vw and recent csr challenges 3

Leaders are responsible for the vision, mission, and values of an organization, but in the modern global business environments leaders must also absorb the responsibilities of such areas as Corporate Social Responsibility (CSR) and corporate citizenship. In Week 7 we discuss quality management practices that include these elements and practices that performance excellence demand from leadership and organizations. How an organization should be led is as unique as how that organization should be motivated.

Review the article: Case Study: VW and Recent CSR Challenges

Case Study: VW and Recent CSR Challenges

BA-432 Quality Management

Mark M. Glenn, MBA, FMI

In 2012, a group of West Virginia University researchers were awarded a grant to study performance testing of clean diesel cars, which included driving them outside of the laboratory. Following the study, the group was to author a paper based on the data for the International Council on Clean Transportation (Lam, 2015). In May, 2014, it was announced that the West Virginia study had uncovered a large fraud being perpetuated on the environmentally friendly public by Volkswagen.

Though the Volkswagen organization had avoided revealing the truth for over a year, Duffer (2015) cited the EPA as saying, “Volkswagen admitted to installing ‘defeat devices,’ software programmed to switch engines to cleaner test modes during official emissions testing. When the software is off and the vehicles are operating under normal road conditions, the affected models can emit nitrogen oxides (NOx) from 10 to 40 times more than the legal limit.”

Duffer continues: “The benefit for Volkswagen to letting the cars run dirty was improved fuel economy and better performance. The scandal is worldwide. VW estimated on Tuesday that about 11 million diesel vehicles have ‘irregularities’ that need correcting.”

VW said in a statement, “A noticeable deviation between bench test results and actual road use was established solely for this type of engine.” The automaker has set aside $7.3 billion in the third quarter to cover the costs for the issue (Duffer, 2015). The VW CEO, Martin Winterkorn, has resigned his position (Lam, 2015).

According to Davenport and Ewing (2015), VW had been struggling to gain a competitive advantage in the U. S. automobile markets. Since the EPA investigation, VW’s sales dropped even farther. It is unlikely to recover anytime soon. “This is several steps beyond the violations that we’ve seen from other auto companies,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. “They appear to have designed a system with the intention to mislead consumers and the government. If that’s proven true, it’s remarkable and outrageous. It would merit a heck of a lot more than just a recall and a fine. We would see criminal prosecution” (Davenport et al., 2015).

The new CEO, Matthias Mueller, warned stakeholders of massive cutbacks and that the company faces serious financial challenges from the scandal. While some cars could be fixed by replacing software, others would require mechanical fixes (Finley, 2015).

  • Analyze how the recent leadership CSR challenges of Volkswagen, impact all organizational stakeholders.
  • As a leader, create new quality management strategies and stakeholder engagement practices you would initiate at VW.
  • Through research sources, evaluate how leadership in companies have recovered from quality control issues and what recommendations for the future leadership of VW would you make.
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