Volkswagen Scandal: Business Ethics Paper Example

Business scandals have been in existence for as long as the process of business transactions has been in existence. In the past, the world has become witness to such major scandals as the Enron scandal, the WorldCom scandal, the Bhopal and Chernobyl disasters to mentions but a few of the scandals that raised ethical questions in the manner in which business management teams make their decisions in a bid to maximize profits by disregarding various environmental and societal factors. Such scandals have also proved that unethical decisions adversely affect the companies in terms of massive loss of trust and confidence in the organization, as well as the loss of integrity. Presently, the business world has experienced another scandal, the Volkswagen scandal that further proves that although organizations have the obligations to seek strategies to maximize their value and profits, the subject of business ethics is still critical thus should be addressed in the value and profit maximization process.

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The Volkswagen scandal came to light as a result of a group of researchers from west Virginia university winning a grant worth fifty thousand dollars from the international council on clean transportation. This grant was to enable the research team to carry out performance and emissions test on a variety of light duty clean diesel cars under every day or realistic conditions, conditions that varied from those in the lab environment, among which were the vehicles from the Volkswagen brand. In their tests, the researchers thus fitted the vehicles with a portable emissions measurement system that was to collects a constant flow of information and data over a variety of road types in the united states of America.

However, on carrying out the tests, the research teams results varied significantly from those results presented by the Volkswagen company. They found major discrepancies in that their results showed that various Volkswagen vehicles emitted thirty-five to forty percent more emissions than those dictated by the United States government. On discovering this, the research team suspected cheating by the company however they lacked the data to prove it. In presenting their results to the environmental protections agency, an investigation was launched into the Volkswagen emission tests. Further tests by the California air resources board confirmed the discrepancies whereby Volkswagen was confronted; however, they insisted that the discrepancies were as a result of a technical fault as opposed to intentional cheating. Ultimately Volkswagen admitted to their deception when the environmental protection agency threatened not to approve further sales in the united states market.

Clearly, one of the major negative effects of the Volkswagen scandal is the immense negative effect to the environment. Were it not for a non-governmental organization carrying out the tests, the Volkswagen company would not have rectified this flaw and would have carried on producing and selling their cars that were emitting harmful gasses above what was permitted by the government. This action, or lack of action, is by itself unethical as it is the responsibility of any organization to make sure that their products are safe and environmentally friendly, a responsibility that Volkswagen neglected. By releasing vast amounts of nitrogen oxides into the atmospheres and the environment, it led to the risk of the formation of smog, acidic rain and the formation of ground level ozone which has been associated with a myriad of health problems. Furthermore, these nitrogen oxide gasses have also been known to cause damage to plants and vegetation. Thus, by intentionally employing unethical practices, the environmental damage that will result from the Volkswagen scandal is estimated to have far longer lasting and immense adverse effects on the ecosystem.

Moreover, in analyzing how Volkswagen violated business ethics, the deontological ethical view can be applied to better understand the case. Deontology in the field of ethics focusses on the action itself. Pertaining to Volkswagen, the action was equipping their cars with a cheat device. In order to pass various environmental tests so as to sell in specific markets such the united states, Volkswagen was fitting their cars with a cheat device. More precise, the cheat device was not hardware, rather it was software. Diesel cars are supposed to have a software installed that is intended to clean the diesel exhaust. This software is intended to work throughout, however, in the case of Volkswagen, the software was only operational when the car was under test conditions. In normal conditions, the software would automatically shut off which resulted in the release of more emissions.

Thus, according to the ethical considerations of deontology, an individual, or in this case, an organization acts ethically only if they follow a categorical imperative. In the case of Volkswagen, the company, in making their choices, should have followed and acted according to the companys values and objectives, that is, primarily maximizing value. Thus, according to the categorical imperative, the company should strive to produce and offer products that are environmentally sound and safe for their customers. However, when taking into account the actions by Volkswagen, it is clear that their actions were unethical. In regards to the vehicles, the adoption of a properly working exhaust emission software would not have any negative impact on the design of the vehicle or its safeness, therefore, had no ethical reason to forego installing it. However, intentionally adding a cheat device had significant negative effects to the environment which goes against the ethical view of providing safe and environmentally friendly products. Hence it is clear that Volkswagen intentionally violated environmental ethics by approving the installation of a faulty software knowing fully that such an action would lead to the significant pollution of the environment.

Furthermore, it is clear that Volkswagen violated environmental ethics by going against the environmental rules and regulations set by the government meant to protect and preserve the environment. According to Bowie as stated by Hoffman, the social responsibility of any organization is to produce goods and services with the primary objective of making and maximizing profit. However, maximizing profit for the benefit of the shareholders should be accomplished within the rules of the market. Such rules and regulations are set by the government and include among others rules that seek to protect the environment. Additionally, Bowie goes to note that a business enterprise is not obligated to more than is required by the rules set by the government. However, in the contexts of the Volkswagen scandal, the implementation of the cheat software in their diesel cars was not in fact within the environmental rules set by the government. The Volkswagen management made the unethical decision to cheat the government as well as their consumers on the environmental friendliness of their vehicles.

Furthermore, although their actions did for a short time maximize profits for the shareholders, once the scandal became public knowledge, the companys stock declined by about thirty six percent as well as a significant reduction of the companys profits. Hoffman further explains on this ethical view by stating that it is the ethical responsibility of any organization to be an active participant in the formulation of solutions dealing with social and environmental dilemmas. In the present society, one of the major concerns is climate change which has been attributed to air pollution caused by such human activities as the burning of fossil fuels. Thus, for a company to knowingly install a faulty software in their products is morally and ethically wrong. Companies, therefore, must develop an environmental conscience and not isolate themselves from the solution seeking process.

In evaluating the violation of the ethics, including the environmental ethics that Volkswagen violated as a result of their cheat software, one can base such analysis on the theory of utilitarianism as proposed by Mill. Utilitarianism in this regard is about what an activity fulfills and whether the consequences of such an activity are ultimately aimed at fulfilling the greater good. Utilitarianism is about amplifying joy, whereby one ought to dependably go for the choice that expands delight for the most people as possible under the circumstances. As per utilitarianism everything in life and each decision can be reduced to a score of joy or satisfaction, regardless of the possibility that there are lives in question. Utilitarianism in the context of the Volkswagen scandal includes the ethical violations pertaining to an assortment of stakeholders. These stakeholders include Volkswagen and its workers which include the companys Chief Executive Officer, the clients, the environmental testing agency and also the indirect stakeholders which include the numerous people living in the areas where the Volkswagen diesel vehicles were sold and were directly or indirectly affected by the unethical actions of Volkswagen.

As per the theory of utilitarianism Volkswagens activities were not ethical nor acceptable, given that their aim was not to maximize the greater good of any or all of the stakeholder involved. Especially taking into account that in the end, after the discrepancies were discovered and the unscrupulous activities of the company were made public, all of the stakeholders were adversely affected more so the environment. Since acceptability and goodness are recognized by value, it merits investigating the value for the Volkswagen case too. Volkswagen was culpable for their activities since they realized that what they were doing was not ethical, as they had created a software that had the ability to cheat and bypass the system. This may have, at the early stages, resulted in the creation of utility, yet this action did not strive towards the greater good for all the stakeholders involved.

For this situation, punishment would be ethically required for Volkswagen since as indicated by act utilitarianism punishment is acceptable when it would prompt more prominent utility. The punishment, in this case, would prevent or at least act as a warning to the car company to not engage in such unscrupulous activities in the future. The same goes for other car producers. In actuality, Volkswagen is at present experiencing punishment, by means of legal claims, a massive drop in profits and stock prices. Furthermore, as a result of their ethical violations, Volkswagen lost a major segment of their market share in the industry for diesel cars. Ultimately, a companys decisions and action should be aimed at maximizing the greater good for all stakeholders while still remaining ethical. In the case of Volkswagen however, the company did not aim for the greater good, rather it opted for unethical behaviors when it opted to cheat their way into bypassing environmental regulations in order to make more sales.

It is also important to note that in achieving their business goals and objectives, most organizations knowingly or unknowingly adopt an individualistic point of view in that the enterprise, as a foundation of its ethical decision making process, is solely concerned with the maximization of profits completely disregarding all other factors. In the context of Volkswagen, it is clear that their motivation in making the unethical decision of installing a cheat device, was motivated by the goal of making as much profit as possible even by going to the extent of breaking the law. The company, in taking an individualistic approach also violated its corporate social responsibility in that it lied to...