Management Challenge.1.edited

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STRATEGIC

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Management

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Nov 24, 2024

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1 Management Challenge Student’s name Institution affiliation Professor’s name Course Date Management Challenge

2 In the dynamic landscape of modern business, companies face multifaceted challenges that require strategic management. Ethical decision-making is crucial as organizations navigate the complex web of stakeholder interests. This study delves into the management challenge of ethics and societal obligation, drawing illumination from the explicit materials provided in the referenced textbook. The research will revolve around how corporations can uphold ethical principles, the ramifications of ethical offenses, and approaches for effective management interventions. The chosen case study for critical appraisal is Volkswagen, which challenged a grave ethical difficulty lessening from its involvement in a diesel emission scandal 2017. Challenge Faced by Volkswagen A globally recognized automaker, Volkswagen confronted a significant ethical challenge when it was revealed that specific diesel engines were manipulated to deceive the U.S.A. (Jong & Vivian, 2022). This calculated and planned offense defied universally upheld ethical standards and raised concerns regarding the ethical integrity of occupational procedures within the automotive realm. The effects of this predicament were not limited to monetary losses, as evidenced by an exceptional 27.4 billion criminal offenses and additional financial consequences exceeding 18.3 (12.6) (Barth et al., 2021). The ethical violation had a broad impact, pressure, and profound scrutiny of corporate liability and ethical administration in the automotive sector. The scandal highlighted the complex interplay of stakeholder interests as customers, shareholders, and employees faced enduring consequences. The challenge for Volkswagen extended beyond rectifying the immediate moral mistake and encompassed the arduous task of rebuilding faith and credibility amidst the fallout. The legal proceeding served as a poignant reminder of the critical need to prioritize the concerns of all related parties in corporate decision- making and the far-reaching consequences of moral choices on the company's standing and

3 partnerships. The difficulty faced by Volkswagen proved to be a turning point for the automotive realm, elucidating the necessity for resilient moral frameworks and skillful managerial responses to navigate intricate ethical quandaries adeptly. Management Response to the Challenge In response to the ethical challenge of the diesel emission scandal, Volkswagen implemented a multifaceted management strategy. The company faced severe legal and financial ramifications, encompassing a criminal settlement of $2.8 billion and additional expenditures exceeding $33 billion. Acting expeditiously and comprehensively, Volkswagen's leadership implemented measures to address the ethical transgression and its repercussions. They acknowledged the gravity of the predicament and vowed to bear complete responsibility for their misdeeds. This direct admission of liability was pivotal in exhibiting transparency and answerability (Bartošová et al., 2023). Volkswagen also instigated a substantial vehicle repurchase initiative to redress the detrimental impact on affected consumers, underscoring their commitment to mitigating the tangible consequences of their moral failure. The management response included internal accountability measures. Eight current and former employees were subjected to criminal charges, highlighting the company's commitment to holding individuals responsible for their roles in the scandal. This approach aligns with occupational ethics, emphasizing standards that govern how members of a profession should conduct themselves. In prioritizing efforts to surpass mere conformity, Volkswagen presented a roadmap for integrating ethical practices and transparency into its long-term agenda. This proactive approach strategically aimed at restoring its credibility and regaining the trust of its stakeholders and the general public. The management's handling of the challenge powerfully

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4 underscores the gravity of ethical decision-making, recognizing the extensive ramifications of ethical transgressions in the automotive industry. Critical Analysis of Management's Response Volkswagen's management response to the ethical crisis stemming from the diesel emission scandal warrants critical analysis through the lens of ethical frameworks outlined in the textbook. The utilitarian stance, improving on the best benefit for the most excellent multitude, exposes the profound and lasting repercussions on clientele, stockholders, and staff (Li, 2023). The heavy financial fines and discolored image of Volkswagen are a stark reminder of the gravity of the ethical transgression, highlighting the enduring significance of principled discernment within the corporate domain. Examining the matter through the lens of moral rights adds complexity, as stakeholders possess inherent rights exceeding utilitarian considerations. The breach compromised financial interests and infringed upon the moral rights of those affected, increasing the ethical evaluation. The principle of justice demands fairness and equity in decision-making, prompting inquiries about the unequal dispersion of ramifications among interested parties. Volkswagen's dedication to impartiality in its decision-making procedures becomes a central matter of moral apprehension. Applicable rules, grounded in societal norms, offer a realistic perspective. Volkswagen's ethical breach serves as a case study in U.S.A. implications of deviating from established ethical norms (Braun &Van Erp, 2022). The critical analysis underscores the lasting importance of ethical decision-making, serving as a cautionary tale for companies navigating the delicate balance between profitability and ethical responsibility. The versatile methodology of utilitarianism, moral rights, justice, and pragmatic principles presents an all-encompassing

5 assessment framework, urging enterprises to prioritize ethical deliberations in their decision- making protocols. How would you respond to this challenge In responding to the ethical challenge faced by Volkswagen, an alternative management approach could involve a proactive commitment to transparency, accountability, and adherence to societal ethics. Drawing insights from the textbook's discussion on societal ethics, nations such as Denmark, Iceland, Sweden, and Switzerland have garnered acclaim for their upright principles and conscientious adherence to societal mores. By proactively incorporating protocols in line with the ethical norms prevalent in these countries, Volkswagen could have averted the ethical misconduct that precipitated diesel production. A comparative analysis with organizations from ethically sound countries could serve as a guide for Volkswagen. For instance, companies in Denmark are known for their strong values regarding social welfare. By aligning its management practices with the ethical standards prevalent in such countries, Volkswagen might have developed a management framework that prioritizes ethical considerations and prevents unethical practices. An intentional reel towards an ethically driven managerial approach could position Volkswagen as an upstanding corporate community member. Emulating lessons from the venerated entities of ethically upstanding countries, Volkswagen could have efficiently implemented safeguards to curb the recurrence of unethical practices while cultivating a corporate ethos that aligns with the prevailing societal principles. In contrast, the ethical space at Volkswagen serves as a warning story, highlighting the importance of considering the broader impact on stakeholders. Other organizations within and outside the automotive industry can learn from this case to ensure that their decision-making

6 processes prioritize ethical principles, leading to long-term benefits for all stakeholders. This reprehensible occurrence should not be readily dismissed as an isolated occurrence but rather subjected to exhaustive analysis and scrutiny by businesses across varying spheres. In delving into the convoluted intricacies of this reprehensible occurrence, both within and beyond the periphery of the automotive sector, enterprises can extract invaluable discernments to bolster their decision-making, fostering a corporate culture that prioritizes ethical principles and ensures the long-term well-being of all stakeholders. Ethical decision-making is a critical aspect of contemporary management. The Volkswagen case study exemplifies the repercussions of ethical lapses and the importance of a comprehensive management response. Utilitarian, moral rights, justice, and practical rules are valuable guidelines for navigating ethical dilemmas. As organizations endeavor to uphold ethical norms, management must conscientiously contemplate the broader implications for all parties involved. Taking notes from cases such as Volkswagen, organizations can endeavor to make sound and conscientious judgments that ultimately benefit all stakeholders in the long term. References

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7 Barth, F., Eckert, C., Gatzert, N., & Scholz, H. (2021). Spillover Effects from the Volkswagen Emissions Scandal: An Analysis of Stock and Corporate Bond Markets. Schmalenbach Journal of Business Research, 74(1), 37–76. https://doi.org/10.1007/s41471-021-00121-9 Bartosova, V., Drobyazko, S., Bielialov, T., Nechyporuk, L., & Dzhyhora, O. (2023). Company strategic change management in the open innovation system. Journal of Open Innovation: Technology, Market, and Complexity, 9(2), 100087. https://doi.org/10.1016/j.joitmc.2023.100087 Braun, C., & Van Erp, J. (2022). International regime complexes and corporate crime: a research agenda based on the Volkswagen diesel fraud case. Crime, Law and Social Change, 1-22. https://doi.org/10.1007/s10611-021-09980-z Jong, W., & Vivian. (2022). Clean diesel and dirty scandal: The echo of Volkswagen’s dieselgate in an intra-industry setting. Public Relations Review, 48(1), 102146–102146. https://doi.org/10.1016/j.pubrev.2022.102146 Li, N. (2023). Ethical Considerations for Automobile Emissions Management Background, Detriment, and Litigation. European Journal of Business and Innovation Research, 11(1), 11–20. https://doi.org/10.37745/ejbir.2013/vol11n11120

Management Challenge.1.edited

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