VOLKSWAGEN EMISSIONS SCANDAL

Hello, this is the operations team to Volkswagen emissions scandal.

Operational analysis.

My name is Claire Shipman along with Jessica Franceschi.

We'll begin with an overview of the project introduction.

Executive summary, current status analysis, operational and leadership recommendations.

And then finish with our conclusion.

Let's get started with our introduction Volkswagen diesel cars have

always performed very well and thus shown impressive efficiency in

regards to fuel mileage.

In the early 2000's, Volkswagen diesel cars labeled as TV

models began to show incredible efficiency gains when most other

manufacturers struggled with efficiency due to height tightening regulations on

emissions. The United States EPA conducted an independent investigation into

emissions level of diesel powered vehicles manufactured by the Volkswagen

group. The scandal commonly referred to his diesel gate began

when the EPA issued an official violation of the Clean

Air Act to the German automaker in September of 2015.

Moving on to our executive summary, the Volkswagen group knowingly

and purposely defied the regulations set forth by the EPA

and the Clean Air Act to modify their diesel engines.

To pass the federal and state emissions regulations and testing,

Volkswagen was forced to recall millions of vehicles and issue

a public apology to its customers, ruining its reputation and

losing a significant number of loyal customers.

Stock prices plummeted along with retail sales.

These problems stemmed from a lack of transparency and accountability

throughout the management team within the organization, profitability was the

only concern and that eventually led to a major system

failure within the company and its leadership.

Since the scandal, Volkswagen has worked to show investors and

consumers a transformation in the company's culture and core values.

Our current status Presently, six years after the scandal first

broke in 2015, Volkswagen is still reeling from the damage

damages to the company came in the form of payouts

to consumers, litigation costs and ongoing payouts, damages to the

company's reputation is lasting Prior to the scandal, Volkswagen rated

as the 18th most valuable brand, falling to 25th after

the scandal and remaining around that level charges against the

executives continue to occur With trials for several that were

charged in 2020, expected to last into 2022.

Many experts believe that there's permanent damage to the brand.

Others feel that the new leadership and a changing culture

will renew the loyalty in the brand and Volkswagen will

again see growth and success in the future.

Mhm. Moving on to our operational analysis, be using the

balanced scorecard.

The balanced scorecard is a process map that assesses four

critical factors of the business financial performance, customer satisfaction, internal

processes and learning and growth.

The Volkswagen emissions scandal greatly affected the brand image and

thus the relationships within and between the elements shown here

on the scorecard.

Our first sector is financial performance, financial performance measures, issues

associated with profitability and market value.

The scandal had significant impacts on the company, including consumer

settlements, lost revenues and continued economic costs.

Routers estimates that the total cost to Volkswagen was around

$34.64 billion 40% drop in the company's share price in

the market.

Some key take wings finding its performance measures, profitability and

market value.

The scandal led to settlements and recall vehicles serious economic

impacts. The company lost $34.64 billion dollars in fines and

settlements. The share price dropped by 40% in the market.

Moving on to the next sector of the scorecard, customer

satisfaction, customer satisfaction addresses issues such as quality, service and

cost of ownership in the automotive industry, customers demand reliability

and quality, as well as performance and styling.

Many automotive enthusiasts are loyal to certain brands and will

typically only purchase those vehicles.

Volkswagen was built on an economical and friendly image.

The scandal ruined this image and cost the company a

significant portion of its loyal customer base.

Survey results show that most affected customers return their cars

and purchased from another manufacturer.

Here's some key takeaways from customer satisfaction portion, customer satisfaction

measures, quality, service and low cost factors, cheating the authority

and customers means losing customer loyalty and trust.

Environmentally conscious customers became more cautious.

The company's public relations were affected and it attracted the

EPA's attention.

Why the next portion of the scorecard is internal processes.

Internal processes within the balanced scorecard measure organizational effectiveness and

efficiency. The internal processes were questionable at best.

During this period of Volkswagen organizational culture, focusing on profits

and a centralized decision making approach became the biggest barrier

to internal communication.

This disconnect and lack of transparency directly attributed to managers

engaging in illegal activities in efforts to meet goals and

profitability targets which were otherwise unattainable in a very difficult

market at the time.

Here are some key takeaways from this portion.

Internal processes measure the efficiency and effectiveness of the company.

The scandal made the operations questionable.

There was extensive use of dubious devices revealed during scandal.

Quality control systems of the vehicles became questionable.

Corporate governance challenges were revealed.

The 4th and last section of the balanced scorecard is

learning and growth within the learning and growth sector.

The balanced scorecard measures the ability of the company to

develop and utilize its human resource skills to meet various

strategic goals.

Volkswagen has always touted their advanced research and development accomplishments,

but it is generally accepted that the illegal alterations were

unbeknownst to the production team.

The illegal modifications and their apparent benefits rather, were kept

in strict confidence within the engineering management and senior leadership.

Here's some key takeaways from the learning and growth sector.

Learning and growth helps measure the business's ability to develop

and utilize human resources.

Well trained human resources disappointed the company.

During the scandal, the highly financed R and D team

failed in compliance.

The brand image was affected with unethical behavior.

Volkswagen ignored safety and health concerns caused by the knocks

omitted by the modified emission systems.

Here are some key points from the balanced scorecard, financial

performance, customer satisfaction.

Internal processes and learning and growth are the critical success

factors determined by the balanced scorecard.

The emission scandal significantly affected financial performance.

Customer satisfaction was hindered in terms of quality, service and

low cost ignorance of the human resource by Volkswagen affected

its growth and expansion within the market.

Lastly, the organization's efficiency and effectiveness was affected by these

dubious techniques.

Yeah. Finally, within our analysis are some contributing factors.

Volkswagen arrived at its current position due to dishonesty and

negligence, power observed that implementation of faulty techniques were applied

to enhance the company's performance.

The new technique of hiding emission levels of the automobile

raised concerns when the emissions were higher than normal dishonesty

by the company resulted into its exposure, thus losing the

trust of the public.

Moving on to our operational recommendations, Volkswagen was always known

as a destination employer of thousands of loyal associates and

professionals. That scandal killed the company's credibility with its associates

while creating a major divide between management and the workforce.

Volkswagen must realign management with the workforce through transparency and

honesty, they must regain their trust and respect while working

towards growth and profitability with manageable targets, ensuring that new

management truly embodies the core values of the new regime

is critical to a new beginning of trust and loyalty

within the workforce and management.

Additional recommendations for the operations team.

An organization successful operations management involves increasing efficiency and effectiveness

to improve production performance.

The organization's culture should involve central decision making powers to

reduce dictatorship creep, observed that organizational culture and decision making

powers play crucial roles in operations management, creation of knowledge

and product development among others, are the critical success factors

of improving operations management.

Moving into leadership recommendations, the culture within the Volkswagen organization

was primarily to blame unrealistic goals and expectations set the

company on a path for failure to avoid future problems,

Volkswagen leadership must set realistic goals and time frames and

allow for transparency within the ranks of management and associates

culture change is very difficult and at this level must

include a total removal of all leadership in the scandal

to be replaced with individuals that emulate the new and

improved culture necessary for ongoing success of the company.

The brand must work to regain its loyal followers.

Volkswagen must show that they have revamped their corporate hierarchy

and work towards their grassroots beginnings to show loyalists that

the company's again ethically and environmentally responsible.

The company's management was immediately changed after the scandal.

The leadership and management was acted maliciously, hence the organization

required more integral leaders to enhance performance.

Mansouri noted that effective leadership and management is essential in

reducing future possible incidents.

There should be equal distribution of power to reduce incidences

of dictatorship witnessed by new leaders.

There should be open discussion culture leadership to handle faulty

situation in any organization.

Moving on to our conclusion, organizational pressure put on middle

managers by the top management team lead to unrealistic expectations

for Volkswagen engineers.

In an effort to meet expectations, software engineers came up

with a system to detect emissions testing and reduce emissions

accordingly while polluting at an illegal rate during normal operation.

This allowed for greater fuel economy and power for the

cars but released pollutants at levels over 40 times the

legal limit.

The investigation and resulting scandal has been devastating to Volkswagen's

finances into their brand as a whole.

The culture within the organization of forcing Associates to make

unrealistic goals and deadlines, with profits being the sole consideration

was to blame.

Volkswagen skirted soc a toll, ethics and norms in the

forms of environmental regulations, and they were forced to pay

the price that concludes our presentation.

Thank you.

VOLKSWAGEN EMISSIONS SCANDAL

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