Volkswagen Scandal

Business ethics are the honest values that control how a business behaves. Businesses have to choose “right” from “wrong” and be a responsible company no matter the increased profit margin or benefit that may come from unethical practice. In many cases throughout history as well as in present times the practice of unethical behavior continues. This can be achieved through exercises such as corporate governance to reinforce insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities.

In recent times the German company Volkswagen had been guilty of this practice which effected their company drastically. The company was trying to bring the popular European Diesel engine into the United States where it had not been very trendy in past times. The Automaker produced a large number of them in hopes it would become a popular product amongst the Americans. However, the company had made untruthful allegations regarding the diesel engines and the emissions that were being produced. Volkswagen created a “defeat device” on a number of their diesel engines that would falsify the emissions that were being produced. The engines could detect when they were enduring an emissions test and would switch to an engine management system that lessens NOx emissions. This incident has effected eleven million cars worldwide and about 482,000 of them are found in the US. As a result, Volkswagen was forced to recall millions of cars world-wide and their CEO Martin Winterkorn had no choice but to step down. Consequently, they reached their first quarterly loss in 15 years as they had to pay $7.3 billion to cover costs. This issue also negatively affected their stock causing a 30% drop in their share wiping billions from Volkswagens value.

By Volkswagen’s unethical process of the distribution of “defeat engines” they ultimately made a very short term unethical decision rather than sticking to their core values that their reputation and company was built on. This dishonorable practice has effected the reputation of one of the most respectable worldwide companies and it will take a very long time, if ever, to get back to where they once were.