RESEARCH PROPOSAL

RESEARCH QUESTION

How does the emissions scandal in which Volkswagen group was involved in the year 2015,
has affected to its image, earnings and credibility during the subsequent years?

INTRODUCTION

Volkswagen group is a German automobile manufacturer and one of the world's largest
companies in the automotive sector. It has several brands under its name such as: Auidi, Skoda,
Volkswagen, etc.

RATIONALE

In the year 2015 the group was involved in a problem denominated “Volkswagen emission
scandal” which consisted of the company installing special software that issued false data in
the emission test. The software made the emissions controls of the engines to activate only
during the laboratory emission tests that made the NOx output of the vehicles comply with US
standards of USA.

THEORICAL FRAMEWORK

Syllabus Unit Syllabus Areas Justification

Understand how the organizational
Organizational Objectives
1.3 objectives of the company went through
- Ethical objectives.
the ethical codes.
External Environment
- Legal opportunities and Understand the benefits and threats of
1.5 threats. the decision that Volkswagen made in
- Ethical opportunities and the year 2015
threats.
Understand the revenues and cost that
Costs and revenue
Volkswagen acquired through its
3.2 - Costs, revenues and
decision and analyze it through the
CUEGIS concept.
CUEGIS concept

SECONDARY SOURCES OF INFORMATION

o Reports and documents of the company.

o Reports and investigations of government.
o Information of external sources (news, individual investigators, etc)
o Paul Hoang’s Business Management book.
METHODOLOGY

Collecting Data Reasons

Secondary sources:
o Reports and documents of the
company.
o In order to corroborate and analyze with
o Reports and investigations of
the information given in the Primary
government. Research.
o Paul Hoang’s Business Management
book.

Business and management

Mateo Andrade

10/09/2018

3rd Bach “A”

Volkswagen

Volkswagen is a multinational company, focused in the automobile manufacturing sector. Now

days, Volkswagen is one of the biggest companies in the automobile industry, operating in 61
production plants in fifteen European countries and in more than six countries in America, Asia
and Africa, counting around the world with 572,800 employees producing about 26,000
vehicles. But the Volkswagen company history was always full of controversy. On May 28th
1937, the government of Germany, under the control of Adolf Hitler, forms a new state-owned
automobile company, then known as Gesellschaft zur Vorbereitung des Deutschen
Volkswagens mbH. Later that year, it was renamed simply Volkswagenwerk, or “The People’s
Car Company. The objective of this new born company was to create a car that was accessible
to all the people in Germany. In that context the company made up the “Beetle”, a car that with
its popularity trespassed all frontiers.

The image of Volkswagen has always been tainted by its Nazi roots, but in the last years a new
controversy putted in the front cover of all diaries. On the year of 2015 it was discovered that
the multinational programmed to activate their cars emissions controls only during laboratory
emissions testing which caused the vehicles nitrogen oxides output to meet US standards during
regulatory testing, but emit up to 40 times more nitrogen oxides in real-world driving. When
the fraud was discovered the company recognized that 11 million cars worldwide could be
equipped with the cheating program that was used to trick regulators and users about the
polluting emissions of their diesel vehicles. How all this scandal does affected the company’s
name? What was the motivation behind this action?

The day after the fraud was discovered the company lost $15.600 of its value in the stock
market, and two days after their shares fell by a 30%, by not to mention a fine of 4 100 millions
of dollars. Of course this consequences were just then short term ones. Volkswagen literally
lied to their customers in front of their faces, and here takes the protagonist the loyalty of
costumers. The fact that a multinational company as huge as Volkswagen used so anti-ethic
methods made the company the loss of thousands of customers. And the environmental impact
is also huge: A study published by "The Guardian" estimated between 10,000 and 41,000 tons
the volume of toxic gases emitted by the 482,000 affected vehicles estimated to exist in the
United States alone. Under normal conditions and in compliance with environmental
regulations, vehicles should have issued only 1,000 tons.

How does Volkswagen recovered from this mistake? Although all of the consequences that the
company suffered from this error, it managed to maintain it straight up with some clever
techniques. Of course, the image of the company was never recovered totally, and now days it
stills suffer from some of the consequences of the mistake, but thanks to the good management
of this problem through diverse marketing techniques, financial, and legal strategies now days
Volkswagen keeps its place as one of the biggest companies in the automobilist industry.