The Ethical Issues in the Volkswagen Company

The present business letter targets two important aspects of the internal politics of the business that you manage. These issues concern the corporative ethics-related problems that emerged in the company during the past five years, as well as the challenges that may be caused by the events that happen nowadays. The automobile industry is a highly competitive sphere that bears many challenges for competitors, and their number decreases with the introduction of new technologies such as autonomous vehicles (Zhu, Gu, and Wang, 2022, p. 2; Martinho et al., 2021, p. 4). That is why automobile companies need to consider their past mistakes and improve their ethics-related policies to be able to meet new challenges and not lose them.

The first issue on the agenda concerns the ethical problems that the Volkswagen company met during the past several years. Due to the high competitiveness and flexibility of the sphere, the companies’ CEOs must be aware of current trends and policies that are currently preferable and observe them (Barrow, 2016, p. 3). Corporative ethics, in general, is necessary for those who want to establish a solid and thriving business.

The ethical issues the Volkswagen company had to handle in the past were related to its violation of the US anti-emission laws. As a result, the company had to pay billions to car owners in the USA (Atiyeh, 2019). The disclosure of the company’s violation was possible due to the lack of trust between the employer and the employees, some of whom were engaged in whistleblowing (Chukwu, 2021, p. 2). The most important lessons learned from this scandal, however, should relate not only to the ethical aspect. Since the issue involves ecological matters, the VW company should pay special attention to the regulation of this matter as well. The main lesson from the situation concerns the fact that fast decisions should not be made instead of wise ethical reactions (Tobe, 2020). At the same time, the managers and the CEO must handle the problems but not avoid or conceal them because, in combination with the NDA policy, their revelation may be ruinous for the company’s reputation.

High-profile scandals such as the one the VW company was involved in showed the importance of corporative ethics and the necessity of the employees’ motivation for ethical behavior. They not only help the company from violating norms and rules of car manufacturing but also help them avoid public scandals. One of the most recent approaches that help businessmen incorporate ethics into their companies’ policies is called behavioral ethics, which enables the leaders to understand why some issues may be considered unethical (Mitchell, Reynolds, and Treviño, 2020, p. 4). This approach relies on psychological studies, and the incorporation of behavioral ethics helps managers and CEOs understand the reasons and consequences of ethical and unethical policies and behavior of the employees.

The second issue the present business letter relates to is the challenges the car manufacturing industry is currently facing or may face shortly. COVID-19 has significantly influenced all spheres of people’s lives, including the business sphere. The major problem, in that case, concerns the fact that car sales have plunged since 2020 (Carlier, 2021). Only at the beginning of the pandemic, did the ratio of passenger car sales in Europe decreased by more than sixty-five percent.

Apart from that, COVID-19 influences the car manufacturing process since the factories are forced to shut down due to the high ratio of infected people. As a result, the companies face massive layoffs, though currently, the sphere has started to recover (Iyer, 2022). Thus, manufacturing shutdowns, employees discharge, and decreased amount of car sales belong to the most negative outcomes of the coronavirus on the automobile industry. The pandemic has significantly changed the automobile industry as well as the relations between suppliers and clients. All the changes that were caused by COVID-19 will influence the development of the economic sphere and the customers’ financial and other abilities and preferences (Göttert and Habisch, 2021).

Hence, car manufacturing companies should pay attention to the situation and tendencies in the market and regard the fact that the industry has changed towards the new abilities of the customers.

After the analysis of the two issues mentioned above, it is possible to conclude that unethical policies and their concealing may provoke great scandal and ruin the company’s reputation as it was with the VW company. Ethical standards are extremely crucial for the car industry because their violations lead to the loss of customers’ loyalty and stakeholders’ support and trust, and also payment of penalties (De Silva, 2020, p. 9). As a result, the company will face not only ethics-related but organizational and income problems as well. Apart from that, the automobile industry remains one of the most flexible and fast-changing in the business field. That is why it is necessary to consider the challenges and changes that may emerge due to the inner and outer factors that influence the companies’ performance. Hence, the impact of the pandemic on the area should not be ignored, and the managers and CEOs should consider the influence of manufacturing shutdowns, massive layoffs, and decreasing demand for cars as well.

Finally, several recommendations for the VW company can be made to help it face difficulties and avoid further problems. The most crucial ones relate to the corporative culture since more ethics-related policies should be incorporated to prevent new scandals. It is possible to suggest such measures as the reformation of the compliance culture and expansion of the whistleblower program (Sun and Hagel, 2020). Their implementation will help the company increase the degree of the employee’s loyalty and not to let the further revelation of the NDA treaties. In addition, VW will gain more trust and support from the stakeholders who will see the changes for the better. The improvement of the workplace culture towards making it more ethical both for the employers and the employees will enable Volkswagen to clear its name by showing the ability to fix the previous mistakes. Finally, solid and ethics-oriented corporative culture will help the company face challenges that currently emerge in the industry and handle them without any violations.

The COVID-19 pandemic has shaped the business area because it had to meet such difficulties as layoffs, sales decrease, and increased levels of stress and anxiety in workers. The most relevant recommendations for the companies on that issue should concern cost optimization and staff policy reorganization. Many companies today transfer to an offline mode of work, but it cannot be implemented in factories and production (Collington, 2020). VW may either ask the managers to work remotely or integrate more automatic services into the production process. Apart from that, the leaders must consult a psychologist who will help explain to the workers that discharge was not their fault but a forced measure.

Reference List

Atiyeh, C. (2019) ‘Everything you need to know about the VW diesel-emissions scandal’. Web.

Barrow,C. (2016) The 30 Day MBA in Business Finance. 2nd edn. London:Kogan Page

Carlier, M. (2021) ‘Impact of COVID-19 on the automotive industry worldwide – statistics and facts.’ Statista, Web.

Chukwu, C. O. (2021) ‘The Volkswagen scandal ethical issue facing business and implications for stakeholders’

Collington, M. (2022) ‘The new role for HR following the covid-19 pandemic’ HRD Online. Web.

De Silva, T. (2020) ‘Concise analysis of current unethical issues in car manufacturing industry.’ Experiment Findings. Web.

Götter, A.T and Habisch, S. (2021) ‘Automotive industry: uncertain times will bring new TP challenges for suppliers.’ International Tax Review, Web.

Iyer, S. (2022) ‘Top 6 challenges in the automotive industry: the post-COVID-19 era. Global Market Insights. Web.

Martinho, A., Herber, N., Kroesen, M., andChorus, C. (2021) ‘Ethical issues in focus by the autonomous vehicles industry.’ Transport Reviews, 41(5), pp. 556-577. Web.

Mitchell, M., Reynolds, S. J. and Treviño, L. K. (2020) ‘The study of behavioral ethics within organizations: a special issue introduction.’ Personnel Psychology, 73(1).

Toebe, M. (2020) ‘Critical lessons from the Volkswagen scandal.’ Corporate Compliance Insights, Web.

Sun, M. and Hagel, J. (2020) ‘Volkswagen tries to change workplace culture that fueled emissions scandal.’ Wall Street Journal, 30 September. Web.

Zhu, X., Gu, Z. and Wang, Z. (2020) ‘Ethical challenges and countermeasures of autonomous vehicles.’ E3S Web of Conferences, 233. Web.