Please help me with this questions Volkswagens Emission Scan

Please help me with this questions

Volkswagen’s Emission Scandal
by: Jason Chow
Sep 23, 2015

TOPICS: Competition, Government Regulation, Business Ethics, Social Responsibility

SUMMARY: By now you\'ve heard the CEO of Volkswagen is being replaced after the company admitted it used software to circumvent emissions tests on its diesel vehicles. The cars have more emissions than allowed. The value of cars dropped and owners may find performance and fuel efficiency affected by fixes to the problem. Another important aspect of this story is how it affects the diesel category in the car industry. European rivals are trying to show their engines meet standards in Europe. Other carmakers may face probes into diesel emissions. Europe developed diesel cars that were increasingly popular with drivers because of lower fuel costs. Renault and Peugeot rely on diesel for about half of new car sales. Although they are not sold in the U.S., Fiat also sells diesel cars. The popularity of diesel cars was declining in Europe because of emissions. Newly proposed standards would cost companies more money. The scandal will affect rivals because regulators will look more closely at the technology and consumer may become more wary about diesel.

CLASSROOM APPLICATION: Sometimes a company faces a competitive threat from a rival that increasing its market share. Other times the threat is from a rival that calls into question the viability of the market segment or causes regulators to take a closer look because of problems. Automakers in Europe face increased scrutiny because Volkswagen used software to rig emissions tests. The problem is primarily in the U.S. market with emission standards Volkswagen met because the software apparently detected when a test was occurring and had the vehicle respond differently. The mistakes rivals make can affect your company because it can raise questions or lead to changes in regulations. This isn\'t something a company can anticipate, but it can represent a challenge to overcome.

QUESTIONS:
1. How did Volkswagen rig the emission tests?

2. Evaluate the effect on competitors in Europe from these revelations about Volkswagen.

3. Discuss the consequences thus far for the company.

4. Why do you think a company would take the kinds of risks Volkswagen took when it rigged the diesel emissions software?

5. How would you feel right now if you had recently purchased a new VW with the diesel engine emission problems?

Solution

Answer

1. Volkswagen rigs the emission test with the help of Software . This software was used to circumvent emission test on its diesel vehicle. The real issue is with the US market emission standard, the software which volkswagen used has apparently detected when this test was occurring.

2. This scandal of volkswagen has resulted in increased competition among rivals - The rivals will closely look on the technology and consumer will be more careful in buying diesel. The Automakers in Europe may face more scruitny. Further as the popularity of Diesel cars decline in europe, Competition in other segment of cards- petrol or CNG will increase.

3. Consequences for the company -

a) Recall of all those vehicles affected by emission voilation scandal

b) More scruity on the company on other segment of vehicles

c) Levy of penalty may arise

d) Compensation may be provided by the volkswagen to the owners of those vehciles

e) There might be decline in Volkswagen forecast sales and EBIDTA

f) Removal of existing CEO

4) They have taken the risks due to the following reasons

a) They might not have found a technical solution within the company’s “time frame and budget” to build diesel engines that would meet U.S. emissions standards.

b) Volkswagen might be paying bonuses based on company performance, hence employees who are even aware of this issue have not reported considering increase in sales in of Volkswagen

5. I will ask for huge compensation from volkswagen because of reduction in my car value also i will not be buying any car of the same brand and will look for other auto companies like Honda.