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Volkswagen Company Organization Change
An organization success is directly determined by its culture and discipline in the provision of high-quality goods and services. Following the unpopular Volkswagen emission scandal of 2015, the company urgently needs a lot of organizational change to avoid a recurrence of a similar incidence. Moreover, the company also needs to evaluate the internal issues that may have led to such developments and whether the management was aware of the existence of a ‘fuel defeat device.’
Current State of Volkswagen Company
At the moment, Volkswagen is heavily involved in a legal and financial tussle as it tries to find ways of repairing the affected vehicles and settling legal disputes that may arise. In November 2015, the Environment Protection Agency (EPA) discovered that the vehicles that the company was selling had a ‘defeat device’ which enabled them to dodge the US authorities’ regulations on pollution. In essence, the defeat device was software that had the ability to know when the vehicle was in test mode and it would enable the car to fake the emission results (Hotten, 2015).
At the time of the discovery of this scandal, Volkswagen had been aggressively marketing its diesel vehicles as been fuel efficient and had sold 482, 000 cars in the US alone, and more than 11 million in the worldwide. Notably, the affected cars included popular brands such as Audi A3, Volkswagen Jetta, Beetle, Golf, and Passat. Given the magnitude of the scandal, the company risks getting hefty financial and reputation loss. With the company recalling millions of cars worldwide, the company has set aside euro 6.7 billion for this activity. Allocation of the contingency euro 6.7 billion resulted in Volkswagen company making a loss of euro 2.5 billion. Worse still, the company can face penalties as high as $37,500 per vehicle in the US, which could result in a loss of about $18 billion (Hotten, 2015). Moreover, there are still risks of legal claims from the affected customers and shareholders. Effectively, this scandal has led to a decline in Volkswagen shares by more than a third of its initial value (Hotten, 2015).
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