Ethics & Governance Organization Analysis Harvard Case Solution & Analysis

Abstract

This paper has analyzed the ethics and governance principles of Volkswagen AG. The ultimate goal of corporate governance within an organization is the smooth running of the company by its management. A strong corporate governance system in place allows the managers to adhere to the codes of transparency, accountability, honesty, responsibility and clear level of the communication. However, at some point, these seem to have failed at Volkswagen AG and the biggest example of its ethical and governance failure is the 2015 scandal when the company had cheated the government regulators by installing software in its 11 million vehicles for passing the Nitrogen Oxide emission testing. This deceptive practice of the company had stripped the dealers and the customers of the company for its fraudulent and dishonest act. The dominant corporate culture has been identified as the main reason for the breach of ethical principles and its governance failures. The leaders of the company have taken a number of significant actions to restore the position of the company. However, the company still has a long way to go to achieve its true position of a legal, ethical and socially responsible automaker around the world.

Introduction

Volkswagen Group of VW AG for short is a German multinational automotive manufacturing company with its headquarters in Lower Saxony, Germany. The company designs, manufactures, and distributes commercial engines, motorcycles, turbo machinery and it also offers other related services such as fleet management, leasing and financing(Cavico, 2014).

Ethics & Governance Organization Analysis Harvard Case Solution & Analysis

The company had generated 10.3 million sales in 2016 and it became the largest automaker in the world. It has maintained the largest market share for nearly two decades. The operations of the company are divided into two separate divisions, which are Financial Services Division and the Automotive Division and has around 340 subsidiary companies. The operations of the company are spread around 150 countries out of which 27 countries have the production facilities for Volkswagen(Cavico, 2014).

Volkswagen Group is a public company and it has primary listing on the Frankfurt Stock Exchange and secondary listing on the London Stock Exchange, SIX Swiss Exchange, New York Stock Exchange and Luxembourg Stock Exchange. Volkswagen Group faces a difficult and competitive industry outlook within the automotive industry(Schmitt, 2009). The industry is rebounding on a global scale with recovering growth in North America and heavy growth in China.

However, there are a number of companies in the industry, which are trying to capture a significant share of this growth. Some of the strong competitors of Volkswagen Group are General Motors, Ford Motor Company and Toyota. The industry is also characterized by pressures from customers and the suppliers(Schmitt, 2009) However, the current manufacturers in the industry face relatively little or zero threat from the new entrants and also from the substitutes because of many barriers to entry.

Despite the difficult outlook of the automotive industry, Volkswagen Group is well positioned in the world automotive market to take advantage of the emerging opportunities in the industry and benefit from the threats of the industry. With great market opportunities in North America and China, the Volkswagen brand has emerged as a significant brand and a prominent market leader in these regions(Hetzner, 2016).......................

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