The case is about the worst scandal to affect Volkswagen in its 78-year history and how the newly-appointed CEO of the company, Matthias Müller, faced one of the biggest leadership challenges in business history. On January 5, 2016, The US Department of Justice sued Volkswagen AG (Volkswagen), Europe’s leading automobile manufacturer, on behalf of the United States Environmental Protection Agency (US EPA), for installing ‘defeat devices’ on thousands of its diesel vehicles including around 499,000 diesel cars with 2.0 liter engines and some 85,000 cars with 3.0 liter engines. The automaker was also accused of misleading federal regulators. Volkswagen later admitted that it had manipulated emission tests on its diesel vehicles in the US and Europe. The crisis wiped billions of euros off the company’s shares and affected its credentials as well as brand image. The case describes in detail the emission cheating scandal and its different aspects. Müller faced a particularly tough challenge as he strove to bring Volkswagen out of this crisis. At stake was not just the survival of the company but something bigger – Germany’s pride, its global economic brand, its engineering. With the regulators in different countries relentlessly and vigorously pursuing the company, Müller had his work cut out for him. What could he do to win back the confidence of the shareholders and millions of customers in different countries? What could he do to boost the morale of the 600,000 employees he was leading who were feeling personally disgraced by this scandal? How was Volkswagen to be restored to its former glory? .

Business Ethics Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies

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Issues

The case is structured to achieve the following teaching objectives:

	Study the factors that led to the emission cheating scandal.
	Analyze the responsibilities of Volkswagen in the event of the emission scandal.
	Discuss the factors that led to the ethical breaches and how this could have been averted.
	Understand the effects of the emission scandal on Volkswagen in particular and the global automobile industry in general.
	Examine the approach adopted by Volkswagen in managing the crisis.

Contents

INTRODUCTION

ABOUT VOLKSWAGEN

DRIVING INTO A SCANDAL

“WE’VE TOTALLY SCREWED UP”

THE AFTERMATH

WILL THE SCANDAL PARALYZE VOLKSWAGEN?

ONE OF THE BIGGEST LEADERSHIP CHALLENGES IN BUSINESS HISTORY

EXHIBITS

Keywords

Business ethics; Cheating; Fraud; Scandal; Emission cheating scandal; Ethical breaches; Crisis management; Corporate culture; Leadership; Responsible Leadership; Volkswagen

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