Need someone to write an email to Boss in professional way. I will provide content in simple english but it needs to be rewritten in professional way
Good Morning Sarah/ HR team,
Hope you had a good weekend. 🙂
I wanted to thank you for sharing your reasons with me regarding the corrective plan. However, Ive accounted below the same along with how Ive felt it to be unfair to be put on the plan.
1. First and foremost, I believe there has been a misunderstanding regarding the sharing of KT with me. I worked with the team for 4-6 weeks initially, when the team required an extra persons help. The work/stories i picked along with its KT (for 2 stories) were given to me by Vaidhavi. Please note KT was given to me only on the stuff that she had given for me to complete. As you are aware, the claims reporting team have more than 40-50 reports and whose enhancements keep coming up. When the changes come in, the IT team has to create a story for every change. Hence, KT wasnt provided to me by anybody on the entire business of claims reporting.
I was switched to the team with the assumption that since I worked with the team for 3-4 weeks previously, I would have an idea about the whole process. Kindly note that I have never received the KT on the entire process of claims reporting. The problem arose with the misunderstanding of believing the KT to be given to me initially and then again when I was switched by Vaidhavi. For future reference (or insert whatever technical word ) the dilemma can be avoided if the management team can come up with a plan, so theres a clarity and transparency with the sharing of Knowledge transfer with a new team member.
I have worked the best I could to deliver the stories Ive picked. When a new person joins a team and theyre not given any KT on the entire process, it takes time for them (usually 5-6 months) to understand the business process. I learned the business process through the work that I picked up. I also worked at the same speed as the other team members and picked up the same amount of stories as others. Learning the process as well as keeping up with the speed and picking up stories as others was a double task on my end.
2. The test case issue
Im aware of the team informing me regarding the test cases in ALM, they also asked me to complete the update as needed which i did. Test cases were created by me when I couldnt find them in ALM. As per my knowledge, I dont see any issue with that and how it came up in the corrective plan. Please advise in case otherwise.
3. May 31, 2022
Kindly note that theres no set standard of writing test cases by the test management team. Whenever I write test cases, I write them based on the story.
The scenario I validated, the reporting team hadnt outlined in ALM. It was a different scenario that i was going to validate and the test cases that were there initially did not cover those scenarios which is why I had to create my own test cases separately.
The test cases of the story had already gone to production and business had no issues. They also reviewed my test cases and the test results and couldnt find any issues. The same was reviewed by my manager Sarah (insert name) and in case of any issues at the time, I believe I should have been notified by my peers or by the manager.
4. July 5, 2022
Every team has a different work culture. When i joined the team, the scrum master usually linked the stories to releases. The date mentioned where I didnt tag the story didnt come under my responsibilities as per the team.
It was supposed to be done by the scrum master.
He was informed by me to put a release tag on the story as i do for every story that I pick up.
The incident which has been reported for July 5th ( i had also joined the team only 2 months prior) occurred only once.
Ive delivered so many stories until now to production.
There hasnt been a repetition of the incident since then as Ive always let the scrum master know every time I pick up a story.
Even then I deleivered everything to production on time with no issue in production. I am not just understanding this reason as part of corrective plan. You were also on that email
where I sent things to UAT for Validation. I have also included EUAT as well in that email so they knew that they need to do validation but they didn’t reach out to me till the last day and they didn’t even inform the team regardin tag and as I said its not my responsibility in team. Scrum master usually tag releases on story. You may check with team as well and I was new to the team and I did what I supposed to do in my previous team.
nobody instructed me about UAT location. There is no proof that location was shared to me by my team members. Usually our developers send things to UAT for business to validate and when I joined team even then developer was sharing files with business for UAT. in the middle when things change from QA management that QA has to share files to business thats when I sent out an email for UAT to business and I used previous approach that I used in Quality team where I used to send files for UAT some common location where end users have access. I used a location where we usually keep files and before I sent files to busienss I opened a file from my end. I am not sure why it didn’t open from business side. this incident happened only once and never repeated again. If this thing keep happening that I think it would be part of corrective plan but since this never repeated, it shouldn’t be a part of corrective plan.
YEs I understand about assining the stories to yourself when you pick it up which I always do it. I have been working with Caresource and in agile environment from last 6 years and I know the process that was just one time when I picked up a story and didn’t assign to myself which I later did it while I was working on it. This incidednt never happend again till now. So this is not valid statement for corrective plan.
5.
SHOW MORE…
article review?
F EATURE ART I C L E
The Volkswagen emissions scandal and its aftermath
Jae C. Jung | Elizabeth Sharon
The discovery in 2015 that car maker Volkswagen (VW) had installed defeat
devices into its diesel engines to lower emissions during testing exposed a corporate
scandal and resulted in a 40% drop in the company’s share price in 2 weeks.
Although industry analysts questioned whether VW would survive the fallout, its
sales quickly rebounded, and in 2017 the firm was the world’s largest auto manufac-
turer. Although this unexpected surge led some to say that the scandal had blown
over, there are indicators that VW has not yet fully recovered from the affair, and sev-
eral issues stemming from it remain to be resolved. An examination of several reports
issued as the crisis unfolded highlights the impact on VW and offers lessons for the
firm’s leaders and public policy makers.
1 | INTRODUCTION
In September 2015, researchers at the University of West
Virginia discovered that Volkswagen (VW) had been instal-
ling a defeat device in each of its diesel engines. This software
enabled the vehicles to pass emission tests under laboratory
conditions while emitting 40 times the level of pollution
allowed in the United States during normal use. The software
was installed in 11 million diesel vehicles worldwide, includ-
ing 590,000 in the United States.
The disclosure led to one of the most serious corporate
scandals in the world. Within 2 weeks, VW’s stock lost 40%
of its value. Stockholders, consumers, and government repre-
sentatives were furious over the auto maker’s duplicity, partic-
ularly when reports contended that the company’s senior
managers had known about the device all along, and had even
rewarded individuals involved with the project (Kieler, 2016;
Tabuchi, Ewing, & Apuzzo, 2017). In the United States, sev-
eral VW executives and employees were charged and impri-
soned for conspiracy to commit fraud and violation of the
Clean Air Act (Isidore, 2016; Tabuchi et al., 2017). As of
autumn 2017, several lawsuits were still in progress in various
countries.
In a public apology after the scandal became public,
Martin Winterkorn, VW’s CEO at the time, did not admit to
any wrongdoing. While recognizing the loss of consumer
trust, he argued that this trust should be restored because it
was unfair to blame 600,000 hard-working individuals for the
mistakes of a few people (Campbell, Rauwald, & Reiter,
2018; Groden, 2015). Apologies from other VW executives
and corporate ads echoed the same themes, offering little or no
acknowledgment of any attempt to deceive (LaReau, 2017).
Although recognizing the loss of shareholder trust, the VW
2015 annual shareholder letter focused on setting the direction
for the company’s recovery in the future (Volkswagen, 2015).
Since then, VW has sought to overcome the negative
impacts of the scandal through various means. Although its
response has differed from country to country, it has promised
to ensure that affected vehicles comply with local emission
standards. It has also agreed to settlements with governments
and consumers in a small number of countries, while refusing
similar settlements in others. VW’s other efforts at reconcilia-
tion include offering competitive warranties for newly pur-
chased cars, announcing a new focus on electric vehicles,
changing its internal organizational structure, and offering
additional, though superficial, apologies.
Although some analysts made gloomy predictions about
the company’s future when the scandal first broke, VW’s
sales actually increased in 2016/2017. This was primarily
due to strong sales in developing economies, such as China
and Central and Eastern Europe, which helped to make
Volkswagen the world’s largest automobile manufacturer in
2017. Given this strong recovery, many consider the worst
of the VW emission scandal to be over. However, a counter-
argument can be made that the firm has not yet fully recov-
ered from the damage caused by the emission scandal, and
DOI: 10.1002/joe.21930
6 2019 Wiley Periodicals, Inc. wileyonlinelibrary.com/journal/joe GBOE. 2019;38(4):615.
http://wileyonlinelibrary.com/journal/joe
that many issues remain to be resolved by both VW and
public policy makers.
Immediately after the scandal, VW’s main objectives
were saving financial resources and maintaining stability. It
achieved those goals, in the short term, by limiting costs and
payouts. The company remains under the shadow of the
scandal, however, and is still dealing with various claims
and lawsuits in several countries. More important, it still
needs to recover the trust of its diverse group of stake-
holders, and that will take time.
Although some analysts made gloomy pre-
dictions about the company’s future when
the scandal first broke, Volkswagen’s sales
actually increased in 2016/2017.
As for public policy, although VW did not violate the
letter of the law in many countries with emission regulations,
this does not mean that the pollution caused by its vehicles
was acceptable. Governments need to update their environ-
mental regulations, become more proficient at implementing
them, and continue to support studies concerning the effects
of the pollution caused by motor vehicles.
2 | EXPLORING THE POST-SCANDAL
SALES SURGE
Defying pessimistic predictions regarding its survival, VW
recorded strong sales in the years immediately following
the scandal. The company sold 10.3 million vehicles world-
wide in 2016 (a 2.8% increase), and 10.7 million in 2017
(a 4.3% increase). Although its Western European sales,
which focused heavily on diesel cars, were sluggish during
this period, sales in developing economies increased sub-
stantially: by 20% in China and by 21% in Central and
Eastern Europe (Boston, 2017; Reuters, 2018). The com-
pany’s US sales fell by 8% in 2016, but rose by 5.2% in
2017. Several factors beyond VW’s control contributed to
this unexpected recovery.
2.1 | Deflecting attention
Research on crisis management suggests that the public and
the media have a short attention span: Interest in corporate
scandals tends to surge in the first few weeks, and then
disappear once attention is diverted to other events (Mena,
Rintamki, Fleming, & Spicer, 2016; Zavyalova, Pfarrer,
Reger, & Shapiro, 2012). The news that many other German
and American automobile manufacturers had practiced
similar deceptive behaviors helped diminish the attention
paid to VW.
Other German automotive companies, such as Audi,
BMW, Porsche, and Daimler, were found to have conspired
in a variety of allegedly anticompetitive agreements with
VW, including one for the development of diesel-emission
systems (Atiyeh, 2017; Hawkins, 2017). If found guilty,
these companies could face fines of $54 billion under
German law, and criminal charges by US authorities. In the
United States, Fiat Chrysler was found to have installed soft-
ware similar to VW’s defeat device in about 104,000 vehi-
cles from 2014 to 2016, and General Motors was found to
have installed such software in 705,000 trucks sold from
2011 to 2016 (Boudette, 2017).
Further, other corporate scandals, both before and after
the VW debacle, had inured consumers to distressing busi-
ness news. These included Toyota’s recall over problems
with its accelerators in 2010 and GM’s recall over ignition
switch defects in 2014, both of which were customer safety
issues. In a world where automobile recalls have become
commonplace and big corporations are considered untrust-
worthy, consumers might be less concerned about an emis-
sion problem that they do not connect to their immediate
well-being (Hennessy, 2015).
Along these same lines, scandals outside the automo-
bile industryfor instance, the Enron accounting scandal
in 2001 and the BP Deepwater Horizon oil spill in
2010had gotten consumers used to the exposure of bad
business practices well before VW’s problems made head-
lines in 2015. Public attention in the United States and
even abroad was further diverted from VW in the run-up
to the 2016 US presidential election, when an unantici-
pated candidate for president, Donald Trump, began to
claim an increasing share of the media spotlight (Campbell
et al., 2018).
2.2 | The impact on individual consumers
Research on crisis management suggests that the perceived
harm an event creates is one of the factors that influence
stakeholders’ reactions (Mena et al., 2016; Shrivastava,
Mitroff, Miller, & Miclani, 1988). As noted, consumers per-
ceived the harm caused to individuals in the VW case as
small. Although they were upset about having been tricked
into buying what they thought was an environmentally
friendly car, for most buyers the inclusion of eco-friendly
features had only a small impact on their decision to pur-
chase a VW (Hennessy, 2015). Before the scandal, VW
was not particularly known for its environmentalist priori-
ties, particularly when compared to such brands as Tesla
and Toyota’s Prius.
A survey of 6,300 car drivers in Ireland revealed that more
than 75% of VW consumers would purchase from the com-
pany again, and that 54% of non-VW owners said the scandal
would not put them off buying a VW or one of its brands in
the future (McAleer, 2016b). A survey of 800 US consumers,
polled a few months after the scandal became public, showed
that only 7.5% had a negative impression of VW. When
JUNG AND SHARON 7
identifying first associations, fewer than 3% of them associ-
ated the company with the scandal (Hennessy, 2015).
It appears that most consumers were more upset about
the effect of the defeat device on their car’s performance and
the hassle of the recall than they were about the emission of
poisonous gases into the environmentthe true impact of
which was difficult for most people to fully appreciate. The
fact that the cause and effects of pollution are not limited to
the owners of VW vehiclespolluted air affects everyone,
regardless of whether they own a VWdid not seem to reg-
ister with many consumers.
2.3 | The power of environmentally aware consumers
Environmental activists frequently direct attention to corporate
scandals in an attempt to force corporations to take corrective
actions; however, they often lack the resources to sustain such
campaigns (Mena et al., 2016; Taylor, 1989). Regarding corpo-
rate transparency and corporate social responsibility issues, mil-
lennials are considered most likely to care (Eisenstein, 2014;
Revkin, 2016).
A survey of 800 US consumers, polled a few
months after the scandal became public,
showed that only 7.5% had a negative
impression of VW.
When purchasing cars, the silent generation (born
19281945), baby boomers (born 19461964), generation X
(born 19651980), and millennials (born 19811996) mani-
fest different patterns and value different aspects of their
vehicles (Harvey, 2016; Serafino, 2018). Millennials spend
more time and energy on looking for cars that are fuel-
efficient and environmentally friendly (Harvey, 2016), while
older generations are less likely to conduct their own
research before buying a car and are more likely to remain
loyal to a particular brand (Palermo, 2014).
In 2016, baby boomers accounted for 36% of vehicle
sales, millennials accounted for 29%, generation X for 25%,
and the silent generation for 9% (Kurylko, 2017; Serafino,
2018). Although the proportion of millennials in the automo-
bile market is not small, they have a lower level of dispos-
able income than the other groups. Therefore, VW had only
a limited need to appeal to those most concerned with envi-
ronmental justice and corporate social responsibility.
3 | DIVERSE APPROACHES TO LEGAL
CHALLENGES
VW’s immediate concern as the crisis unfolded was to limit
the costs associated with the legal actions that resulted from
the discovery of the device. This was a factor over which
the company had some direct control. Even though the
defeat device affected all vehicles in every country in the
same way, VW adopted different response strategies in dif-
ferent countries.
The United States was among the few countries where
VW paid out any type of settlement to consumers or govern-
ment agencies. More than $23 billion in fines and settle-
ments covered consumer compensation (roughly $10,000
each), dealer compensation, environmental settlements, sup-
port for research to lower diesel emissions, civil penalties,
and additional funds for the repair and buyback of vehicles.
In Canada, the government and consumers received substan-
tially less compensation, roughly C$2 billion, with individ-
ual Canadians receiving C$5,100$8,000 (Huffington Post,
2016; Sagan, 2017; Winton, 2017).
The United States was among the few coun-
tries where Volkswagen paid out any type of
settlement to consumers or government
agencies.
In Europe, VW refused to settle with governments or con-
sumers in Germany, Ireland, Italy, the Netherlands, Spain,
Switzerland, and the United Kingdom, and treated court cases
that arose there as a nuisance and waste of time (McAleer,
2016a). In developing countries, such as Brazil, China, and
India, VW did not take any substantial action as a result of
the scandal.
Exhibit 1 shows the reported actions and outcomes in
various countries as of October 2017. Exhibit 2 shows the
number of cars reported as being fitted with the defeat
device, and the total amount of settlements by country as of
March 2017. Some of the tactics that VW’s leaders used to
address the legal ramifications of the emission device scan-
dal and mitigate the aftermath are described below.
Exploit variations in environmental regulations in differ-
ent countries. In Canada, for example, VW’s representatives
argued that the company did not violate Canada’s emission
regulations between 2006 and 2010, since Canadian and US
standards were not unified until 2010 (Ayre, 2016; Isidore,
2016; McIntosh, 2016). In European countries and Australia,
VW asserted that respective laws and standards were either
absent or less strict than those of the United States, and that
the use of its device did not contravene any laws or regulations
that were in force in those countries at the time (Mortimore,
2016). For example, in a court case in Australia, VW insisted
that Australia’s regulations only required that vehicles pass
emission tests carried out in laboratories, and not on the road
(Dowling, 2016).
In terms of compensation, VW argued that in Europe, there
was no reason for any compensation or settlement beyond the
cost of repairing the more than 8.5 million affected vehicles
(Boston, 2016; McAleer, 2016a; Swissinfo.ch, 2017). Similar
arguments were deployed in developing countries.
8 JUNG AND SHARON
Remove stepping stones to other legal battles. VW’s
leaders quickly realized that compensating the government
or consumers in one country had the potential to create a
stepping stone for claims and lawsuits in other countries
when different areas had similar standards, like Australia
and the European Union. If VW were to agree to any type of
settlement or compensation with the Australian government,
this would strengthen any cases against the automaker in the
European Union, and vice versa. Thus, the outcomes of law-
suits in Europe, the United Kingdom, and Australia were
highly interdependent. A similar situation existed in Ireland
where several claimants were waiting for the results of a
class-action lawsuit in the United Kingdom before undertak-
ing their own (see Exhibit 1).
React according to markets. VW also adjusted its
response according to relative and potential market size. For
example, the Canadian market was considered small com-
pared to the US market, which had a much larger number of
affected consumers (590,000) than Canada (105,000). This
led some to argue that even though the legal situation in the
United States and Canada was identical after 2010, Canadian
consumers were treated less favorably than those in the
United States (Ayre, 2016).
A similar divergence was found in the treatment of
South Korea compared to other emerging economies. VW
was extremely compliant in its negotiations with the
South Korean government compared to Brazil, China, and
India. One possible explanation for this is that VW’s reve-
nues from South Korea had tripled in the 5 years before
the scandal and, therefore, the company wanted to
appease the South Korean government and consumers so
that sales would continue to grow (Jin, 2016). The strat-
egy seems to have worked: In the first 4 months follow-
ing the scandal, sales of VW vehicles in South Korea
soared (Choi, 2015).
Offer competitive warranties. To win back consumer
trust, VW offered competitive warranties for its products. Its
6-year or 72,000-mile warranty on the 2018 Tiguan and
Atlas SUVs was twice as long as the 3-year or 36,000-mile
warranty for comparable SUVs, such as the Ford Explorer or
the Honda CR-V. This gesture of largesse was intended to
demonstrate that VW would take care of its customers’
needs.
Shift to electric vehicles. VW’s focus on electric cars was
partly intended to emphasize the firm’s commitment to build-
ing environmentally friendly vehicles. Recognizing that die-
sel vehicles no longer have the market appeal they used to,
VW has planned to fade out production of diesel-fueled
vehicles and concentrate on the growing market for electric
ones (Ramey, 2016). The company has announced plans to
produce 80 models of electric-powered vehicles by 2025 and
to spend $62 billion to advance battery technologies
(Petroff, 2018). VW has also entered into a partnership
with China’s Anhui Jianghuai Automobile to develop and
manufacture new energy vehiclesboth fully electric and
hybrid cars (Yu, 2016).
3.1 | Seizing the opportunity for radical organizational
change
After the scandal, VW implemented a lean organizational
structure that would facilitate a direct line of communication
to top managers so that fewer errors would slip through the
cracks (Kollewe & Ruddick, 2015). Following public outrage
over the defeat device scandal, Matthias Mller replaced
Martin Winterkorn as VW’s CEO in September 2015. In April
2018, Mller was succeeded by Herbert Diess, who had spent
nearly two decades at rival BMW. Overall, about half of
VW’s senior managers were fired after the emission scandal
became public.
The company has announced plans to pro-
duce 80 models of electric-powered vehicles
by 2025 and to spend $62 billion to advance
battery technologies.
The publicity that followed the discovery of the defeat
device was so intense that it convinced VWs stakeholders of
the need for a radical restructuring. Before the crisis, VW
employed about two-thirds more people than Toyota to pro-
duce about the same number of vehicles. After the scandal,
the unions and management at VW agreed to reduce the
number of employees by 30,000 and to cut expenses
(Campbell et al., 2018). Germany’s codetermination law,
which mandated representation of union members on
supervisory boards, would not allow such a large-scale
reduction of employees unless there was a strong reason
to do so.
VW also streamlined its product lineup. For example, it
stopped making the Phaeton, a luxury sedan assembled by
hand and priced at roughly $102,000 that was cherished by
Ferdinand Pich, chairman of Volkswagen Group’s supervi-
sory board from 2002 to 2015. Considering the authoritarian
leadership style at VW (Jung & Park, 2017), the discontinua-
tion of the chairman’s pet project was a strong signal of the
company’s commitment to change.
The momentum produced by such initiatives allowed VW
to divert further resources toward new, innovative strategies.
For example, the factory that used to build the Phaeton was
retooled to produce electric vehicles (Campbell et al., 2018).
VW also began emphasizing new methods of transporta-
tionsuch as ride hailing, car-sharing, and on-demand
transportto attract younger customers. In December 2016,
VW introduced a new company, MOIA, to provide services
similar to Uber and Lyft. Depending on MOIA’s success in
Germany, VW planned to launch similar services in China
(Etherington, 2016).
JUNG AND SHARON 9
4 | BUILDING TRUST AND PUBLIC
POLICY
The short attention span of consumers and the media can
make it difficult for business practitioners and scholars to
evaluate postcrisis actions and improve managerial decision
making in the long term (Mena et al., 2016).
Looking back, VW faced a variety of environmental and
civic charges. Claims and lawsuits were filed against VW for
unfair commercial practices and false advertising claims
(NDTV, 2016; WeClaim.com, n.d.). In the European Union,
VW was found to have violated two consumer laws
(Reuters, 2016). The first, the Consumer Sales and Guaran-
tees Directive, forbids companies from making false environ-
mental claims. The second, the Unfair Commercial Practices
Directive, concerns unfair business-to-consumer commercial
practices in the European internal market (Cancian, 2016).
Marketed as environmentally friendly, VW’s vehicles were
emitting up to 40 times more nitrous oxide than advertised;
the firm’s promotion of its products can be considered
greenwashingmisrepresenting them as environmentally
sound (Siano, Vollero, Conte, & Amabile, 2017; Watson,
2016). Beyond fighting its legal battles, VW now needs to
recover consumers’ trust, and this can take a long time.
Management research emphasizes the value of trust in cri-
sis situations (Dean, 2004). For example, after Hurricane
Katrina devastated parts of the American South in 2005 and
led to significant drops in stock prices in the firms that had
been affected by it, losses were much smaller among firms
that had nurtured trustful relationships with their stakeholders
(Muller & Krussl, 2011). Another study showed that the
stock price of firms facing negative legal or regulatory actions
fell less if the firms had earned their stakeholders’ trust by
engaging in activities that demonstrated corporate social
responsibility (Godfrey, Merrill & Hansen, 2009). Similarly,
EXHIBIT 1 VW’s actions and outcomes (as of October 2017)
Country VW’s actions Outcomes Pending developments
Australia
Barber (2016)
Refused any type of settlement with
government or consumers
Class action lawsuit involving
more than 90,000 Australian
consumers, seeking approximately
$100 million
Brazil
hani.co.kr (2016)
After negotiation with the government, VW
came to a settlement over violating
emission standards
Negotiated settlement, $2.4 million
Canada
Huffington Post (2016);
Sagan (2017)
Reluctant to grant requests for government
and consumer settlements
Consumer compensation: $2.1 billion
(~$5,1008,000 each)
Civil penalties: $11.2 million
China
Amad (2015)
Agreed to fix affected vehicles to align with
emission standards
Chinese environmental group filed
lawsuit
Germany
Edelstein (2017);
Godoy (2016);
Pleskot (2016);
Rust (2016)
Refused any type of settlement with
government or consumers
250 consumers reached settlements;
amounts unknown
1,000 consumers filed for a class
action lawsuit, seeking up to
$5,200 each
1,400 investors sued for
$9.2 billion
Investors partnering with
BlackRock suing for more than
$2.1 billion
German state of Bavaria suing for
$783,000
German state of Hesse suing for
$4.3 million
Germans state of Baden-
Wurttemberg suing for $446,000
India
Raj (2015)
Agreed to fix affected vehicles to align with
emission standards
Ireland
Shannon (2017)
Refused any type of settlement with
government or consumers
800 Irish consumers waiting for
the results of the UK versus VW
case before perusing their own
settlement
Italy
WeClaim.com (n.d.)
Refused any type of settlement with
government or consumers
Autorit Garante della
Concorrenza e del Mercato fined
VW for $5.35 million; waiting
court decision
Netherlands
Ridley and Sterling (2017)
Refused any type of settlement with
government or consumers
Class-action lawsuit involving
220,000 consumers180,000
Dutch and 40,000 from the United
Kingdomseeking an estimated
$4,700$5,800 per consumer
South Africa
Holmes (2016)
No action taken, including a recall
agreement to fix vehicles
(Continues)
10 JUNG AND SHARON
firms that had developed a positive relationship with and were
trusted by their stakeholders recovered more quickly from the
2008 global recession (DesJardine, Bansal, & Yang, 2017).
The stock price of firms facing negative legal
or regulatory actions fell less if the firms
had earned their stakeholders’ trust by
engaging in activities that demonstrated
corporate social responsibility.
Despite the importance of trust, VW has not done much to
recover that of its customers. Even though managers issued
apologies, they did not take responsibility for or try to explain
the company’s misconduct. Rather, they emphasized VW’s
positive characteristics, such as its dedicated workforce. Con-
sumers are likely to perceive such actions as mere attempts to
draw their attention away from the negative characteristics of
the company that led to the wrongdoing in the first place
(Ashforth & Gibbs, 1990; Zavyalova et al., 2012). As a result,
the company will be viewed as hypocritical and its efforts to
win customers’ support could backfire and even decrease their
trust in the firm (Desai, 2011; Lyon, Maxwell & Strategy,
2011; Mishina, Block & Mannor, 2012).
VW’s sales growth in the short term following the scan-
dal does not guarantee its long-term success. Past research
on crisis management (Coombs, 2007; Dean, 2004) points
out that in the aftermath of a debacle leaders need to:
protect stakeholders from harm, not protect their own
reputation;
find relevant information quickly and disseminate it to
stakeholders; and
show their concern for victims.
VW’s managers did not adequately execute any of
these steps. Whereas past studies have advised companies
dealing with a crisis to acknowledge its severity and
accept responsibility to improve their corporate image,
VW took the opposite approach. Its leaders focused on
minimizing public communication and denied any wrong-
doing, a strategy that might diminish the company’s credi-
bility in the eyes of consumers and stakeholders over
time (LaReau, 2017).
EXHIBIT 1 (Continued)
Country VW’s actions Outcomes Pending developments
South Korea
Choe (2016); Chosunilbo
& Chosun.com (2017);
NDTV (2016); Seo (2017)
Compliant with requests for government
settlements and consumer vouchers
South Korea Ministry of Environment
settlement: $12.7 million
Penalties for forgery: $16 million
Penalties for false advertisements:
$32 million
Consumer vouchers: $224.1 million
($830 each)
Consumer compensation of $270 for
4,000 consumers in class-action lawsuit
Spain
Munoz (2016);
Reuters (2016)
Refused any type of settlement with
government or consumers
One consumer recovered 10% of the
vehicle’s value ($5,350)
The Organization of Consumers
and Users will file a class-action
lawsuit; 5,500 consumers have
filed as of October 2016
Switzerland
Swissinfo.ch (2017)
Refused any type of settlement with
government or consumers
Consumer Protection Association
for French-speaking Switzerland
joined the European class-action
lawsuit
Consumer Protection Organization
for German-speaking Switzerland
suing for $3,000$7,000 per
vehicle
United Kingdom
Ridley and Sterling (2017)
Refused any type of settlement with
government or consumers
Class-action lawsuit involving
220,000 consumers40,000 from
the United Kingdom and 180,000
Dutchseeking an estimated
$4,700$5,800 per consumer
United States
Cabraser (2016); Tabuchi
et al. (2017); United
States Department of
Justice (2017); Winton
(2017)
Compliant with requests for government
and consumer settlements
Consumer compensation: $10 billion
(~$10,000 each)
VW dealer compensation: $1.2 billion
(~$1.85 million each)
Settlement with the US Environmental
Protection Agency and California Air
Resources Board: $2.7 billion
Research to lower diesel emissions:
$2.0 billion
Civil penalties: $1.5 billion
Additional funds to repair buyback
vehicles: $3 billion
JUNG AND SHARON 11
After dealing with short-term problems, VW would do
well to direct its attention to developing a positive relation-
ship with all its stakeholders, including consumers. Studies
have shown that maintaining positive relationships with
stakeholders can decrease the probability of future crises
(Bundy & Pfarrer, 2015; Clair & Waddock, 2007;
Coombs, 2007; Ulmer & Sellnow, 2002). In the long term,
VW can improve its chances of fully regaining consumer confi-
dence by taking these steps:
Publicly acknowledge the company’s faults. Taking
responsibility for any wrongdoing is the first step to
recovering stakeholders’ trust in the firm.
Formulate and implement strategies that recognize the
roles of diverse stakeholders in VW’s future and align
them with the new emphasis on electric vehicles. This will
help to promote the image of VW as a green company.
Donate to research on reducing air pollution and other
environmental concerns.
Participate in green energy projects, such as ride hailing
and car sharing.
Work with suppliers to devise environmentally friendly
parts and vehicles.
Improve employee job security to motivate employees.
Communicate with stakeholders as partners who contrib-
ute not only to VW’s future, but also to the future of
other stakeholders.
4.1 | For policy makers
Air pollution remains one of the world’s most serious envi-
ronmental problems: It caused about 9 million premature
deaths in 2015 alone (Das & Horton, 2018). While the
United States Environmental Protection Agency considers
an air quality index exceeding 300 to be hazardous, in vari-
ous parts of the world, it is significantly worse. For
instance, in New Delhi it ranges between 700 and 1,000
(Prakash, Dolak, Bernauer, & McGrath, 2017). In
November 2017, New Delhi’s air quality was so poor that
United Airlines canceled flights into the city for 2 days
(Meza, 2017). The problem of air pollution is not restricted
to developing nations. A recent study conducted in the
United Kingdom reported that walking in a highly traf-
ficked street caused harm to respiratory and cardiovascular
functions (Sinharay et al., 2018).
Although VW did not break the letter of the law regard-
ing emissions in most countries in which it did business, it
clearly acted against the spirit of those regulations, and the
level of nitrous oxide released from VW vehicles was,
EXHIBIT 2 Worldwide settlements (as of March 2017)
Country
Number of cars with
defeat device Amount of settlement
Australia
Barber (2016)
90,000
Brazil
Fox News (2015); Hani.co.kr, (2016)
17,000 $2.4 million
Canada
Huffington Post (2016); Sagan (2017)
105,000 $2.11 billion
China
Zhang (2016)
1,950
Germany
Edelstein (2017)
2.5 million 250 settlements
reachedamounts unknown
India
Raj (2015)
323,000
Ireland
Boston (2016)
110,000
Italy
Kollewe and Ruddick (2015)
650,000
Netherlands
Dutchnews.nl (2016)
160,000
South Africa Unknown Unknown
South Korea
Choe (2016);
Chosunilbo & Chosun.com (2017); Nam (2016); NDTV (2016)
200,000 $284.8 million
Spain
Munoz (2016); Palacios, (2016)
700,000 $5,350
(one consumer settlement)
Switzerlands
wissinfo.ch (2017)
180,000
United Kingdom
Hotten (2015)
1.2 million
United States
Tabuchi et al. (2017); Winton (2017)
590,000 $23 billion
12 JUNG AND SHARON
without doubt, unacceptable. This situation indicates a need
for governments to review and upgrade their air quality/pollu-
tion regulations and investigation processes, possibly includ-
ing emission tests on the road.
Reducing pollution and improving air quality is a complex
challenge. Many countries prioritize economic development
over environmental protection. Enforcing higher compliance
rates will impose an additional cost on businesses; for a devel-
oping country, this option may not be realistic (Malhotra,
2015). In the case of New Delhi’s air pollution, the illegal
burning of crops contributed significantly to the city’s pollu-
tion level, but local politicians did not enforce existing regula-
tions out of fear of losing support among farmers (Prakash
et al., 2017).
While the United States Environmental Pro-
tection Agency considers an air quality
index exceeding 300 to be hazardous, in var-
ious parts of the world, it is significantly
worse.
Developed countries face a similar tangled web of con-
flicting interests, and need to balance economic benefits,
electoral support, special interests, and the concerns of pow-
erful lobby groups. Yet, even those who are primarily
attuned to the economic benefits of industry should under-
stand that pollution is not simply an environmental issue, but
also an eco