Executive Summary.

An ethical issue occurs when there is a disagreement over how to handle a

potentially moral dilemma at work. One of which is ethical advertisement. To
delve deeper in the said concept, a commendable focus point is the 2016
Volkswagen Emission Scandal. This case study will evaluate and further discuss
the said occurrence and how it is linked to ethical issue as well as faile of
leadership.

Introduction.

An ethical dilemma occurs when there is a disagreement over how to

handle a potentially moral dilemma at work.

When a moral quandary arises in the workplace that requires corporate

action, we have an ethical challenge. Ethical concerns may have a wide-ranging
impact on how a business operates. Each ethical conundrum is one of a kind, yet
they all have certain elements. Right and wrong options exist in every ethical
conundrum. There is always a choice between right and wrong when dealing with
an ethical dilemma. Oftentimes, there is no clear "proper" solution to a
widespread problem. A mistake in judgment in an ethical conundrum might have
negative consequences for a person. Even though the damage is just bodily, it
may nevertheless cause mental pain. The law is often at the heart of ethical
quandaries. Obeying the law includes acting ethically.

A rise in expenses is possible if a company adheres to a high ethical

standard. This is due to the fact that goods sourced morally are usually more
costly. The policy has the potential to reduce the company's market share and
profit margins. The effects of dishonesty extend beyond the individual to the
company. In addition, serious penalties and lost revenue may result from actions
that damage an organization's standing in the community, employee morale, or
output.

Ethics in the workplace set a higher standard of behavior than what is

required by law. Businesses use ethical behavior to keep their most important
customers and workers trusting them. Because of this, both decision-making and
morale in the workplace improve.
 One example of an ethical conundrum that may arise in the workplace is
that of ethical advertising. Ethical marketing may be identified by its use of truth,
justice, and equality in promotional language as well as the whole experience of
the consumer. The only kind of advertisements that respect human dignity are
the ones that are honest and present the facts. It is also taken into consideration
the situations in which the advertisements appear as well as the likelihood of bias
in the analytics data.

The topic of advertising has been the subject of several debates.

Businesses are required by law to provide all relevant information about the
goods or services they offer to customers (Weiss, 2014). However, in the course
of their marketing activities, they often engage in a variety of deceptive practices,
which, despite the fact that they are not criminal offenses per se, are still very
dubious. For instance, several businesses, in response to the growing number of
customers who are concerned about their health, have begun adding "sugar-
free" labels to the packaging of their products while simultaneously disguising
sugar as other, less obvious names (such as dextrose, fructose, maltose).

In certain instances, the explanation is printed in a very tiny type, making it

difficult for the majority of customers to understand it. In spite of the fact that,
from a legal point of view, it might be considered the responsibility of customers
to educate themselves or to exercise greater caution, it is the ethical obligation of
an organization to provide information that is accurate, easily accessible, and
easy to understand about the product. In addition, because lying to customers
destroys their confidence, this tactic is not likely to be successful as a long-term
business plan.

A notable example regarding the issue about the ethical dilemma is the
Volkswagen emissions scandal. This will be further discuss in the body of the this
case study.

Body
(Background Information)
 The Volkswagen emissions scandal. Recalling the happenstance that took
place back then during 2016 about Volkswagen, it is a paradigmatic case of a
company that has engaged in unethical marketing practices. When they were
caught red-handed in the process of fooling their clients, the world's largest
automobile manufacturer, Volkswagen, got themselves into a lot of difficulty.

Volkswagen has maintained throughout each and every one of their diesel
car advertising campaigns from 2009-2015 that its automobiles produce just
trace amounts of greenhouse gasses. Volkswagen designated its newly
produced automobiles as being environmentally friendly, or "Clean Diesel" as the
company like to refer to it.

However, the claims that they made regarding their automobiles in their
advertising efforts were not true. Volkswagen came up with a method that
enabled them to circumvent the procedures used to test emissions and
inaccurately underreport the amount of pollutants produced when fuel was
burned. It has come to light that the automobiles manufactured by Volkswagen
emitted levels of nitrogen oxide emissions that were forty times higher than the
permissible quantity. As a result, the automobiles did not have the same low
impact on the environment as was claimed in all of the advertising and legal
documentation.

This unethical business technique in marketing has resulted in significant

repercussions for the automobile maker. Volkswagen was assessed a penalty of
$15 billion as a direct consequence of the infringement, and as a direct result of
being revealed, its share price fell by more than 20%.

As a result of the scandal, more than fifty percent of Volkswagen

consumers said that they were hesitant to purchase automobiles from
Volkswagen for a considerable amount of time. It is clear from this that the
consumers have lost faith and confidence in this particular brand of automobile.
Volkswagen has come to the realization that it is very hard to regain the
confidence of one's consumers after that trust has been betrayed.
(Answer)

Volkswagen seems to be well aware at this point that it will need significant
effort to regain the public's confidence. What it has done so far to restore its
image once it became obvious that corruption was pervasive in the corporation is
reminiscent of what Siemens (among the top levels of Volkswagen management)
did (Rothlin & McCann, 2016). It acknowledged misconduct and a failure to
exercise proper control, removed its tainted top leadership, and brought in a new
chief executive from outside the organization. It actively adopted a number of
actions to root out corruption, including suing individual individuals at the center
of the affair for pay. These managers included eleven former senior managers,
as well as the former chairman of the supervisory board and the former CEO.
Peter Loscher, the company's new CEO and one of the few C-suite executives in
German businesses to have an MBA, has made it very apparent across the
organization that preventing corruption will be a primary focus. To back this up,
Siemens established a Chief Compliance Officer (19 September 2007), a new
directorate called "Law and Compliance" on the Siemens Managing Board, and a
position for an independent compliance consultant to advise the Board of
Directors and report regularly to the Chief Compliance Officer. Five hundred
workers were disciplined for infractions of external laws and company standards.
Thirty percent of those workers had their contracts terminated, while another
eight percent were penalized with pay cuts. Everyone else got a scolding or a
warning.

The Siemens Compliance Guide Anti-Corruption is a comprehensive

compilation of all the company's anti-corruption policies and procedures. As a
central point of contact for workers with queries about compliance and corruption,
it established a Compliance Help Desk with a "Ask us" option. The Compliance
Help Desk also has a "Tell us" feature that allows workers and other
stakeholders to anonymously report any suspicions of breaches of the Business
Conduct Guidelines. Siemens also started providing ethics training to its staff and
expanded its anti-corruption training program.

Siemens seems to have done what was necessary to restore public faith in
the brand as a trustworthy, law-abiding enterprise. If Volkswagen wants to avoid
a repeat of Siemens' legal missteps when it pays up its lawsuits and penalties, it
should do what Siemens did. However, both organizations need to keep in mind
that top-down moral support is crucial for any policy shifts to be effective.

Conclusion

To conclude, the emissions crisis was caused by a major leadership failure

at Volkswagen's top levels. Volkswagen's difficulties aren't unique. Enron,
Siemens, and Wall Street banks implicated in the 2008 housing market meltdown
have comparable leadership failings, neglecting ethics.

In retrospect, it's evident that individual and organizational defects

triggered the severe breakdown of corporate culture and values, which cost
corporations dearly. Managers and corporate executives acted as if they lived in
an ethics-free zone where lip respect to moral ideals was enough and all they
had to do was dodge the police. They forgot that business isn't only about profit
and loss or legal norms and laws. Economic systems and its primary participants
rely on the moral principles and standards that underpin human happiness and
social existence.

Business leaders are social creatures and citizens whose welfare relies on
shared values and standards. As social creatures, we can only advance our own
interests by recognizing others'. The norms of effective collaboration derive their
power from a shared interest in 'the good' Good company always has moral
structures and internalized normative norms; it can't function without them.
Businesspeople, leaders and subordinates, employers and employees, CEOs
and workers rely on trust, honesty, and justice. We normally assume we can trust
each other, that others will follow their promises, and that none of us is wholly
without compassion, sympathy, or fairness. If possible, a completely amoral
economic system would be parasitic on socially established ethical principles.

If so, moral leadership should be achievable even under tough commercial

times. The public expects that. Only these assumptions may explain the
corporate crises' shock and public uproar. People are watching corporate leaders
carefully and demanding tighter standards since so many have failed morally.
Companies should dread both high fines and moral ruin if they disobey the law. If
people don't trust a firm or its goods, they'll seek elsewhere. When individuals
believe they're helping the world but aren't, they feel cheated and upset (Orts &
Paul MacDuffie, 2016). A corporation can't easily regain lost moral ground.

References

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Diesel Emissions Scandal? Knowledge@Wharton. Retrieved from:
http://knowledge.wharton.upenn. edu/article/can-volkswagen-move-beyond-its-
diesel-emissions-scandal/

Rothlin, S., & McCann, D. (2016). International Business Ethics: Focus on China.
Berlin Heidelberg: Springer, 297-320.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management

approach (6th edition). Berrett-Koehler Publishers.

Nip, B. (2021, July 6). Ethical Marketing Examples: 4 huge ethical hits & misses
of 2021. Growth Animals. https://growthanimals.com/ethical-marketing-4-
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