KRISTINE M. PAGGAO
MBA
ISU- Cauayan Campus
Mgt. 240
Reaction Paper
Case 2: The Volkswagen Group- Disaster in the Integrated Corporation
Gunter Muller- Stewens and Joachim Stonig of University of St. Gallen’s case study of: The
Volkswagen Group- Disaster in the integrated corporation. This study illustrates how effective or
ineffective on handling a management situation.
The manipulated emission values for diesel engines of type EA 189 in what transpired to be
around 11 million vehicles across different brands of the corporation, both inside and outside
USA. Due to manipulation, loss in public image and trust from customers were damaged. Legal
action from the US Department of Justice on the grounds of fraud, financial penalties payable to
the authorities, legal proceedings against individual managers, as well as many other legal
consequences of an unknown extent. The US Environment Protection Agency accused
Volkswagen of having installed a sophisticated software algorithm in diesel vehicles that
influenced the result of emission tests. This software evokes low emission which are not attained
in normal driving. The use of this software is illegal and threat to public health. Regulatory
compliance is an organization's adherence to laws, regulations, guidelines and specifications
relevant to its business processes. This is for the benefit of the public and environment. Being
adherent to these laws, are one of the ways a company earns trust from its consumers.
Consequently, violations of regulatory compliance often result in legal punishment, including
federal fines. This may not have been thought by the management of the Volkswagen, this made
a great impact of the company that it affects the organization itself and resulted internal
consequences. It ruined public image and resulted in Volkswagen financial crisis.
This manipulation also happened due to lack of communication within the company. Business
communication is the process of sharing information between people within and outside a
company. It is impossible that the CEO is not aware of the wrongdoings, having the highest
position in a company takes full responsibility of what a company is going thru. Effective business
communication is how employees and management interact to reach organizational goals. Its
purpose is to improve organizational practices and reduce errors. This maybe a reason why this
manipulation was made at Volkswagen. Culture, ethics and communication within the company
spokes how sound their process in their transactions can be. As described by Thomas
Sattelberger, Volkaswagen company is based on command and obedience, trimmed for mass and
efficiency which is dictatorially governed.
In conclusion, adhering regulatory requirements is the highest and surest guarantee for the
efficiency and efficacy of a product a company can offer. Through complying legal requirements,
company may easy to gain trust from the public. Trust is a long-term investment of a company
but can be ruined in a small error in short period of time. This affects the public image that a
company hardly earned for years. Business communication involves constant flow of information
within and outside a company, I can’t imagine how would a company be without communication.
Effective business communication is how employees and management interact among each
other to reach organizational goals. If employees were being pressured and threatened, they as
part of the management may not be transformed as asset but a liability to the company.
Unrealistic organizational goal may also lead to an illegal process or ways just to achieve that
certain goals, higher management should think of targets that are possibly reachable.