Volkswagen Corporate Failure Case Study

1060 Words 5 Pages


Exam-1: Volkswagen Corporate Failure in 2015




Prepared By:

Name: Nil

Surname: KINIK

ID: 52930


Volkswagen which is well-known German car producer became worldwide number one car

producer in 2015. However in September 2015, something went wrong and VW found out

itself in a deep trouble which was named as a scandal and also in media with emission scandal

and became the example of corporate failure. The scandal was occurred as following, the

Environmental Protection Agency (EPA) which is an agency responsible
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In the sense of corporate governance issues that had missed, the VW case represents a failure

in the context of Corporate Social Responsibility which is a department as a whole and

completely responsible from the respect and clean image of the company by running

departments with this point of view. Such as the case of broken trust of customers and public,


manipulation of regulators, social impact on employees. VW’s aim was to satisfy an

advantage over its competitors i.e Toyota by maximizing the sales and profit by this way

being the number one car maker even by using the image of environmentally friendly cars

which is common expectation beginning from the middle level managers going up to board of

members in today’s corporate world. In other words, for VW it does not matter whether its

cars poisoned the planet with 40 times more nitrogen oxide while the main purpose is

becoming the image of world’s leading car maker.

When we looked from the ethics and legal perspective, the VW emission scandal easily finds

place itself in the side of illegal perspective. After diesel emissions scandal, VW profits
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The main

question mark in their head is about whether this software will affect their car performance or

not. As an action after the scandal, the new CEO and eventually board of directors now

facing a role such as recovering the company’s reputation and financial stability and build

trust among investors and other key stakeholders.

In the context of corporate governance, VW is a publicly listed company, with headquarters in

Germany, which has a double tier system of corporate governance that involves employee

participation. Major shareholders are the family of founder Ferdinand Porsche with 50.7%,

the federal sate of Lower-Saxony and the state of Qatar with 20% stakes each. Public

shareholders hold less than 10% of the shares. In general, this board organization with main

shareholders, strong stakeholders including employees through workforce representatives is

considered to be a good solution to corporate governance and control issues however it seems

that did not work for VW

In my opinion, mainly the people who are working in these CSR departments should be

responsible from their companies’ actions and they should be well prepared for

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