DIESELGATE

Group - 2
Contents

Case Summary ................................................................................................................................ 1

Defence Strategy ............................................................................................................................. 1
Revival Strategy .............................................................................................................................. 2
Press Release ................................................................................................................................... 3
Case Summary
Volkswagen, a leading automobile brand worldwide is caught in “Diesel Scandal”.
Volkswagen’s cars have defeat devices which helps to differentiate from the two operating
modes. The other mode of this car is resulting in heavy nitrogen oxide emissions, which is 40
times than that of the federal limit. This scam is now in the open and Volkswagen in facing
international backlash. The company image and prices are both suffering because of this.

Defence Strategy
1. Unethical practices by the competitor
Volkswagen’s closest competitor in this market has been Honda. Honda had secretly
bribed the employees, which consisted of software engineers and supervisory board to
take part in this emission scandal in order to stain the name of Volkswagen and bring
down its public image and crash its stock prices.

2. Internal enquiry and firing of employees directly involved in the scandal

A thorough internal enquiry was conducted, and it was found out that approximately 50
employees of the company were aware of this scandal and its happenings. 9 out of them
were directly involved in the scandal. A case was filed against these 9 employees and
were fired from the firm immediately.

3. Software coding tampering

The coding which goes behind the vehicle of Volkswagen has been tampered with by
the company’s software engineer. The software engineer responsible for this had been
bribed by Honda. This code tampering was difficult to track by the other software
engineers as the coding goes into thousands of lines. This resulted in the emissions of
the car being much higher that the acceptable rate by EPA. Since Honda had also bribed
the supervisory board, this model was approved for production on large scale. Honda
had then later tipped this information to other sources in order to bring this issue into
the eyes of the EPA and the government. There is also concrete evidence on a senior
manager at Honda reaching out to one of our employees Aaron Smith over mail, talking
about tampering the codes. (Creative 3)

1
Revival Strategy
1. Replacement Scheme
Volkswagen promises to compensate its customers by giving them a fair replacement
of all the cars bought between the 2009 – 2015 (17th September 2015) time period.
Customers will be given two choices. They can sell their cars to Volkswagen and will
receive a fair price depending on the model, age, trim etc. They can also take their cars
to the nearest Volkswagen stores and give us their cars for two weeks within which
we’ll rewrite the computer codes and install the correct software so that the AdBlue
functions aptly.

2. New SRP Initiatives

Due to the increased levels of the toxic emissions, Volkswagen has decided to donate
5% of its annual profits to people suffering from respiratory diseases. As a socially
responsible company, Volkswagen also plans to plant and maintain 1,00,000 plants
annually and continue to do so in all the coming years of the company. These initiative
details will be posted on its social media pages and its official website page in order to
make sure it is reaching out to a large audience. (Creative 1 and 2)

3. Restructuring the Organization

Volkswagen plans to change its vertical hierarchy and adapt to the modern horizontal
hierarchy structure. A junior employee tried to report the scandal but was unable due to
the hierarchy. The human resources also plan to set up a website where any employee
can leave their feedbacks and place grievances or complaints anonymously. The
website has already received many feedbacks under the blog column. (Creative 4)

4. Collaborate with EPAs and Government Organisation

Volkswagen has decided to meet up with the Environmental Protection Agencies and
concerned Government Authorities to clear up the entire scandal. We also plan to set
up a body which in collaboration with an environment protection agency will conduct
surprise checks in the organisation.

2
 Press Release

For Immediate Release

25th September 2015

“The people’s car and company”

Volkswagen is one of the most trusted automobile brands in the world. Volkswagen is also the
world’s largest car maker by worldwide sales. Volkswagen Groupe sells its vehicles in 153
countries across the world. Volkswagen compromises of two words which collectively means
people’s car, as customer safety and satisfaction are the topmost priorities of this company.

We are aware of how our vehicles are exceeding the emission levels specified by the EPA.
Upon thorough investigation it was found out that it was found out that one of our competitors
had bribed some of the employees of our company to tarnish the reputation of the firm. It was
also found out that there was tampering with our software coding, which was resulting in excess
of emissions. We understand the gravity of the situation and are working on buyback and
replacement schemes for the vehicles produced within the time frame of the tampered coding.

We are aware of how stock price is dipping because of this tragic incident. However, we at this
firm have the skills and determination to make sure the stock prices are retained back to its
normal at the earliest, and then skyrocket to new heights. As a highly progressive company we
use effective strategies to achieve the best outcome. Our results are based on experience,
market insight and sheer hard work. We ensure to the stakeholders, that we will be soaring at
new heights.

For further details, please contact:

Aaryan Bihani

PRO, Volkswagen Groupe