Organizational Ethical Analysis Paper - VOLKSWAGEN

Introduction

The Company is founded by Adolf Hitler and the German Labor Front headquarters in Wolfsburg, Germany. In 1934, with so many projects in development and early stages of production, Adolf Hitler got involved by ordering a basic vehicle which is capable of transporting 2 adults and 3 children at 62 mph. He then wanted all his citizens to have accessibility to cars. Thus, Hitler chose to sponsor a new state-owned factory using Ferdinand Porsche’s design adding few of his own constraints and thoughts to the make of the vehicle.

In 1937 Germany, a company called “Deutsche Arbeitsfront” was trying to create a vehicle affordable enough for every German family, a vehicle that would appeal to the masses. Shortly thereafter, during WWII, workers from concentration camps-built cars for the German army. After the war, the factory was taken over by the British military and used to produce “Volkswagen” vehicles, which in German means “People’s Car.” During the time Car was a Luxury. Only 1 in 50 could afford to buy a car because of the expensive price. As there is a potential new market some independent car maker started “People’s Car” Projects. Ferdinand Porsche, already well established high-end and race car designer had tried for years to get the attention of manufacturers into small family cars. At that time small cars are usually overtaken by big cars. So, he decided to build a car from scratch in 1933 using many ideas which are floating around at the time consolidating with his own thoughts. He finally put together all the ideas into his beetle shaped car and named it as “Volksauto”.

For the next ten years, control of the company switched hands while the “Beetle” model became increasingly popular.

Currently Herbert Diess is the chairman of the Board of Management of the Volkswagen Passenger Cars brand. Volkswagen belongs to the parent company “Volkswagen Group “

In 2018, Volkswagen was one of the largest automobile firms with a 11.4% global market share for passenger cars. It produced 41,000 vehicles every week-day in its 119 production plants. That same year it sold 10.1 million vehicles. Most of the Volkswagen’s vehicles are sold in China constituting 40% of its revenue

As a company the goals for Volkswagen as of 2018 are:

· Becoming a world leader in customer satisfaction

· In major-growth markets, capture more than the average market and achieve a sale of 10 million vehicles a year

· Maintain stability during difficult markets by obtaining at least 8% return on sales (before tax)

· Build a first-class talent by hiring the right talent and becoming a top employer across a variety of fields.

Ethicality of an organization

We strongly opine that reputation and trust are the two important factors which can directly impact an organization’s growth prospects. In today’s world of business, organizations do tend to deviate things from standard norms and ethics w.r.t finances, quality, culture etc. Employees and organization’s culture should have significance in day to day business. Risking ethics will be a biggest mistake, standards of an organization can still be increased without compromising on ethical practices if the following steps are alluded:

• Strong foundation should be established and once the organization is ready to buy in rules and regulations set up by government/ respective firms, there should be strict monitoring on practices.

• Assessment of needs and resources with honesty can win the trust of stakeholders and there wouldn’t be any need to compromise on the quality of the product.

• A moment can be small or big, but the culture should still strive the organization to be value focused and not based on occasions or requirement, especially no implications should be drawn from fancy financial deals and negotiations, values should be the only key factor.

• Evaluation/Monitoring is very important on a timely basis, this will definitely help in improving company’s standards and there should not be any scope for Band-Aid over Band-Aid.

Some of the elements that determine if an organization is ethical or not include Respect,

Honor, Integrity, Customer-Focus, Results-Oriented, Risk-Taking, Passion and Persistence. In an

organization, everyone should be able to trust each other and respect each other (colleagues,

customers, vendors or be it respecting oneself). Without trust, forget ethically, but the

organization cannot be built.

Integrity is crucial because making a deal to meet the targets is not only unethical, but it

will be unprofitable in the long-term. Volkswagen was not ethical as they had no integrity which

is reflected in their manipulation of software to pass their tests to get into the market. They have

done this in the 2009 and they repeated the same in 2015.

In Order to determine the whether an organization is ethical or not, initially the

employees has to know the company’s values are and I recommend companies to choose only 5

rules as to become an ethical organization those should be very easy to all the employees to

recall them very quickly when someone asked about their organization ethics. There are some

companies majorly focused only on organization ethics to follow everything as per the business

ethics.

Volkswagen has been caught up in several corporate scandals over the past quarter

century, but none had the potential to taint the German carmaker’s products.

1987

Currency traders said illegal speculators had evidently purchased large amounts

of dollars on the company's accounts, expecting the American currency to reverse

its downward trend and rise against the German mark. Expecting a Quick Profit

2005

German prosecutors are investigating allegations that two former Volkswagen

executives siphoned an undisclosed amount of corporate funds into a web of fake

companies. In addition, the carmaker faces charges that its managers paid off

employee representatives to support their policies.

https://www.nytimes.com/2005/07/07/business/worldbusiness/scandals-raise-questions-over-

volkswagens-governance.html

2006

Volkswagen was embroiled in a wider auto industry corruption scandal after executives at some

carmakers were accused of taking bribes from suppliers. This scandal led to the resignation of

the executive chairman of Faurecia, a French automotive components maker, after Bernd

Pischetsrieder, VW chief executive at the time, threatened to sever ties with the company.

2009

Porsche headquarters were raided as part of an investigation into alleged market manipulation by

the company’s executives during a failed takeover of VW that dated back to 2005. Porsche built

a stake in its much-larger rival by using a contentious options strategy, which distorted the price

of VW’s ordinary shares over a four-year period. In the end, the takeover attempt failed and

almost bankrupted Porsche — forcing the smaller sports car maker to agree to a merger with VW.

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