Corporate social responsibility - 2 case studies both with 3 questions each. 4000 words

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Corporate social responsibility - 2 case studies both with 3 questions each. 4000 words
	
Document Preview: Case 1: The Volkswagen emissions scandal: A case study in corporate misbehavior What is Volkswagen accused of? It's been dubbed the "diesel dupe". The Environmental Protection Agency (EPA) found that many VW cars being sold in America had devices in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US. VW has had a major push to sell diesel cars in the US, backed by a huge marketing campaign trumpeting its cars' low emissions. The EPA's findings cover 482,000 cars in the US only, including the VW-manufactured Audi A3, and the VW brands Jetta, Beetle, Golf and Passat. But VW has admitted that about 11 million cars worldwide, including eight million in Europe, are fitted with the so-called "defeat device". The device sounds like a sophisticated piece of kit. Full details of how it worked are sketchy, although the EPA has said that the engines had computer software that could sense test scenarios by monitoring speed, engine operation, air pressure and even the position of the steering wheel. When the cars were operating under controlled laboratory conditions - which typically involve putting them on a stationary test rig - the device appears to have put the vehicle into a sort of safety mode in which the engine ran below normal power and performance. Once on the road, the engines switched out of this test mode. The result? The engines emitted nitrogen oxide pollutants up to 40 times above what is allowed in the US. What has been VW's response? "We've totally screwed up," said VW America boss Michael Horn, while the group's chief executive at the time, Martin Winterkorn, said his company had "broken the trust of our customers and the public". Mr. Winterkorn has now left the company as a direct result of the scandal and has been replaced by Matthias Mueller, the former boss of Porsche. "My most urgent task is to win...

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ASSIGNMENT

ASSIGNMENT 
CORPORATE 
SOCIAL 
RESPONSIBILITY 
VOLKSWAGEN CSR CASE STUDY 
CASE STUDY I:  THE VOLKSWAGEN CSR CASE STUDY 
1. Main Issues In The Volkswagen Case 
Volkswagen is a group German multinational automobile company that was started in 1937, 
its headquarters are in Wolfsburg. The company is engaged in the business if designing, 
manufacturing and distributing vehicles, motorcycles and engines. It is the second largest 
automobile company in the world. It produced around 9.87 million vehicles in 2015. (OICA, 
2015). It has largest share in European market since more than 20 years (ACEA, 2013) 
 Volkswagen had been claiming to produce one of the most environment friendly and fuel 
efficient diesel cars and based on this image it had promoted a brand image over the decades 
and based on the same it had increased its sales manifolds in many countries in the world. 
The action began when International Council on Clean Transportation (ICCT), an NPO, hired 
by West Virginia University, did an independent research for the environmental regulation 
government agencies. ICCT detected that the company had been using defeat devices in 
diesel engines that could detect an emission test and change the performance accordingly to 
improve results. The engines switched out of this test mode, once the system detected on road 
atmosphere. The diesel engines had a balance between power consumed, efficiency of fuel, 
and emissions of gases. The ICCT then reverted its research outcomes to the Environmental 
Protection Agency (EPA) and the California Air Resources board. EPA concluded and 
announced the violations of the Clean Air Act by Volkswagen by cheating emissions tests in 
the US. The EPA's findings cover 482,000 cars in the US only. Volkswagen admitted the 
fraud and stated that it had fitted such device in about 11 million cars worldwide and eight 
million in Europe.  Its engines emitted nitrogen oxide pollutants up to 40 times above 
permitted level in US.  
https://en.wikipedia.org/wiki/Germany
https://en.wikipedia.org/wiki/Multinational_corporation
https://en.wikipedia.org/wiki/Wolfsburg
The scandal led to enormous nitrogen oxide emissions and the same is the leading cause of 
acid rain, smog, and many other health effects. According to the European Union’s report of 
2011 majority of Nitrogen Oxide emissions are due to the road transport. 
As this news came out, the stock prices of the company began to fall. The authorities began 
to raid the Volkswagen offices for investigation. The company announced to set aside about 
$7.3 billion towards recalling of the car and replacing the engines of the cars in order to 
comply with pollution standards (Jack Ewing, September 2015) The Volkswagen is facing a 
lawsuit of approximately 3.3 billion euro and a fine of approximately $18 billion in the US 
(Jack Ewing, September 2015).. The EPA has the power to fine a company up to $37,500 for 
each vehicle that breaches standards - a maximum fine of about $18 billion. Besides, Legal 
prosecution from the shareholders may also follow. 
Besides the financial repercussions in the form of fine imposed liability to call back vehicles 
and replace engines, the company had to face a lot of criticism worldwide, hampering its 
brand image built over the years. It may also face criminal prosecution. 
The CEO of the company, Martin Winterkorn and a few top executives of Volkswagen 
resigned immediately. The head of brand development, the Audi R&D, and the Porsche R&D 
were also suspended.  The CEO Martin Winterkorn had been replaced by Matthias Mueller, 
the former boss of Porsche.  
2. Why This Is An Appropriate Case For Corporate Social Responsibility 
Corporate Social Responsibility (CSR) is the incorporation of self-regulation in organisation. 
It is a management concept where companies integrate concerns of all the stakeholder in 
business operations and stakeholder’s interactions.  It encourages active compliance with the 
https://en.wikipedia.org/wiki/Industry_self-regulation
spirit of the law and ethical standards and national, and not just the legal compliance. Its 
implications are beyond just legal compliances towards the society and stakeholders. 
Its encompasses the concept that since the company draws resources in the form of profits, 
minerals and resources from the society, hence it owes a responsibility towards the society to 
enhance it and make sure that it does not cause any potential harm to the society.

Corporate social responsibility - 2 case studies both with 3 questions each. 4000 words Document Preview: Case 1: The Volkswagen emissions scandal: A case study in corporate misbehavior What is...

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