Are you surprised that an organization as large as Volkswagen was caught engaging in such unethical behavior? Do you agree that the organization’s culture could have encouraged this behavior?Are there structural variables that may have influenced the unethical behavior at Volkswagen?Evaluate Volkswagen’s actions based on the factors in Exhibit 5-5. How would you describe the issue intensity of Volkswagen’s actions? Moving forward, what do you think Volkswagen needs to do to avoid such an ethical lapse in the future? Exhibit 5-5How much agreementis there that thisaction is wrong?Issue IntensityHow likely is itHow many peoplethat this actionwill be harmed?will cause harm?Consensusof WrongGreatnessProbabilityof Harmof HarmIssue IntensityConcentrationImmediacy ofConsequencesof EffectProximity toVictim(s)How concentratedWill harm be feltis the effect of theaction on the victim(s)?immediately?How close are thepotential victims? In one of the worst business ethics scandals in history, the world learned in 2015 that Volks-wagen intentionally circumvented government exhaust emission tests for years by installingso called "defeat devices" on their clean diesel vehicles.126 This revelation was a shock tomany given the company's long-standing success in the auto industry. Volkswagen, one ofthe world's most recognized brands, was founded in 1937. The company is headquarteredin Germany but employs more than half a million people around the world.Researchers at West Virginia University (WVU) first discovered the violationwhen they started studying clean diesel engines. When they tested the performance ofVolkswagen vehicles, they were surprised to find that on the road emissions exceededgovernment allowances by almost 40 times. Further investigation by the U.S. Environ-mental Protection Agency (EPA) found that the vehicles were actually equipped withsoftware that could essentially trick emission testing systems. The diesel engines coulddetect when they were being tested for emissions and changed the vehicle's performanceto improve testing results. Once on the road, the vehicle would switch out of the testmode, emitting excessive nitrogen oxide pollutants, as the WVU researchers found.The EPA's finding covered about 500,000 cars sold in the United States only. ButVolkswagen later admitted that about 11 million cars worldwide were fitted with thissoftware. It will be a long time before Volkswagen realizes all of the damage of thisethical blunder. There will be legal sanctions from governments, private lawsuits, andconsumer bans that will impact the company for a long time to come.How could such a blatant ethical violation occur? It may take years to sort out whois to blame. CEO Martin Winterkorn, who resigned in response to the scandal, initiallyclaimed not to know about the devices. While many high-ranking executives were sus-pended, no one is sure who knew about or authorized the software. In fact, some believethat the driven, performance-based culture may be more to blame than any individual.Chapter 5 Socially-Conscious Management 207Winterkorn, who reinforced the uniquedriving perfectionist who was committed to securing the top spot among global carmanufacturers. He was known to criticize employees publically, and this generated bothfear among employees and the commitment to do whatever necessary to ensure thecompany's success. The company's culture has been described as "confident, cutthroat,and insular." It is possible that arrogance led Volkswagen managers to assume that U.S.government or other officials wouldn't discover the misleading emissions tests.What's more problematic is Volkswagen's response to the scandal. The companyfirst suggested a technical problem with the cars, but finally admitted the softwaredevices were designed to cheat the system. Initially, the company reported only a limitednumber of cars were affected; however, as more details were uncovered, the companycure, has been described as a hard-admitted more cars were fitted with the device and that these actions occurred over alonger period of time than originally reported. The company's faulty initial response tothe scandal has clearly made the road ahead a bigger challenge for them. In fact, a recentpoll of Americans’ attitude toward 100 large companies put Volkswagen in last place.

Unethical behavior is associate degree action that falls outside of what's thought of virtuously…

Are you surprised that an organization as large as Volkswagen was caught engaging in such unethical behavior? Do you agree that the organization’s culture could have encouraged this behavior? Are there structural variables that may have influenced the unethical behavior at Volkswagen? Evaluate Volkswagen’s actions based on the factors in Exhibit 5-5. How would you describe the issue intensity of Volkswagen’s actions? Moving forward, what do you think Volkswagen needs to do to avoid such an ethical lapse in the future?

Are you surprised that an organization as large as Volkswagen was caught engaging in such unethical behavior? Do you agree that the organization’s culture could have encouraged this behavior? Are there structural variables that may have influenced the unethical behavior at Volkswagen? Evaluate Volkswagen’s actions based on the factors in Exhibit 5-5. How would you describe the issue intensity of Volkswagen’s actions? Moving forward, what do you think Volkswagen needs to do to avoid such an ethical lapse in the future?

Foundations of Business - Standalone book (MindTap Course List)

4th Edition

ISBN:9781285193946

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Chapter16: Mastering Financial Management

Section: Chapter Questions

Problem 1DQ

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