Management - Research Design - Literature Review - Group Project Assessment Answer

ManagementGroup Project Assignment

Assignment Task

Management problem

The biggest management problem that the company faced was that the corporate governance of the company which consist of a hybrid ownership of the company in the form of family control, government ownership as well as the influence of the labour. Until 2015 the company was mainly dominated by Ferdinand Piëch, 78 until he was made to forcefully resign in 2015. The company was involved in a major carbon emission scandal where the management tries to circumvent the US emission laws in order to promote their car. Hence it can be said that the company was inept in with respect to the ethical management towards the customers

Research questions

The research questions are the guiding factors to a study and they are listed below-

What was the key ethical issue that Volkswagen Faced?

What were the impacts of the management issue at Volkswagen?

Research design

The research design is done using secondary and primary data. Secondary data is data which is pre-existing and has already been researched by another academician and may be present in journals, newspapers, article or other sources which are authentic and can be verified. The primary research is research which is conducted for the first time and sheds light on new data. For the purpose of conducting primary research survey will be taken by contacting 20 employees who are working or have worked at Volkswagen in 2015 when the ethical issue happened. This type of data collection process is called the quantitative data and will be analysed with the help of graphic representation which will be done using excel (Kothari, 2004).

Literature review

When it comes to the ethical management issue at Volkswagen, the mission scandal that the company faced was the highlight of the global news in the automobile industry in 0215. The company not only lost its reputation but also its failure in terms of revenues of the company. This is a deep rooted issue which is not limited to an engineering design but to the way an organization is run. The company intentionally misled regulators in order to believe that the carbon emission of the engine was within permissible limits which point a finger at the upper management of the company (Hotten, 2015).

Colvin (2015) points out that Volkswagen has always been a reputable company since a long time and such a scandal has a direct impact on the corporate governance of the company aswell as its risk management. In today’s world of globalization and easy access to information no customer is going to put up with a company hose business practices are questionable let alone they proclaim themselves as one of the most ecological and responsible brands of the automobile industry.

The crisis as outline by Sense (2015) is mainly result of three area of corporate governance which is marketing, risk management as well as the internal controls of the company. The loss of reputation comes under marketing where the company used an environmental message to attract the customer to buy the cars. When the consumers found out that the information as incorrect and the company had led them to believe that the emission was within the permissible range it not only lost out on the trust that the consumer had put in the brand but also a loss of reputation of the company.

Secondly when it came to the risk management of the company, it is essential to understand that in today digital world one has to look beyond the standard operational and financial risks that a company undergoes. Both companies need to think about the ethical and other potential risk that may damage their reputation due to the large global footprints that they have. Hence when the company branded itself with an environmental friendly car without coming clean about its emission, it was clearly begging for a reputation risk crisis (Thompson, & Kottasova, 2015).

Kretchmer (2015) outlines the third part of this management issue is the internal audit and control of the company. The company was inept to monitor its governance function by outlining the potential issues that the company may face and developing control toward sit. In the Volkswagen case, the incentive derived through manipulation of the software which would inflate their revenues and increase dales. Hence it can be said that the company had an internal audit issue since the auditors to the company were not able to singularly outline the emission issue and let it pass by the monitoring stage.

Hence the above secondary data outlines that there were three main areas of corporate governance due to which the company has to face a major ethical management issue which comprises of marketing, risk management and the internal audit and control of the company.

Primary data

The primary data was collected in the form of a survey and there were in total 5 questions which were asked to the current or ex – employees of the company. A total of 20 employees have given answers which have been recorded in a graphical representation in order to analyse the answers.

Demographics - Experience of employees

This is a demographic feature to understand the amount of time employees have spent in the organization hence one gets a perspective from varied range

Question 1

Was there any ethical issue faced by the company in 2015?

According to the data, 80% employee agree that the company faced an ethical issue in 2015 which is a substantial portion of the survey group

Question 2 - If yes did it have an impact on the reputation of the company?

90% of the employees agree that the ethical issue had an impact on the reputation of the

company which means that there was mismanagement with respect to the ethical issues

Question 3- According to you was the management aware about the issue?

Most of the employees agree that the management was aware of the ethical issue though 35% disagree with it making it extremely relevant to the study about the management awareness of the ethical management issue of the Volkswagen crisis

Question 4 - On a scale of 1 to 5, rate the reason of the ethical management issue?

By looking at the above graph it can be seen that the most of the employees agree that the marketing shortcoming and the risk management of the company was weak due to which it resulted in the ethical management issue. The internal control and audit too contributed to the management issue but it was not as severe compared to the other two.

Question 5 - On a scale of 1 to 5 how badly was the reputation of the company affected from 1 being no impact and 5 being maximum impact due to the ethical management issue in 2015?

By looking at the above graph it can be seen that 15 employees agrees that the reputation of the company was affected in an extreme manner due to the ethical management issue of the vehicle

Analysis

By looking at the above analysis it is evident that the employees working ate Volkswagen too agree that there was definitely an issue with ethical management at the senior level of the company and the management of the company was aware about it. They agree that the carbon emission scandal was mainly due to a marketing ineffectiveness where the company was not able to maintain its reputation and the trust that the customers had for the brand. This is an agreement with the secondary data where it is clearly outlines that the ethical management issue had a deep impact on the reputation of the company. Also when it comes to the risk management issue, it is seem that the company did not analyse the effects of encountered risks in a coherent manner. The company did not anticipate the risk associated with withholding information from the public due to which it cost them a huge scandal that had bad effect for the revenue of the company.

Hence the primary research shows that the employees knew that the emission issue would create a problem for the company in the long run and also feel to an extent that his management was aware about. The internal audit and control of the company too an effect on the reputation of the company since a clear monitoring of the internal control would not lead to company allowing the car to get out of production with such high carbon emissions. Overall it can be said that the various facets of corporate governance lead to a management issue which went beyond the control of the company.

Recommendation

A series of recommendations have been provided in order to help the company to improve the brand name and re gain market share in the industry. These recommendations should be implemented by the management of the company to overcomes its mistakes

Since culture is the basis on which a company is based, the company should ensure that this culture is formed on the basis of ethical beliefs and value where the customers perceive the company is being truthful which is set by the senior management or the board member of the company. Hence the company should ensure that its top management sets the right time for the entire company ensuring that there is no conflict of interest in the entire organization. Hence the company should have an outsider on their board members who can perceive the culture of the company from a neutral perspective and advise them on the wrong doings of the company. Culture and strategic direction flows from the top down of the company where the board has a significant role to play (Stevenson & Sum, 2002).

Also the company should focus on the understanding of the corporate social responsibility and its impact on the trust and the reputation it has with the customers. The company should integrate these practices in the main stream business by actually doing what it initially claimed and fixing its engine to the actual standards as mandated before. An understanding of the ways that corporate social responsibility and sustainability adds value along with the risks and opportunities is an extremely important aspect of the strategy of a company (Weiss, 2014).

In conclusion it can be said that a lot has to be learnt by business companies when it comes to management and the issues related to it. The problem that Volkswagen faced when it came to the emission scandal is a living proof the way that the image and the reputation of a company can be tarnished when it’s in efficient in being proactive about the forthcoming issues. The board of directors occurs in a consensus and takes a lot of courage to go against the majority but it is essential to do the right thing and think about the organization before thinking about personal gains. At any cost it’s important for a company to maintain and instil culture which should be followed by all the employees of the organization.