Volkswagen could have paid the ultimate price, their
lives, because of the unethical and illegal conduct engaged in by Volkswagen. The government
also becomes involved in this situation because of the illegal activity. It is now up to the
government to bring justice to all of those who had suffered, and make an example out of
Volkswagen so no other company believes that Volkswagen's actions are tolerable. In addition,
the tests used to check on cars' emissions may need to be redone in order to ensure other
companies are not following in Volkswagen's foot steps. As the article The Volkswagen
Emissions Scandal Explained by Gwyn Topham,Sean Clarke, Cath Levett, Paul Scruton, and
Matt Fidler says, "This particular cheat may be unique to VW but the scandal highlights how few
test results match real-life emissions" (Topham, Clarke, Levett, Scruton, and Fidler n.pag).
Therefore, more steps must be taken to ensure that in the future the tests done on cars do a better
job of matching real life emissions. Ultimately, Volkswagen's actions impacted many of its
internal and external stakeholders both directly and indirectly.
Codes of Ethics and Codes of Conduct
A code of ethics and a code of conduct are very different, but both can play a part in the success
of a company. However, if these codes are not defined or practiced then it could spell trouble for
a company like in the case of Volkswagen. A code of ethics is defined by being general,
judgement based, and contains the aspirations for the company. In comparison, a code of conduct
is more specific and typically lists a set of rules that are not open to interpretation. Volkswagen
makes its code of conduct and code of ethics public on the Internet which allows potential
consumers to see what the company pledges to practice. However, in the case of Volkswagen the
codes can be regarded as pointless because in light of the scandal they seemed to be ignored. In
addition, neither the code of ethics or code of conduct have been changed or updated since the
release of Volkswagen cheating emissions tests. This is concerning because it may lead to
stakeholders questioning if Volkswagen will lie and cheat again in the future. However, hopefully

it just means the company will take more care to ensure all internal stakeholders follow the codes
more carefully in the coming years.
Conclusion
In conclusion, Volkswagen's focus on profitability outweighed the company's concerns about
remaining ethical, the other two components of the triple bottom line, and the overall well-being
of its stakeholders. The illegal actions taken by Volkswagen in order to cheat emissions tests can
not be justified on any level because of selfishness and lack of doing anything for the greater
good. In addition, Volkswagen's choice to ignore not only the law, but also two vital parts of the
triple bottom line resulted in harmful pollutants to the environment and misled people.
Volkswagen let down and deceived many of its stakeholders, and may have even manipulated its
employees to make sure no one blew the whistle. Volkswagen's actions were inexcusable, illegal,
and morally corrupt. It will take a lot of rebuilding and reinstallation of morals for this company
to regain the trust of its customers, but if Volkswagen learns from its tremendous mistakes then
hopefully the company can be prosperous again.
I am using MLA to cite my sources
Bansal, Tima, Michael King, and Gerard Seijts. "The Volkswagen Emissions Scandal: A Case
Study in Corporate Misbehaviour." The Globe and Mail. N.p., 25 Sept. 2015. Web. 03 Apr. 2016.
<http://www.theglobeandmail.com/report-on-business/rob-commentary/the-vw-emissionsscandala-case-study-in-what-not-to-do/article26550100/>.
Grace, Damian, and Stephen Cohen. Business Ethics. 5th ed. Melbourne: Oxford UP, 2013.
Print.
Hotten, Russell. "Volkswagen: The Scandal Explained - BBC News." BBC News. N.p., 10 Dec.
2015. Web. 03 Apr. 2016. <http://www.bbc.com/news/business-34324772>.
Krall, J. and Peng, R. (2015). The Volkswagen scandal: Deception, driving and deaths.
Significance, [online] 12(6), pp.12-15. Available at: http://dx.doi.org/10.1111/j.17409713.2015.00861.x [Accessed 1 Jun. 2016].
The Economist. (2015). A Mucky Business; The Volkswagen Scandal. [online] Available at:
http://search.proquest.com.wwwproxy0.library.unsw.edu.au/docview/1716967577?
accountid=12763&rfr_id=info%3Axri%2Fsid%3Aprimo.
Topham, Gwyn, Sean Clarke, Cath Levett, Paul Scruton, and Matt Fidler. "The Volkswagen
Emissions
Scandal Explained." The Guardian. Guardian News and Media, 24 Sept. 2015. Web. 06 Apr.
2016. <http://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissionsscandal-explained-diesel-cars>.

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