Mgn409 Management Theory And Practice Assessment Answers

The corporate scandal of Volkswagen is a mischievous example of how the business organisations can modify the political as well as ethical issues of the environment. The headquarters of Volkswagen are established in Germany and the company owns several renowned brands such as Škoda, Bentley, SEAT, Bugatti, Porsche, Audi and Lamborhini (Goel, 2015). The indulgence of Volkswagen in such fraud was appeared as highly significant not because of the financial or the legal aftermaths that took place from various nations but due to the lasting negative impact on the environment and the society. The company holds an aim of appearing as the market leader in the automobile industry in the year 2018 but because of this scam, Volkswagen lost its 1/3 of the total market share (GRADE, n.d.). For compensating such an act of emissions violation and the fraud, there was resignation of the directors and the CEO of the company as well as a letter of public apology was issued by the business organisation (Oldenkamp, van Zelm and Huijbregts, 2016). The organisation is facing a number of charges as well as lawsuits which depicts that the future of Volkswagen is grim. It is one of the biggest ethical dilemmas in the history of Volkswagen as well as in the automobile industry where such a renowned brand has indulged itself in such a fraud practice (Münchau, 2015).

There are various theoretical concepts related to managerial ethics that offers a deep understanding of the ethical dilemma of Volkswagen from the theoretical point of view. There are several ethical theories and concepts which emphasize the practices of business organisations to remain ethical. The violation of the ethics can be understood with these theories. In the case of Volkswagen, the first theoretical concept which can be linked is the Utilitarian Ethical Theory. As per this ethical theoretical concept, the activities or the decisions undertaken by the individuals must be based on an approach of offering maximum benefits to the maximum number of individuals. This theory opposes the decisions which are taken from the perspectives of self-direction which benefits only few people or the organisation (Hursthouse, 2013). The case of Volkswagen or the conduct of the company violates this theory in a deeper sense. The people which were benefitted from this unethical conduct include the organisation, the directors and the investors. On the hand, there are enormous numbers of groups which are harmed from such activity. The first negatively impacted is the environment. Because of the continuous sales of the default vehicles the level of pollution increased with a rapid rate for a longer period of time. Secondly the consumers get ditched as they paid for a fraud product as well as their trust upon the brand also lost (Jones, Felps and Bigley, 2007). The other parties which were impacted in a hazardous manner comprises of the various other competitors of Volkswagen in the automobile industry. Because of the less emission, the sales of Volkswagen cars increased and simultaneously the sale of cars of other brands decreased significantly. The government, environmental agencies also get impacted in a pessimist manner. Therefore, the action taken by the company is completely against the utilitarian ethical concept of management (Gray, 2010).

The second theoretical ethical concept is virtue based ethical theory. According to this theory, it is essential that the business organisations must work upon the path of reliability as well as honesty in its business functioning and operations. There are certain inherent qualities of characteristics which define the right actions as well as the appropriate behaviour of the individuals taking decisions. In the case of Volkswagen, there is complete violation of this ethical theory as the higher authorities, key stakeholders and other managerial authorities were involved in this act (Thiroux and Krasemann, 1980). The key chairpersons had a complete knowledge and with utmost intention they performed such major actions of corporate fraud. From the view point of the ethical theory of virtue, Volkswagen does not appear to be at a sophisticated position as it has been identified that the organisation and the key persons are indulged in the unlawful as well as unethical practices for the development of the business and the market segment. And there is an utmost need that Volkswagen should work on the ethical virtues. It will result in disclosure of the business operations of the company to the stakeholders, government, public, employees and the customers (Hursthouse, 2013).

The third ethical theoretical concept which has an association with the unethical business operations of Volkswagen is Rights based ethical theory. As per this theoretical concept of ethics, there are certain rights which have been established in the community (Broad, 2014). These are the rights which are paid huge priority and are established to give protection to the individuals (Armstrong, Ketz and Owsen, 2003). These rights are sound to be ethically true as there are huge numbers of people who follows them. In the case of Volkswagen, the customers as well as the environmental authorities have all the rights to know about the true emissions and operations of the diesel cars. But Volkswagen has violated this ethical theory of rights as it had hid the actual information about the engines from the society. The customers who paid for the vehicles have a complete right to the information about the products but Volkswagen have supplied faulty vehicles which were against the right based ethical theory. Therefore, it can be analysed that Volkswagen was highly unethical and has worked against the society ethics and moral virtues (Donnelly, 2015).

The next theoretical concept which offers a detailed analysis of the ethical dilemma of Volkswagen is deontological based ethics theory. As per this the deontological theory, the individuals must follow their responsibilities as well as their obligations at the time of making decisions when there is a vital role of ethics (Alexander and Moore, 2007). It is essential that the individuals must have a considerable concern about the society and the individuals at the time of taking decisions as it is the duty of an individual to remain ethical in his or her actions (De Colle and Werhane, 2008). The people who follow the deontological theory usually make consistent and ethical decisions which are beneficial for the society as well as for all other associated bodies. In case of Volkswagen, the organisation is sound highly unethical as at the time of making decisions, there was no relevant concern for the society (Shafer-Landau, 2012). There are numerous environmental hazards because of fake emission results but in spite of being aware of the consequences of the decisions, the key persons took such decisions. This shows that there is a direct violation of the deontological theory of ethics. The managers or the executives have worked against their obligations and because of their unethical decisions, the societies were negatively impacted. The decisions made were self-centred and instead of being advantageous for the societies they were completely in hazardous, unethical and immoral (Hursthouse, 2013).

All these ethical theoretical concepts have a direct association with the managerial practices followed in the organisations. In present scenario, to become a reputable and reliable business organisation, it is essential to possess high level of ethicality in the managerial practices and business operations. In today’s business world, corporate social responsibility is such a wide concept that forces the organisation to lay their major emphasis on the societies, communities and their development (Weihrich and Koontz, 2005). In terms of capital investments and several other initiatives, the organisations have to remain ethical in their business operations. There are sustainability reports of every business organisation, which shows that how much am organisation is socially responsible. There is analysis of the business operations in terms of sustainability where the operations are marked ethical, sustainable and moral in terms of environmental impact and societal impact. There were numerous negative impacts upon the brand value and sales if the vehicles of Volkswagen because of fraud and unethical practices. The market share of the company also declined with a rapid rate. But after having an analysis of various ethical theories and the theoretical concepts, it is evaluated that there is a direct influence upon the managerial practices of Volkswagen. All these theoretical concepts have forced the organisation to maintain ethicality in its managerial actions and approaches (Windsor, 2006).

The first and the foremost influence that took place is that the managers have to create high credibility. Volkswagen has to now work in a more moral manner where there can be high level of social responsibility initiatives and corporate governance. Maintaining credibility in the managerial practices means that Volkswagen has to take use of those practices which can offer high level of benefits to the society and the masses (Northouse, 2015). The second major influence on the managerial practices is making improvements in the decision making. The destiny or the future of an organisation completely depends upon the decisions which the managers take in an organisation. All the frauds and unethical actions were the result of the decisions of the key persons or the managers of the organisations. Thus, there is a direct influence on these decisions. It is essential that the organisations must shave improvements in the decision making process (Armstrong and Taylor, 2014). The improvements are in the form of disclosure, which ensures that at the time of making decisions, all the information is disclosed to all the stakeholders where there is no confidentiality or hidden errors in the decisions which can have a negative impact on the society and the consumers. The second improvement in the decisions is related to integrity (Ghoshal, 2005). The aspect of integrity in the managerial aspects ensures that the decisions taken are honest and reliable which means that there must not be any kind of wrong or immoral intentions or hidden benefits of the organisations in the decisions taken by the company. Next influence on the managerial practices is that securing environmental sustainability (Lantos, 2002). Because of the growing industrialisation, there is a huge impact laid down on the environment. Because of the fraud emission test, the most negatively impacted element was the environment. Therefore, it is a major influence on the managerial practices to have high level of environmental sustainability. It is now essential that Volkswagen must improve the quality of its engines and must have appropriate initiatives to reduce the emission level of the diesel cars (Parboteeah, et al., 2010).

Conclusion

In this paper, it is critically analysed that how Volkswagen has been indulged in such a huge corporate fraud or an ethical dilemma. Such a big action against the moral and ethical business practices have drowned the image, customer base and the market share of the company from the global context. From this paper it can be concluded that, there is a huge demand for ethical approaches in the business and the managerial practices. The theories such as virtue ethical theory, right based ethical theory, deontological theory and the utilitarian ethical theory helped in analysing that the practices of Volkswagen were unethical and violates the major aspects and rules of business ethics (Zhang, Veijalainen and Kotkov, 2016). From this paper, it can also be stated that there is a need that the organisational leaders must ensure that the organisation decisions are made ethically. It is the sole and key responsibility of the leaders to take organisational decisions and on these decisions, the future of the organisations depends upon (Toor and Ofori, 2009).

There is an essential need of ethical leadership in the business organisations because the organisational leaders who work hard for the ethical business conduct boost the morale of other people to act in an ethical manner (Butts, 2012). In ethical leadership there is a substantive character element as well as a structural component. As per the substantive element, the leaders take use of their authoritative powers in a very optimistic manner for influencing the individuals by the means of role modelling (Shah, n.d.). This is the primary reason there is a huge emphasis on the strong character of the leaders who are ethical and the ethical leadership. It is recommended to the leaders that they must incorporate an approach of virtue ethics in the organisation and the business practices. In the present scenario, there are several crisis from which the organisations are undergoing. In such a case, there is a need of string and ethical characters (Butts and Rich, 2012). As per the analysis of various theories, it can be concluded that the leaders must have their major focus on the virtue ethics. The high level of ethics in the leadership and the leadership practices, there is ethicality in the assessments, standards, accountability, consultation, decision making processes and the policies. It is also essential for the leaders to have ethical communication in the business and the workplace. The leaders are required to have truth as a primary value in their business practices (Huhtala, et al., 2013). If the leaders maintain fairness and truth in their communication then the consumers build high level of trust for the organisation and to achieve long term sustainability, the most important factor is to attain the customers’ trust. It is also necessary that the leaders must have ethical collaboration as well as ethical succession planning. Successful collaboration means that the leaders must remain ethical in all the business practices as well as all the various level of the business (Walumbwa, et al., 2011). At the time of dealing with customers or other parties there is a need to have ethical collaboration. The ethical succession planning by the leaders ensures that there are continuous ethical practices in the future run of the business organisation. The present leaders must take care that the in the future also leaders must be ethical in decision making, taking initiatives and performing business practices (Ciulla, 2014).

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