Management Ethics: Assignment 2

Whether they realize it or not, managers make many decisions every day that can directly or indirectly impact their customers, employees, stakeholders, shareholders, and the company\’s reputation. When making these decisions, managers need to be aware of the legal and ethical implications their decisions may have on others. Some decisions have an obvious impact, such as bribing a government official to secure a contract or falsifying financial documents to make the company appear to be more profitable to shareholders. Management Ethics: Assignment 2 .Other decisions are less obvious, such as hiring one person over another simply based on a \’gut feeling\’ or ignoring a problem on the team in the hopes that it will work itself out. For this assignment, you will examine a real-life ethical dilemma managers have faced in the past. Please write a 1,500 to 2,000-word paper that addresses one of the following dilemmas. • In 2015, Volkswagen was caught in violation of United States\’ emissions standards for vehicles. The automaker designed programming that would allow their vehicles to pass laboratory emissions tests, when in reality, their vehicles were emitting up to 40 times the legal emissions limits. Examine the company\’s decision to engage in these practices and what the fallout for the company was after the practice was discovered. • In early 2017, the ride-sharing company Uber faced several scandals. A former employee posted a blog where she described her experience with gender bias and harassment while at the company, and their new self-driving car technology dangerously failed as it ran a red light while a passenger was crossing an intersection. Examine what decisions the company made that led to these issues, and analyze and evaluate how Uber responded to them. For the situation, please address the following: • Discuss the decision-making process employed by management to address the ethical dilemma, if it was in fact addressed. • Show how management decisions impacted employees, leaders, stakeholders, and shareholders of the organization • Explain the public relations and media strategy the organization used to address the ethical dilemma. Using Sources You may refer to the course material for supporting evidence, but you must also use at least three resources and cite them using APA format. Please include a mix of both primary and secondary sources, with at least one source from a scholarly peer-reviewed journal. If you use any Study.com lessons as sources, please also cite them in APA format, including the lesson title and instructor\’s name. • Primary sources are first-hand accounts such as interviews, advertisements, speeches, company documents, statements, and press releases published by the company in question. • Secondary sources come from peer-reviewed scholarly journals, such as the Journal of Management Ethics, the Journal of Management Studies, or the Harvard Business Review. You may use sources like JSTOR, Google Scholar, and EBSCO to find articles from these journals. Secondary sources may also come from reputable websites with .gov, .edu, or .org in the domain. (Wikipedia is not a reputable source, though the sources listed in Wikipedia articles may be acceptable.) Management Ethics: Assignment 2 .

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Management Ethics

The decision-making process employed by management to address the ethical dilemma

On 18^th September 2015, the United States Environmental Protection Agency (EPA) made an announcement indicting Volkswagen for illegal installation of software in its diesel-fuelled Volkswagen emission scandal was an intention and internal act that deliberately placed the public and stakeholders at risk and managers utilized their authority to mislead consumers and regulators. The scandal was neither an acceded nor an error, but rather decisively crafted fraud and deception. The company took numerous warning s from EBP for granted until 2016 when the company received a threat from EPA to withhold certification of its car models. The management dismissed allegations, claimed that the organization was not responsible, and denied cheating in emission tests to both external and internal stakeholders (Oosthuizen, 2019).

Mansouri(2016) indicate that After EPA discovered that Volkswagen deliberately attempted to cheat the EPA in regard to nitrous oxide engine emissions,  Volkswagen’s CEO  Martin Winterkorn said that software engineers took part in the diesel scandal. The CEO also stated that he was unaware of the precise number of the engineers involved in the scandal and that the company did not make the decision for the installation of the software (Mansouri, 2016). Management Ethics: Assignment 2 .
On3rd and 18^th October 2015, the EPA issued Volkswagen with notices of violation of the Clean Air Act and made the threat to hold back certification on all 2016 model cars.   Faced with the risk of incurring huge losses in the United States, Volkswagen responded by a press statement saying that there will be investigations on the issue. On 20^th and 23^rd 2015, Martin Winterkorn (the then Volkswagen’s global CEO) offered a follow-up statement admitting Volkswagen’s transgressions. During a product presentation in New York, Michael Horn, (The then CEO in the United States) made a public admission that Volkswagen had fitted defeat software in its cars to allow them to beat emission tests (Ephraim, 2016).

Ameen (2020 ) emphasizes that the cheating persisted for ten years before it was detected. An investigation by EPA in 2016 established that 482, 000 cars were fitted with the defective device. Volkswagen pleaded accountable in 2017 and was fined 4.3 billion dollars, which was the higher ever criminal penalty imposed on an automobile company in the United States.  Consequently, Volkswagen made a public apology and made the arrangement to pay 22 billion dollars to claimants including car dealers, owners, and regulators.

Volkswagen management at first tried to avoid offering full apology s because apologies leave a company open to legal liabilities. The delay in apologizing lead to serious damage to the reputation of the organization as managers admitted to using defective devices only after EPL issued the threat to withhold approval for the organization’s Audi diesel and 2016 Volkswagen models. Volkswagen’s decision to admit to wrongdoing was not as a result of social decency but was for financial motives. The company admitted wrongdoing only after the threat of reduced care sales became evident (Oosthuizen, 2019).

How management decisions impacted employees, leaders, stakeholders, and shareholders of the organization

The management decisions hat significant impacts on employees, leaders, shareholders, and stakeholders of the organization. The higher emissions were a threat to people’s health. Volkswagen cars fitted with defeat devices produced an extra poisonous population that directly triggered heart diseases, cardiovascular and respiratory disease, and bronchitis, and premature death (Mansouri, 2016). According to Chu (2015), the utilization of software by Volkswagen to evade emission standards will contribute to premature deaths in the United States. A study carried out at Harvard University and MIT established that excess emissions from the defeat devices used by Volkswagen will cause approximately 60 individuals in the United States to die ten to twenty years prematurely.Management Ethics: Assignment 2 .  Also, it is predicted that the additional emissions produced by Volkswagen will directly contribute to thirty-one cases of bronchitis as well as hospitalization of 34 people with cardiac and respiratory conditions (Chu, 2015).

The management decision caused a drop in employees’/leaders’ bonuses. When manipulation in diesel emission came to the public eye, Volkswagen sales went down. Thus, so as to deal with the financial crisis, the company announced a substantial reduction in the bonus of chief management. The cutback in bonus included the management board along with employees who helped the CEO in operating the company’s daily routine (Mansouri, 2016).

Volkswagen’s shareholders were the most affected because the emission scandal causes a drop in Volkswagen sales. According to Mansouri (2016), Volkswagen’s bad reputation affected customer loyalty, making consumer s switch to Volkswagen’s competitors which resulted in a significant drop in sales. Since 2002, Volkswagen’s sales substantially went down in 2015, thanks to the emission scandal. Also, the unethical practice resulted in a dramatic drop in share value. Mansouri(2016) indicates that immediately after the scandal was revealed, the share value of Volkswagen dropped a third and the stock prices are continually dropping radically in the United States. When deceptive emission was revealed, a package of certain programs to help retailers deal with Volkswagen’s diesel emission rigging was offered to Volkswagen dealers. The program entails money in the form of incentives, bonuses, sales, or subsidies pumped to dealership networks grappling with lower profit and sales.  Management Ethics: Assignment 2 .

The public relations and media strategy the organization used to address the ethical dilemma

The negative effect of a corporate scandal can be serious and often damages relationships between the firm, investors, customers, and the general public. Volkswagen used numerous public relations and media strategies such as television advertisements, press releases, and brand development activities to address the emission scandal. According to Hassan (2019), company’s CEO Martin Winterkorn in the initial days of the emission scandal from 18^th to 23^rd September 2015, there was the publication of numerous stories and news items on all media channels. Volkswagen failed to respond to the negative press made on the first day but on 21st September, the organization admitted cheating on emission tests occurred in the United States but not in Europe.

On 23^rd the company announced that CEO Martin Winterkorn had reigned and released the conclusions of the meeting by board members showing that made extreme efforts to overcome the scandal and regain the trust of stakeholders. Volkswagen employed BP’s oil spoil lawyers to demonstrate that the company was highly committed to its external and internal stakeholders, particularly retailers, employees, and shareholders. After two weeks, Volkswagen launched a marketing campaign titled” We have broken the most important part of our cars: Your Trust”. The campaign meant for customers since they were worried were questioning what would be the fate of their car and if they would be able to resell them at a value.  The company involved numerous marketing activities, that is, social media posts, television advertisements, YouTube videos as well as the redevelopment of services and showrooms. The campaign was intended to lessen the harmful effect of confessing that the company had been involved in wrongdoing. Volkswagen provided solutions, such as a link to the company’s website where owners of Volkswagen cars could access so as to check whether their cars had the defective part (Hassan, 2019).

On 4th February 2016, Volkswagen released an advert on YouTube. The organization posted the video on its official accounts (the company’s main account, the France account, and the United Kingdom Account on YouTube). Hassan (2019) indicates that the advert, branded as the “Champion” was intended to utilize the relationship marketing technique. Management Ethics: Assignment 2 .  In late April 2016, the majority of television news announcements and newspaper articles focused on the agreement between the United States authorities and Volkswagen to repurchase nearly fifty thousand cars that had the defective part.

On 28^th April 2016, Volkswagen made a publication of its yearly report from 2015 which contained the message of the CEO to stakeholders. The CEO’s message had numerous references to the emission issues and the way the organization was trying to tackle the situation appropriately and quickly.  By 28^th June 2018, authorities had made a decision and Volkswagen was requested to pay approximately 15 billion dollars for all defective cars to be bought back.  The announcement was aired on all communication channels (Hassan, 2019).

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References

Ameen, K. (2020). Failure of Ethical Compliance: The Case of Volkswagen. International Journal of Science and Management, 3(1), 7-13.

Chu, J. (October 28, 2015). Study: Volkswagen’s emissions cheat to cause 60 premature deaths in U.S. https://news.mit.edu/2015/volkswagen-emissions-cheat-cause-60-premature-deaths-1029

Ephraim, P. E. (2016). Transparency and Ethical Considerations in Business Organizations: A Comparative study of Crisis Relations Strategies of Volkswagen and Mitsubishi Motors. International Journal of Online Marketing Research, 2, 2. Management Ethics: Assignment 2 .

Hassan, A. S. (2019). Evaluating the Marketing Communication Strategy of Volkswagen in Post-Crisis Period: Application of Image Repair Theory. International Journal of Marketing Studies, 11(2), 87-101. doi: 10.5539/ijms.v11n2p87

Mansouri, N. (2016). A Case Study of Volswagen Unethical Practice in Diesel Emission test. International Journal of Science and Engineering Applications, 5(4), 211-216.

Oosthuizen, M. (2019). Crisis Response Strategies: A Case Study of the Volkswagen Emission Scandal. International Journal of Management and Applied Science, 5(6), 31-37.

Management Ethics: Assignment 2