VOLKSWAGEN CASE STUDY
Executive summary:
Volkswagen is the leading manufacturer of car products. This company holds Volkswagen group and produced a variety of models. Recently, Volkswagen has been involved in the emission scandals of their equipped vehicles. The company vehicles are equipped with software that was cheating on emission tests. Hence, Volkswagen is the top selling brand of Volkswagen group. Since 1975 the company has been treated as world largest automaker in the world. Volkswagen has the most cars of the automobile manufacturer which has multiple revisions of model names. In this, the crisis management of the Volkswagen emission scandal has been explained in this study.
Introduction:
The Volkswagen emission scandal was held on September 15, 2015. The company involved in the cheating tests on emissions. The environmental protection agency planned to conduct emission test on VW cars where many Volkswagen cars were being sold in America. The diesel engines have been tested and found to be that they hold some software to detect the errors or issues found in the engines. The German car giant admitted a 11 million of vehicles are equipped with cheating emission tests in the U.S (Wei et al, 2015). VW had a major sale of diesel engines cars in the US due its low emission features. But they had scandals with the emission of the vehicles. The Volkswagen manufactured Audi A3, Beetle, Golf, Jetta and Passat. It has almost eight million cars worldwide that are so called as a defeat device.
Vasa been charged by the environmental protection agency with modifying software on diesel engines. The diesel engines being fitted to model names such as Porsche. VW has contested the claims. VW has admitted to test the level of carbon dioxide emissions that could influence 800000 cars. The EPA has said that the engines used computer software which used to measure and test the monitoring speed, engine operation and position of the steering wheel. The defeat device has been tested to aspect of safety mode in which the device ran under the usual performance. But as a result of this test, the engines exploded nitrogen oxide gas or pollutants up to forty times above that normal level that can be allowed in the US. The issue started in the US has spread across the countries. The legal action costs are incurred by the car owners and shareholders that cannot be evaluated at the present time. The result of this crisis will have the financial impact.
The Canada, Korea, South Korea and Germany have raised some investigations towards the scandal emission. The politicians, environmental groups and regulators are questioning about the VW emission testing. The carmaker’s shares have fallen in the year of 2015 and step into 2016 also.
The engineering theory has applied in the emissions scandals where the engineers know about the nature of the causes that to be happening actually. After investigation about the cars, the suspect software has been applied to Volkswagen in 2007 which can be used for internal testing only. The carmakers planned to install the technology in their vehicles. The warning accepted from Bosch, the illegal plan for applying the software in the cars for the sale to the general public (Vernon, Volkswagen of America, and Magazine).
In order to prohibit this, the VW employees fixed the alarm bell if any cars found to be fixed inside the engines. This was founded in the year of 2011. However, some carmakers are preventing to install it.
The volkswagen vehicles have undergone road test by the international council on Clean Transportation it has conducted in 2014. As a result, the vehicle explodes the emission of nitro oxide gas more than a normal. But carmakers argued to the council, the anomalies between the tests and road performance have been held for different technical problems or issues. After the road test, the US seek solution for solving the issues by using the software.
The US authorities planned to conduct the series of tests accessed by the California Air Resources Board where the result of which is unsatisfactory. There was a frequent technical meeting held after the road test. The engineering theories are used in this scandal for emissions in Volkswagen. But everything found to be suspected and unsatisfactory (Ishikawa, and Tsujimoto).
Crisis management:
In this case, the general purpose of the crisis management experts usually praised the companies with the public apologies. But Chiptole made this issue as greater and global issue and asked Volkswagen CEO to apologize their fraudulent activities. The CEO of Volkswagen apologized on the Today show. The social media, ads and other mass media of communication influence this crisis as international issue. The crisis management experts are disagreed that the brand faces more public review challenges. VW employees broke the law. It is important to ensure that food safety is significant that car emissions. Hence, this emission won’t repeat in the future. After the Volkswagen incident, the five crisis management report should be obtained.
They are,
Crises are complex to handle. Crises are the incidents which hits the organization suddenly and reaching a tipping point. Even USA and Germany are aware about the emissions issues, but no one informed the status to VW senior managers.
The crises influenced by internal action are more complex to handle than externally. Here, all organizations of Volkswagen to do, apologize and rebuild the trust with the customers.
Communication is the important for all the crisis management. The authorities should communicate to the shareholders very often even if they had no new news.
Organization should take the own responsibility to recover from the crisis. This seems to be healthier in form of recovering from emission issues. The US agreed to bear all claimed and legal cost incurred for such affairs.
Information should be reached at the time where the public safety must be concerned (Users, 2016).
Issues related to crisis management in US:
In order to analyze the crisis management on the Volkswagen, the extensive research has been used to ensure the reasons and causes behind such crisis. After the emission held in 2015, the UK asked to claim 1.7 million for the crisis happened in South Korea, UK and leading centers of Volkswagen (De Munck, J. and Ferreras, 2015). The US authorities involved in such crisis. They also involved in the crisis management of FIFA scandals. The corruption can be viewed as unethical structure of FIFA. In order to investigate the FIFA scandal, there is more attention paid to the link between the human rights and business in Qatar. However, the preparation of the world cup has short time, the people have been reported to the association that the working has been taken under the poor conditions to the movement of the workers contributing to the event.
There are some collisions between the corruption and human rights are managed. The corruption is one by which human rights are undetermined. The UN Convention and OECD's anti bribery convention haven't any communication between the human rights violation and corruption. The human rights abuses have paved more attention towards the Bribery Act, Foreign Corrupt, national corruption law are associated to the legal violation. The corruption has been kept aside than the human rights and there is a strong association between the corruption and human right (Park, 2014).
The organization like FIFA should determine the risk and great influence the corruptions on communities and stakeholders. FIFA scandal has proven that corruption has influence on the society and people if they go beyond the bribe payments. If the organization tends to start a greater relationship between the human rights and corruption.
The Volkswagen scandal emissions led to environmental issues and impact economically to all carmakers. Recent days, the number of corruption has misled in the United States being recognized as a developed country. In this case, the legislation of US decided to give settlement for such causes happened with Volkswagen emissions. The huge amount of nitric oxide may cause human beings effectively and the major cases it leads to death or severe disabilities.
After the testing made by the Environment Protection agency, the CEO reported in Volkswagen’s Twitter account and said they had not ceased. This argument creates more tensions to the buyers, shareholders and the authorities. All councils raised a violation against such issues done by Volkswagen group and requested the CEO of Volkswagen to resign. Even, it is named as number one car company in the world, this shocked not just entire automobile industry and they never mind VW owners. This scandal is treated as not such a big deal related to the automobile industry as well as environmental protection. Hence the company is regarded as agency of Environmental protection; they cause environmental harm to the human beings with higher emissions of nitric oxide than is legally permissible (Huy). It is suspected to retain a trust of people towards the company where deal with a daily basis. The certain model of diesel engine used by Volkswagen to meet the stringent emission law of US and it was completely marked as incarceration. Earlier, they have used some sensors to perform a function of torque and improve the fuel efficiency as well and also minimize the emissions. This trick used for US to successfully pass the test. Later the serious testing of emission evolved from fuel cars are done by the protection agency (Koplin, J., Seuring, S. and Mesterharm, 2007). The result revealed that they are engaged in Volkswagen scandal emissions. The software cheat choked the Volkswagen car to minimize the emissions during the testing.
After the testing, the software would revert the car to its ordinary parameters with higher torque and increased gas mileage with the exhaust fumes beyond the legal limit. This dramatic change happened during the emissions test. However, Volkswagen seeks resolution for recovering from the emissions scandal. Volkswagen had lost €1.58 billion during the last year due to the faked engine emission tests. In related to the settlement with US car owners and authorities, VW agreed to repair 482000 vehicles which do not meet emission standards (Tran Ngoc Huy, D. and Tran Ngoc Hien). The company has set up some fund to recall the millions of cars, related costs. Volkswagen had suffered worst with the crisis of emission scandals and taken steps to financial recovery. Still, the cost of the settlement is unpredicted. Volkswagen planned to pass Toyota as the top selling automaker for the year. But still many unanswered questions are left to the Volkswagen emissions.
Suggestions:
In order to avoid emissions in the diesel engine cars, the urea based solution treated as a cleansing agent which exit the vehicles. But the urea solution is required to replace more often, especially while performing an oil change (Bartunek, 2002). This method is somewhat bulky, but it is called as optimal hack solution for emission tests. In this case study, the adoption of caring of culture should be required for this crisis management. If one organization relies in trouble, the other organization should give their hands to retain the trust with the customers and financial recovery.
Conclusions:
Volkswagen seeks solution the recall the emission scandals and they are likely to sustain in the competitive world as like before. VW provides more awareness and crisis management guide to avoid the loss of reputation. But in fact, it takes a number of years to recover and retain the trust with the customers. However, they had agreed that the crisis happened in the company and finding solutions for the issue. If the company provides affordable, low emissive and reliable cars in next few years, then it is quite easier to build the trust and fame.
Questions:
Why marketing does not help Volkswagen and what is the things makes them worst?
Volkswagen emission scandals has been spread across the world through the social media, ads and other mass media communication. In this case, the general purpose of the crisis management experts usually praised the companies with the public apologies. But Chiptole made this issue as a greater and global issue and asked Volkswagen CEO to apologize their fraudulent activities. The CEO of Volkswagen apologized for the crisis on the “Today” show. The crisis management experts are disagreeing that the brand faces more public review challenges.
On the other hand, corporate social responsibility is considered as a marketing exercise which had a great failure in Volkswagen (Forbes, 2016). The fully transparent at every step of the operation of the company might cause such crisis. Volkswagen has hidden the fact that the diesel engines are highly contaminated. The head of corporate social responsibility should maintain brand image of the company even the risks and crisis could be managed well. This strategy has clearly shown in the Volkswagen case. However, Volkswagen crisis may highlight the failings of capitalism, blindly focused on the reality of the future, and a clearly unsustainable future (Aseanprnetwork.org, 2016). Hence, Volkswagen has followed public review policy and legislation policy. The rating agency, consequently fetches VW debt, operation, process transparently to the public views. By considering these facts, the marketing does not help Volkswagens and made them feel worse.
Is it important that crisis communication should be well defined in Volkswagen?
The crisis is difficult to handle, but the communication about crisis should be sensitive and quite often. Crises are the incidents which hits the organization suddenly and reaching a tipping point. Even USA and Germany are aware about the emissions issues, but no one informed the status to VW senior managers. The crises influenced by internal action are more complex to handle than externally. Here, all organizations of Volkswagen to do, apologize and rebuild the trust with the customers.
Communication is the important for all the crisis management. The authorities should communicate to the shareholders very often even if they had no new news (Crisis Solutions, 2015). This seems to be healthier in form of recovering from emission issues. The US agreed to bear all claimed and legal cost incurred for such affairs. Information should be reached at the time where the public safety must be concerned. Communication should be speedy in a crisis. In this crisis, it is about the crisis of one company in one country with a single product line, this should not affect other country.
How this scandal emission impact Volkswagen reputation?
Before this emission scandal, Volkswagen had a great reputation of reliability and solidity. Retaining reputation is considered as a long process. This is not done only by words or through misguided corporate social responsibility initiatives or PR experts (Mansouri, 2016). By having the demonstrable change, it is possible to retain the trust through reliable and good performance.
Change is the key attainment for the crisis that to be recovering from the scandal. The changes made during the crisis should not be punished, but it is treated as a significant one. In order to protest this change, Matthais Muller publicly stated that “where there is change, there is opportunity”. Opportunity provides gateway to enhance purpose, direction, values and strategy. The survival instinct of the company should create a better one where the forces changes are acceptable.
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