Volkswagen Scandal: Ethics versus Profits – Term Paper

Article summary

The article examines the scandal of Volkswagen scandal of green revenue manipulation and its significance in corporate governance. The Volkswagen emissions affected 11 million global consumers.  The Volkswagen scandal concerns the Uber global brand, which is seen as dependable by the business executives and ordinary families (Adams, 2015).

The Volkswagen scandal is due to three prolonged cultural failure and governance in the areas of marketing, internal control, and risk management. The inability of the three factors to link led to the failure of the firm. Marketing involves crisping different environmental issues and driving sales and this is what led to the failure of Volkswagen group (Adams, 2015).  The company bragged while it marketed its products and convinced the consumers that the cars were environmentally friendly (Adams, 2015). However, these marketing approaches were incorrect, and it led to mistrust from the consumers and loss of reputation.

Risk management also resulted in the failure of Volkswagen Company.  It is important for brands to grow under the scrutiny of public for a firm to look beyond the operation and financial risks (Adams, 2015). Furthermore, it important for a business to know the risks that might affect its reputation (Adams, 2015). The risks mainly come from environmental, ethical concerns, and social issues. Therefore, a firm should ensure that reputational threats are incorporated in time. Learning from internal audit and control is an important lesson from the crisis. Companies should make sure that they know what is going on and establish governance control and systems. Therefore, a business should ensure that it manages the various risks that might affect it in time.

 Lesson learned from the scandal

In business, it is important to enhance internal control for the business to succeed. Through the article, I learned that when wrong approaches are used during marketing, they result in loss of reputation and consumer mistrust. Internal control ensures that integrity and ethics are practiced, but Volkswagen failed in these areas. In most cases, businesses focus on the operational and financial risks and leaves out the potential hazards that might hinder its reputation (Adams, 2015). These risks do not always appear radar since they are hard to manage. Therefore, in internal control, a business should identify the potential risks that might affect it and establish steps of managing them to enhance the performance of the firm.

Firms should be carefully monitored to know how it is performing and in case it needs any necessary changes (Cascarino, 2013). The governance function should also be supervised by cataloguing the potential issues.  Furthermore, I have learnt that a business should not use manipulation form of marketing to increase its sales. It is important for the risk manager to stay alerted and the internal audit should be monitored to ensure that its practices ethical behaviors and it complies with the breaches (Cascarino, 2013). Internal control is necessary for any business to succeed.  Managing the environment ensures that the stakeholders of the firm practice integrity. Furthermore, assessing and managing risks in time are important as it ensures that the reputation of the business is not lost.  Therefore, Volkswagen failed because it did not practice internal control. 

References

Adams, C. (2015). VW scandal: ethics versus profit | Economia. Economia.icaew.com. Retrieved 2 October 2016, from http://economia.icaew.com/business/december-2015/ethics-versus-profit

Cascarino, R. (2013). Corporate fraud and internal control workbook: A framework for prevention. Hoboken, N.J: John Wiley & Sons, Inc.