Volkswagen Corporaton Essay

For the majority of companies, there are many factors to take into account before they can be profitable with the strategies they use. Organizations create strategies merely as plans to accomplish their goals. Today, it is crucial that they take into account what they are providing for the setting in which they operate. It is crucial that they have strong business social responsibility policies as a result. This has the benefit of enhancing an organization’s competitive advantage in addition to supporting green movement efforts. For Volkswagen, one of the biggest car manufacturing organizations in the world, implementing a CSR move soon meant the company was dealing with a scandal that would shake its future. CSR strategies as implemented by different automobile organizations have differed over the years mostly due to the fact that the industry is partly accountable for the global warming being experienced now. Therefore, they have to implement CSR controls that lower their carbon footprint but for Volkswagen, the opposite was realized thus the scandal.

Volkswagen

History

Volkswagen was founded in the year 1937 by Deutsche Arbeitstront, a Nazi trade union organization with the aim of making family cars. As explained by Bowler (2015), the Nazi leader, Adolf Hitler, commissioned the development of Volkswagen cars at the time to cater for family transportation whereby it would allow for two adults and three children traveling at an average speed of 100km/hr. Given the era of its establishment, the company is best recognized for its humble begins especially during and after the Second World War. History has it that it owns most of its success and growth to its engineering abilities where it has been able to design and develop some of the greatest cars in the history of car engineering in Germany and globally. The organization has had its shares of court cases more so with subsidiary companies over its ownership. However, it has managed to win the cases and gain full control of its operations to become the largest German car manufacturer and the second globally (Bowler, 2015).

Mission and vision of the organization

According to Volkswagen (2013), the company’s mission statement is, “The Group’s goal is to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class” while its vision is, “to gain a position of the world’s leading manufacturer by using intelligent innovations and technologies to shape customers’ satisfaction and quality.”

Organizational Culture

Volkswagen Competing Values Framework largely revolves around its ability to be innovative and competitive (Volkswagen, 2017). This means that it is the kind of organization that will invest in research and development, more so in technology, to redefine the experience of driving for its target population. It is also competitive in that through its innovative values, it seeks to be the best amongst its competitors. In terms of its artifacts, the most remarkable have to be its creativity studio where some of its best designs works concepts are achieved. Another of its artifacts is the beetle car that has for years been its most associated best-selling cars. This is because it sold in millions throughout the world for its remarkable performance

Volkswagen’s espoused company values as includes its desired to be responsible, sustainable and collaborative more so in respect to its employees and green movement initiatives. However, in reality, the company best enact the values of sustainability through its innovation for outstanding car models. Bowler (2015) explains that it is one of the companies that utilize modern technology to give its clients outstanding car models that meet their every want and needs. This results in it achieving its value of being sustainable in its product delivery. In addition to this, it is also true that Volkswagen is responsible in some way as it ensures to be an equal employer by employing capable, skilled and experienced employees as opposed to just anyone. The basic assumption of the company is that for it to realize growth and competitive advantage, it has to match every car model that its competitors launch in the market. And as explained above, this has a lot to do with the technological capabilities of the car in addition to speed, comfort, and safety.

Customers/Clients

Volkswagen’s customer base is broad in that it seeks to serve basically anyone who is looking to drive a superior car in terms of engineering performance. Most of its client base is people who are financially capable in that in as much as their car models are affordable; there are the additional costs of maintenance. Volkswagen’s clients are people who are technology savvy because of the additional features that the cars models now have (Lyons, 2015).

Location Information

The company has it’s headquartered in Germany but because of its global expansion, it now has stations in over 31 countries (Bowler, 2015). This includes the United States, China, India, and South America and recently it opened a station in Kenya. In addition to this, Volkswagen is known to cater for more than 153 countries globally through the sale of its cars. This is one of the reasons as to why it is known for international growth and in particular valuable and durable cars.

Leadership Role/Organizational Chart

The current leadership structure at Volkswagen is overseen by a Board of Management that oversees all of the brands under the group. From this point, the leadership breaks down into the CEO and then the automotive and financial divisions that make up most of the service departments of the group (Volkswagen, 2015). Prior to the scandal, the Guardian (2015) explains that the leadership style at Volkswagen was very authoritative given that the CEO of the brand was very demanding. However, since the scandal, the executives of the group are looking to change this culture and have a style where employees have a say on processes and activities as implemented by the organization. Furthermore, they are looking to enhance how employees and their leaders relate in that the previous will be freer to tell the latter when and how things are going wrong and give recommendations.

Currently, what is the future of the organization

At this point, the future of the organization remains unknown as the scandal will require between 18-21 billion dollars is needed to be addressed in the least destructive way possible (Lyons, 2015). However, it looks like it will survive this phase given the swift changes they are willing to make as an organization and also due to the fact that it is a brand that has addressed difficult situations in the past and managed to rise against all odds.

Overview of the Scandal

In the years leading to Volkswagen admitting it’s wrongdoing that leads to the emission scandal, the company had devised a software that would be used on its diesel-run engineers. To gain competitive advantage the organization would market a car model that was said to be eco-friendly in that it was emitting fewer greenhouse gasses and as such saving the environment. This was proven for every car model that was tested at Volkswagen as a means of it meeting the set standards for gas emission and environmental protection. However, this was far from the truth given that the main objective of the software that was added to the cars was to detect when the car was being tested and alter its operating system to show positive and desired results. Georgievski & AlQudah (2016) further adds that when the software was not running, the cars were emitting almost 40 times of the legally permitted limit of nitrogen oxide. They were slowing killing the planet by not only poisoning the environment but contributing towards respiratory diseases.

According to Georgievski & AlQudah (2016), almost everyone at Volkswagen was involved in the scandal in different ways given that in as much as the decision to use the software came from top management; it was designed and implemented by the workers of the organization. As a result, this impacted different groups and individuals of the organization in unique ways. For instance, the CEO was forced to resign and management was placed in a difficult position of having to devise creative ways of dealing with the problem. This meant addressing stakeholders concerns more so in reflection to the value of the company. For the employees, a vast majority risk being laid off as it is in the plans of the organization to downsize by about 30,000 employees because of the scandal (Tribune News Services, 2016). However, due to the new structural positions that will be formulated, current employees will have the opportunity to seek internal employment.

For its customers, both current and potential, there is that loss of trust. Its customers are most likely feeling betrayed in that they were lead to believe in something and even spend money to buy a product that did not deliver as expected. Therefore, its customers are likely to question ever information the organization gives in regards to their products. As for other manufacturers and the automobile industry, the scandal was more of a learning curve as to how important CSR is a strategy. Given that after the scandal, Audi’s head of research and design, as well as Porsche chief engineer, were forced to resign because of the software association, it only goes to show how interconnected the industry is. As such a scandal such as Volkswagen’s can alter industrial operation for the short or long term.

Thoughts on Volkswagen’s Ethics

From a personal point of view, I would say that Volkswagen’s ethics are lacking a culture of transparency. This is because for an organization to hide from its target population the truth about their engines only to gain a competitive advantage is very wanting. A brand such as Volkswagen is a trusted one in that it is globally associated with great engineering thus cars that perform as designed to. They need to improve their ethical climate by emphasizing not only on the transparency of their processes but honesty within the organizational structure. Creativity should be maximized on but it ought to not be encouraged at the expense of the customer and the environment. Also, management should uphold a culture of wise decision making by emphasizing on the greater good of the vast majority rather than seeking to ensure only that of the organization.

Improvement Plan

Having researched the history, scandal and ethical environment of Volkswagen, the best turnaround plan for the organization will be to deal with the scandal as it implements internal changes to its culture. It is a good thing that Volkswagen come out and admitted its wrongdoing as this can be perceived as it taking responsibility for its damaging decisions. Addressing the scandal as highlighted above is going to cost the company billions of dollars. As such, given that top management has already decided to fire some employees, it would be best if it would devise a way of retaining as much of its employees as possible. Most importantly, internal employees should be considered for the new vacancies that will be created with the additional divisions to be implemented in its structure. This way, the organization does not add more to the scandal by looking as though they are punishing their employees for a scandal that top management should be suffering the most from.

In addition to the above, there is also the need for the organization to reconsider how it looks at and address its CSR. Dans (2015) expresses that for Volkswagen, CSR is more of a marketing exercise and perhaps the reason it is going through the scandal. By reconsidering its outlook at CSR, there is the possibility of the organization developing a culture of responsibility and accountability across its structures. This will ensure that it is in a position to not overlook decisions as each person is accountable for their outcomes and when needed, potential problems are highlighted and taken care of before they become a scandal that can ruin the entire organization.

References

Bowler, T. (2015). Volkswagen: From the Third Reich to emissions scandal. Retrieved from http://www.bbc.com/news/business-34358783

Dans, E. (2015). Volkswagen And The Failure Of Corporate Social Responsibility. Retrieved from http://www.forbes.com/sites/enriquedans/2015/09/27/volkswagen-and-the-failure-of-corporate-social-responsibility/#3d06a21e6128

Georgievski, B. & AlQudah, A. (2016). “The Effects of the Volkswagen Scandal (A Comparative Case Study). Research Journal of Finance and Accounting 7(2) pp. 54-57

Lyons, S. (2015). The road to recovery: How does Volkswagen bounce back from emissions scandal? Retrieved from http://hub.jhu.edu/2015/12/07/volkswagen-scandal-explained-sylvia-long-tolbert/

The Guardian (2015). Volkswagen executives describe authoritarian culture under former CEO. Retrieved from https://www.theguardian.com/business/2015/oct/10/volkswagen-executives-martin-winterkorn-company-culture

Tribune News Services (2016). Volkswagen to shed 30,000 jobs, cutting costs after scandal. Retrieved from http://www.chicagotribune.com/business/ct-volkswagen-vw-job-cuts-20161118-story.html

Volkswagen (2017). Corporate Culture. Retrieved from http://www.volkswagen-poznan.pl/en/corporate-culture

Volkswagen AG (2013). The Group. Available at http://www.volkswagenag.com/content/vwcorp/content/en/the_group.html