Statement of the Problem
How can Volkswagen address and rectify the systemic failures in corporate governance, culture,
and ethical standards that led to the creation and concealment of the defeat device, in order to
restore trust, ensure adherence to environmental regulations, and commit to long-term
sustainability?
Alternative Courses of Action (ACAs)
ACA 1: Comprehensive Environmental Compliance and Ethics Training Program
With the goal of restoring Volkswagen's (VW) image after the scandal and encourage honesty and
transparency within the company, this ACA recommends instituting a comprehensive program for
that of environmental compliance and ethics training. All employees of Volkswagen, regardless of
the role they play or the position they hold, will be mandated to be in compliance of the said
program, to instill unto them the importance of adhering to environmental regulations and
practicing ethical behavior. Furthermore, the program will also educate personnel on the gravity
of committing ethical lapses and the need of making ethical decisions in both fields of engineering
and business.
Pros Cons
• Raises staff knowledge on ethical • Requires a substantial investment of
concerns and environmental issues time and resources to develop and
• Enhances employee awareness on the administer the training
importance of regulatory compliance • Possibility of resistance from
• Strengthens the ethical culture within employees who could perceive it as a
VW punitive measure
• Reduces risk of ethical and regulatory • Difficulty in quantitatively assessing
breaches the program's success in preventing
future misconduct
ACA 2: Advanced Emission Testing and Reporting Systems
In order to demonstrate its commitment to environmental stewardship, this ACA urges Volkswagen
to create and set up state-of-the-art emission testing and reporting systems. Doing so is
demonstrative of the company’s commitment in going above and beyond that of environmental
compliance standards—via the adoption of advanced technologies for continuous emission
monitoring as well as setting up an open system to report emission data. Not only does this result
in helping the company gain back the confidence and the trust of both regulators and consumers,
it would, at the same time, also set new standards within the greater automotive industry. As a
result, the possibility that any future and/or potential compliance-related issues would arise have
a significantly lower likelihood of occurring.
Pros Cons
• Revives consumer and regulatory • Requires a substantial investment of
confidence time and resources to develop and
• Establishes VW as an industry leader implement such technology
in environmental accountability • Possibility of encountering technical
• Allows VW to set environmental obstacles, and the constant need to
benchmarks, encouraging broader invest in order to keep technology
industry improvements relevant
• Reduces likelihood of regulatory • Difficulty in getting everyone on
penalties and reputational damage board, especially if these principles
are at odds with the company's goals
for cutting costs
ACA 3: Restructuring of VW’s Corporate Governance
In light of the emission scandal, this ACA suggests that Volkswagen's undergo a complete overhaul
of its corporate governance structure in order to increase transparency, responsibility, and ethical
decision-making within the company. Essential to this plan include that of the establishment of an
independent ethics commission, the introduction of stricter balances and checks, and the creation
of transparent procedures in terms of the punishment for those responsible of ethical
transgressions. By reestablishing basic decision-making procedures that incorporate ethical
considerations, the reorganization intends to prevent the likelihood of similar scandals in the future
from occurring—whilst at the same time—restore faith and credibility among stakeholders.
Pros Cons
• Reduces the likelihood of unethical • Requires a substantial investment of
behavior among employees time and resources to implement such
• Promotes a culture of responsibility extensive changes
within the company, encouraging • Possibility of encountering resistance
ethical conduct and decision-making from employees due to unalignment of
across the organization values, and pushback from upper
• Serves as both a preventive measure management who may see their
against misconduct and a signal to authority diminished
stakeholders that the company is • Presents challenges in terms of
serious about making lasting changes dismantling of entrenched systems and
the integration of new processes
ACA 4: Launch of a Global Sustainable Mobility Initiative
This ACA is centered around Volkswagen's launch of a global sustainable mobility plan, which
will mark a significant move by the company towards sustainability. This will put Volkswagen in
the vanguard of the sustainable transportation movement by investing heavily in electronic
vehicles (EVs), new public transportation systems, and renewable energy projects. Volkswagen is
setting itself up for future success by reinventing itself as an innovator and sustainability leader.
This will help the company overcome the emissions issue and adapt to changing consumer
preferences and government regulations. This is an opportunity for Volkswagen to rebrand itself,
reach out to new demographics of consumers, and set an example for the automotive industry in
terms of environmental responsibility.
Pros Cons
• Provides an opportunity for the • Demands a substantial investment of
company to emerge as a frontrunner in time and resources to launch an
terms of environmental sustainability initiative of this scale
• Aligns the company with broader • Presents a challenge to the company to
environmental trends in the global innovate continuously while adhering
market to its new strategic direction
• Opens new revenue streams for the • Requires VW to maintain a delicate
company balance between profitability and its
sustainability ethos
