Overview of Volkswagen and the Emission Scandal
Identify a major business incident that occurred NOT LESS than 2 years ago. Briefly, describe the incident and then provide an analysis of the way the company handled the issue? drawing on the various communication and management theories and strategies covered in this unit.
The communication is an important aspect of an organization. The effective communication is prerequisite for the implementation of organizational strategies. The communication has a great role in the effectiveness of managers. Volkswagen is a German automotive manufacturing company having headquartered in Germany. The company designs passenger vehicles, engines, and machinery. Volkswagen sells passenger cars to Audi, Bugatti, Bentley, Skoda and more.
Volkswagen confessed that 11 million vehicles were fitted with the software which was used to cheat on emissions tests. The chief executive Martin Winetrkorn was accused of misleading regulators about the German maker’s effort to cheat the emission test of it’s diesel-fuelled vehicles. Volkswagen is the parent company of Audi. Audi has discovered emission related issues with it’s 60,000 cars. The company stopped delivery of A6 and A7 models due to finding an unidentified problem with the emission software. The 60,000 cars were called back for the software update. The company revealed that it faced irregularities in the emissions controls of A6 and A7 models. While carrying out the internal investigation, the authority was found guilty that is Volkswagen. The authority is under surveillance from US regulators (Ziek & Anderson, 2015). The concerns arose because of wrongdoing by Volkswagen. Audi faced irregularities in the emission controls of A6 and A7 models while carrying out internal investigations. The vehicles with the Audi engines were recalled over diesel-gate emissions scandal to more than 900,000. Volkswagen recalled millions of vehicles and paid huge fines since 2015 because of using illegal defeat service software which disguised the level of pollution released by it’s diesel engines. Audi informed the U.S. monitor for overseeing Volkswagen’s post-diesel-gate reforms of the latest problem by adding no more cars in the U.S. affected by it. After the wrongdoing by Volkswagen the defeat device software was installed I the cars fitted with it’s larger engines. Audi faced the significantly higher costs to resolve the emission issues (Ali, Nguyen, Vien & Shah, 2015). The engine control software was completely revised, tested and submitted to KBA for consent. The company was said to find the solution for the affected models. Audi suffered from the diesel-gate emission scandal which consequently suffered poor performance and worst fuel consumption of company. The problem required a simple software upgrade. The Volkswagen was asked to offer a compensation package to the UK consumers. This technology permitted cars to release up to 40 times the accepted levels of detrimental nitrogen oxide at the time of driving (Dybus & Lemmen, 2017).
The diesel-gate emission coasted Volkswagen about $30 billion in fines, reimbursements, and remediation. It was the biggest crisis ever faced by the company in it’s history. As per diesel-gate the company had cars with setback devices software which could perceive test conditions and cut discharges to mend results. The diesel-gate technology permitted cars to release up to forty times of the tolerable points of harmful nitrogen oxide during driving. The company self-proclaimed that eleven million cars were fixed with the obstacle device comprising eight million cars in Europe and 6,00,000 in the U.S. The excess of nitrogen oxide from the diesel vehicles contributed to almost 38,000 premature deaths (SBS News, 2018). Schmidt was charged to oblige fraud and violated the clean air act and was sentenced to 7 years in prison in 2017.
Volkswagen’s Communication and Management Strategies
Volkswagen made use of social responsibility theory as an approach of the classical theory of communication to handle the diesel-gate issue. This theory helped the company to guide actions taken by it such as responsibility towards the environment, society, culture, and economy. This theory promotes environmental and socio-cultural aspects. As per this theory, the company encourages freedom to press and regulates according to the social responsibilities. Volkswagen presented it’s facts with interpretation by making use of this theory. It is based on the reality and affects the social order. The social responsibility theory provides the interpreted and analyzed facts so that the public gets the true information and comprehensible news. It helped the company to maintain social harmony by revealing it’s bad conducts that is setback device software. The vehicles used more fuel and failed in pollution tests (Wuthishuwong, Traechtler &Bruns, 2015). The company commenced contacting owners of the models fitted with the illegal software and ask them to bring their vehicle for the rectifications and set the technical malfunctions. There were around 11 million units affected by the illegal software. Audi confirmed 2.1 million units affected whereas Sakoda confirmed 1.2 million units and 7 lac units from Seat. Out of the 11 million cars, 5 million were with the Volkswagen device. The company paid $25 billion for the emission scandal in the U.S.
The board of management at Volkswagen conversant to the supervisory board about the situation regarding possible cartel law issues. These issues occurred in 2017. The company did not make any comments on the present time regarding these issues or on speculation. Volkswagen works very closely on the general principle which discusses the feasibility and standardization of technical issues and safety standards where the regulatory approaches are still pending in many occurrences. The general principle works closely for Volkswagen in order to cooperate and create trust. It is a common thing for the car manufacturers to involve in technical issues in order to accelerate the quality of innovations. It brings benefits not only to customers but in many aspects as the innovative solutions become more viable then the costlier individual solutions (Volkswagen, 2017). Co-operation is appropriate in the individual model specifications. Such cooperation used to exist in the particular car manufacturers and did not use to involve competition specific vehicle features. These manufacturers were not obstructive to brand competition. The visualized standardization of charging connections for an electric vehicle is the example of cooperation. The open discussion was made with the Supervisory board on the information. The board of management keeps the supervisory board informed regarding such matters. The meeting addressed the claim that was among the German carmakers functioning with a wide-ranging cartel. According to the European Commission, the antitrust regulators investigated a possible automotive cartel (Men, 2014). The companies such as Audi, Porsche, Mercedes, and BMW used German car industry committees to discuss the price of machineries and technologies and how it anticipates anticompetitive behaviour. It was also heard that the U.S will also be looking into the allegations which could prove more cost to the Volkswagen (Zulch, 2014).
Social Responsibility Theory and Volkswagen’s Response
Culture is a powerful force which causes people to take a decision which is not in the best interest of the company. It does not lead to the honest internal communication and ends up facing disaster. In the case of Volkswagen, technology failed to meet emission standards. The company tried to cover up the issue by installing software in diesel-powered vehicles rather than fixing the issue. The software was designed to beat tests by making use of phony data. These setback devices made the cars appear safer for the environment (Sonnier, Lassar & Lassar, 2015).
The attribution theories were used to analyze the Volkswagen case and identify the source of events and stemming accountability. This theory is apprehensive with recognizing the reason of events and originating accountability (Zhang, et. al. 2016). The attribution research is significant for the study as it reflects how an individual reaches casual interference and what the concerns of such interference are.
The crisis management theories are engaged to examine how Volkswagen directed itself to deal with the consequence of the crisis that is public security, financial loss, and reputation loss. It has seen that people take behavior in terms of causes (Lee, et. al. 2016). This understanding has an significant role in determining responses to the behavior. The crisis management strategies are types of response and it follows attributions in order to implement applicable strategies.
The attribution theories include internal and external attribution and Weiner’s attribution theory. The internal and external attribution has recognized when there were 2 types of attribution. The first is known as external attribution. In this theory, the behavior is attributed as caused by the situational factors. In the internal behavior, the behavior is said to be instigated by the internal characteristics. As per this theory, the condition is held accountable for an effect. These effects are present when the conditions are present and the effect is absent when the conditions are absent. The individuals cause more to the attribute cause to the outlook than situational factors at the time of pursuing explanation for the action of others (Martinko, et. al. 2018). There are various frameworks which have been developed in order to emphasis on the attribution of outlook as a causal factor for events.
It has been noticed that people inclined to pay more courtesy to the intended behavior. It is identified that the strong and identified disposition interferences are drawn about a person under conditions of high choice. The attribution theories were easily practical to the Volkswagen to understand the cause of employee’s behavior (Sharpe, 2017). This theory develops a better understanding of the working of business employs the future decision suitably. The company can gain the capacity to intervene in the working so that employee’s motivation is increased. The understanding of internal and the external environment acts more purposefully and how it fits in the context of a crisis.
The Weiner’s attribution theory makes use of an additional framework in examining why the crisis happened. This theory accepts that individual’s try to govern the causes of the behavior of other people. A person attributes a number of causes to the action of others. This theory considers that the process of attribution can be divided into 3 stages. In the first stage, the behavior is perceived by a person. In the second stage, the person believes that the behavior was executed intentionally (Hewett, Shantz, Mundy & Alfes, 2018). The third stage decides that whether the behavior was the result of pressure in which one accept an external cause and in the other case, one assumes an internal cause in the individual. This theory suggests the attributions of the cause which guides future actions such as preventive measures.
Attribution Theories and Analysis of the Volkswagen Case
The crisis management theory can be informed by the attribution theory. The response strategies are created on the nature of the cause of the crisis. The Coombes situational crisis communication theory helps to corporate crisis management. This theory helped Volkswagen to focus on reliability and uniqueness as measurements of acknowledgment and looks in terms of crisis and relationship history. This theory referred to how Volkswagen has accomplished in respect to the stakeholders and in other backgrounds. Both the factors are important in persuading the public opinion after the crisis. The crisis causes to manage different communication strategies effectively (Braun, 2015).
According to the Benoit image restoration discourse theory, in order to assess company’s course of action to accomplish risk, it is required to manage risk as it affects to the image of the corporation. The defense of corporate image is essential to the organization’s response to the threat. This theory helped management of Volkswagen to rebuild it’s image in the market. The communication strategies are used to minimize damage and restore the image in the corporate field. It is important for the company to identify the appropriate audience at the time of using communication strategies to re-establish it’s image. This theory has acknowledged the five image restoration techniques which are used to shift blame such as avoidance of responsibility, reduction of impoliteness, measures to restore real condition and prevent reappearance, offering regrets and penitence (Jin, Liu & Austin, 2014).
References
Ali, K., Nguyen, H.X., Vien, Q.T. and Shah, P., 2015, March. Disaster management communication networks: Challenges and architecture design. In Pervasive Computing and Communication Workshops (PerCom Workshops), 2015 IEEE International Conference on (pp. 537-542). IEEE.
Braun, B., 2015. Preparedness, crisis management and policy change: The euro area at the critical juncture of 2008–2013. The British Journal of Politics and International Relations, 17(3), pp.419-441.
Dybus, C. and Lemmen, J., 2017. “Dieselgate” and Consumer Law: Repercussions of the Volkswagen scandal in the Netherlands. Journal of European Consumer and Market Law, 6(2), pp.91-94.
Hewett, R., Shantz, A., Mundy, J. and Alfes, K., 2018. Attribution theories in Human Resource Management research: a review and research agenda. The International Journal of Human Resource Management, 29(1), pp.87-126.
Jin, Y., Liu, B.F. and Austin, L.L., 2014. Examining the role of social media in effective crisis management: The effects of crisis origin, information form, and source on publics’ crisis responses. Communication research, 41(1), pp.74-94.
Lee, C.G., Sung, J., Kim, J.K., Jung, I.S. and Kim, K.J., 2016. Corporate social responsibility of the media: Instrument development and validation. Information Development, 32(3), pp.554-565.
Martinko, M.J., Randolph-Seng, B., Shen, W., Brees, J.R., Mahoney, K.T. and Kessler, S.R., 2018. An Examination of the Influence of Implicit Theories, Attribution Styles, and Performance Cues on Questionnaire Measures of Leadership. Journal of Leadership & Organizational Studies, 25(1), pp.116-133.
Men, L.R., 2014. Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction. Management Communication Quarterly, 28(2), pp.264-284.
SBS News, 2018. What is the Volkswagen ‘Diesel-gate’ emissions scandal? [Online] Available at https://www.sbs.com.au/news/what-is-the-volkswagen-dieselgate-emissions-scandal [Accessed on 2 July, 2018]
Sharpe, N.F., 2017. Volkswagen’s Bad Decisions & Harmful Emissions: How Poor Process Corrupted Codetermination in Germany’s Dual Board Structure. Mich. Bus. & Entrepreneurial L. Rev., 7, p.49.
Sonnier, B.M., Lassar, W.M. and Lassar, S.S., 2015. The influence of source credibility and attribution of blame on juror evaluation of liability of industry specialist auditors. Journal of Forensic & Investigative Accounting, 7(1), pp.1-37.
Volkswagen, 2017. Volkswagen Board of Management informs Supervisory Board about current situation regarding cartel law issues. [Online] Available at https://www.volkswagen-media-services.com/en/detailpage/-/detail/Volkswagen-Board-of-Management-informs-Supervisory-Board-about-current-situation-regarding-cartel-law-issues/view/5348117/7a5bbec13158edd433c6630f5ac445da?p_p_auth=yKHRm6er [Accessed on 2 July, 2018]
Wuthishuwong, C., Traechtler, A. and Bruns, T., 2015. Safe trajectory planning for autonomous intersection management by using vehicle to infrastructure communication. EURASIP Journal on Wireless Communications and Networking, 2015(1), p.33.
Zhang, B., Marita, V., Veijalainen, J., Wang, S. and Kotkov, D., 2016. The Issue Arena of a Corporate Social Responsibility Crisis–The Volkswagen Case in Twitter. Studies in Media and Communication, 4(2), pp.32-43.
Ziek, P. and Anderson, J.D., 2015. Communication, dialogue and project management. International Journal of Managing Projects in Business, 8(4), pp.788-803.
Zulch, B.G., 2014. Communication: The foundation of project management. Procedia Technology, 16, pp.1000-1009.
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