Business Ethics Dr. Aravind Banakar –

Business Ethics CASE STUDY (20 Marks) Since the story broke that VW deliberately buried emissions results in its software, plenty has been written about this case of corporate malfeasance, perhaps more than any since Enron. The Volkswagen brand crisis seems fairly straightforward to me. With no mission or values, I contend there is no hope for achieving VW’s goals ethically and in a way to sustain the company. Some confuse mission statements with other corporate communications that are really marketing taglines and slogans. Mission statements are not typically external documents, used to convince others of the value the company creates. Rather the most effective mission statements are largely internal documents, guiding people within an organization about its purpose and paired with a values statement so that organizations have clarity about both their purpose and how they are going to achieve it.

Volkswagen doesn’t have a mission statement. There were values stated in the 2006 annual report, but they disappeared in future years. A vision statement dated June 2011 pronounced: “By working in co-operation with politicians and society, the world of business can play a key part when it comes to combating serious environmental issues and social inequality. Volkswagen's main contribution to the project is related to sustainable mobility.” An analysis by Strategic Management Insight 2013 could find only this goal in lieu of a mission statement: “The Group’s goal is to offer attractive, safe, and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” SMI found Volkswagen Group’s goal lacked any statement of values or philosophy, did not mention customers, employees, or technology. It achieved a score of 1.6 out of a possible 4.5 in SMI’s evaluation. By 2014, Volkswagen’s annual report talked about its strategy.

Still no mission, no values: “Our Strategy 2018 focuses on positioning the Volkswagen Group as a global economic and environmental leader among automobile manufacturers. We have defined four goals that are intended to make Volkswagen the most successful, fascinating and sustainable automaker in the world by 2018.” These goals related to innovation, customer satisfaction, sales, profits and employee retention, but say nothing about core values. In 2010, Volkswagen joined 21 other German automakers in 2010 in agreeing to a “mission statement for responsible actions in business.” Yet it sill operated without a clear core set of defined beliefs or values to guide VW’s work, or a motivational or reward system aligned with a mission.

Answer the following question. Q1. Discuss why the effective mission statements should be paired with a values statement. Q2. Give your views on the case and sustainability.

Global Study Solutions Dr. Aravind Banakar –