HUMANITIES,  
FIRST TRIMESTER. 
MR. TAYLOR 
DUE: MONDAY 9TH, 2017 
FINAL WORK 
 

MULTINATIONAL CORPORATIONS
Volkswagen Case Report 
 

 
 
___ 

BY CAMILA DANZINGER, GRADE 10 A. 

 

 
  

  2 

 
 
TABLE OF CONTENTS
 
INTRODUCTION………………………………………….....PAGE 3

RESEARCH METHODS …….……………………………...PAGE 4

ANALYSIS OF SOURCES…………………………………..PAGE 5

ACTION PLAN………………………….……...…………....PAGE 9

FINDINGS….……………………………..……….………....PAGE 12

CONCLUSIONS...……………….…………………………PAGE 16

APPENDICES………………...………..…………………....PAGE 18

BIBLIOGRAPHY……………………………………….……PAGE 19

REFERENCES………………...…………………………….PAGE 21

 
  

  3 

INTRODUCTION
Volkswagen is a well-known german automaker company, recognized for their

high quality cars with low prices.

Much the same as other companies, it has gone to great extents to increase their

profit, though we probably don’t know all that they have ever done to achieve this

objective, one good example of this “strategy” was what was known as the

Volkswagen scandal that you most likely heard about last year on the news.

This scandal was essentially when Volkswagen modified their cars in order to trick

the software that measured how contaminating their cars were, obtaining good

results that allowed their cars being sold in certain ecologically restricting markets,

when in reality, their cars were way over what the law on some countries allow. In

this report I intend to look into this case in depth.

  

  4 

RESEARCH METHODS
 

In order to research this issue and evaluate this company, I’ve made a statement of

inquiry that explains what the issue is and what I will be researching:

Volkswagen lied about the levels of contamination emissions on their cars by

tricking the systems.

Based on this statement, I’ve elaborated some questions which will help me verify

and analyse the statement of inquiry:

1. How did they trick the system?

2. Who manipulated the system?

3. Why did they do it?

4. How did they get away with it?

5. Who discovered this fraud?

6. Who (or what) did this issue affect?

7. What has been done to solve this issue?

8. Have they done anything similar formerly?

  

  5 

ANALYSIS OF SOURCES
The evaluation of the credibility and accuracy of my sources is based upon some or
all of these six criteria:

● Type of media.
● Reputation.
● Purpose of the text.
● Bias of the Publisher / Owner
● Author.
● Year of production of the text.

Following the majority of the criteria, I will now analyze the most used and
important sources from my findings.

The Wall Street Journal:

The Wall Street Journal is a business based newspaper, headquartered in New York
City. Owned and published by Dow Jones & Co. which doesn’t seem affiliation to
VW much like the authors of the articles.

This newspaper has been running for more than a century and is recognized by
New Yorkers and Americans as well as Europeans and Asians as a trustworthy
newspaper with an am of informing.

From this newspaper I have information from both, years 2015 and 2016, thus it
must have information that is up to date as well as maybe some that is obsolete.

From this information I can conclude that overall The Wall Street Journal is a
trustworthy source.
  

  6 

Fortune:

Fortune is a business magazine, owned by Time Inc (Time Inc. also owns other
magazines such as ​Sports Illustrated​, ​People​, ​InStyle​, ​Life​, Etc). Its main office is
located in New York, USA.

Fortune, as well as the other magazines published by Time, are recognized as

serious media and their aim is to inform and educate.

Neither Fortune nor Time Inc. has any relationship with VW or their owners,
Therefore this appears to be an unbiased source of information.

The only issue could be the date of publication of the text, since the article was
written in 2015, some of the information could be outdated. Though overall
Fortune seems to be a good source.

CNN Network

CNN is an American television cable channel, owned by Turner Broadcasting

System. Both this broadcast companies don’t seem to have anything against either
VW or their CEOs so it should be unbiased.

CNN is world recognized and it has predominantly good prestige.

The CNN video I watched for resolving the research questions had the
conventional aim to summarize and generalize the VW issue so that people can
understand it, it was also up to date since the video was made this year.

Generally, CNN seems to be a good source.

BBC News

British Broadcasting Corporation (BBC) News is a business division from the

radio, television and online news coverage BBC Corporation, unlike my other
sources this is a European source that does not seem to have any kind of trouble
with VW nor their employees and should therefore be unbiased.

BBC is well known in Great Britain and has a good reputation

  

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The only issue, once again could be that the information in this article was outdated
since it is from 2015, but it’s mostly a good source anyways, plus it gave me a
different perspective (aside from American) so that I could compare information
and separate what’s opinion from what’s facts.

Car and Driver

Fortune is an automobile fan magazine, owned by Hearst Media, that also owns
several television channels, newspapers and other magazines, their headquarter is
located in Ann Arbour, Michigan, U.S.A.

Car and Driver is recognized for their car-related articles and news and even
though it may not be taken very seriously as a source of information, I think it
knows what it’s reporting about, since their reporters know all about cars and
engines and can therefore understand the problem on a different view from the
business magazines.

These magazine seems to be unbiased since, judging by my research, there is no

connection between the magazine and VW. The date of publication of the text, was
in 2015 though, so of course, some of the information could be outdated.

Greenpeace

Greenpeace is a non-governmental organization with the aim of peace and

environmentalism worldwide.

It is a legitimate organization and thus, it has a reputation of being trustworthy.

However, it may be biased just for that reason, they may be making the issue a
bigger deal than what it really is so that they persuade you into collaborating.

The date of publication of the text, is 2015, so some of the information could be
outdated.

Greenpeace is therefore not a good source, since it could easily be biased and
outdated.
  

  8 

Business insider UK

Business insider is a German owned news website. Obviously, since VW is a

German company, Business Insider could be biased on the positive side of the
company.

It is known to be a serious business-related online news media with the aim of

informing and educating, so it must be a good source of facts.

There’s also the issue of the publication date, which in this case was 2015, making
some of the facts outdated.

Overall, Business Insider might not be a very good source since it might be biased
and outdated.

 
  

  9 

ACTION PLAN
Date What I plan to do What I did

Sunday Read the instructions, choose I chose gatorade and how they
November 27th
a company and understand might have caused an
how they were mistaken. overhydration related medical
issue.

Monday Make the research questions I changed my mind on gatorade

November 28th
and start writing essay. since I had to pay for my
sources.

Thursday Choose a company and I chose Volkswagen and started

December 1st
understand how they were making my research questions.
mistaken.

Sunday December Make the research questions I finish the research questions
4th
and start writing essay. and start answering them by
taking notes and start the essay.

Monday December Finish answering the research I am almost finished answering

5th
questions. the research questions.

Thursday Finish answering the research I finish answering my research

December 8th
questions. questions and start referencing
sources.
  

  10 

Sunday December Citate all of my sources and I finish the bibliography and
11th
put all references on my references.
work.

Monday December Start the analysis of sources I design my analysing criteria

12th
and have my analysing and decide which are my most
criteria ready. important sources.

Thursday Finish the Analysis of I start writing my analysis of

December 15th
sources. sources and get three out of
seven sources done.

Sunday December Finish the Analysis of I get another two sources and
18th
sources. finish the last two at home.

Monday December Work on the Introduction and I do the introduction and later
19th
Conclusion. the conclusion at home.

Thursday Go through the work and add I create and appendices and
December 22nd
any appendices I consider finish some mistakes my work
necessary or interesting. Print might have, I print it and hand it
and hand in draft. in

.
  

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WINTER BREAK Go through the criticism and I work with the conclusion and
things I missed and work on research methods.
them.

Thursday January Finish researching and I finish my findings and go

5th
writing Findings. through my work.

Sunday January Copy my Action Plan onto I copy the action plan and go
8th
the work and go through it to through the project again, I print
fix mistakes I might have it and hand it in.
missed. Print and hand in
finished work.
  

  12 

FINDINGS
1. How did they trick the system?

What they did to trick the system was, they installed a special software on their
cars that would know when the car was being tested and when it was, the engine
would be cleaner and would work according to the law ​(CNN Network, 2016)​, but as
soon as the testing was done, it would go back to having nitrogen-oxide gas
emissions 40 times over what is allowed by law ​(Atiyeh, 2015, supported by CNN Network,
2016).

2. Who was responsible?

There is no specific person responsible for what happened, though Chairman Hans
Pötsch and Chief Executive Matthias Müller blamed this issue on a “chain of
mistakes” they affirm that it started with a small group of employees and they
clarified that there was no evidence of senior management being involved ​(Boston,
Varnhold and Sloat, 2015)​. Michael Horn, ex-head of Volkswagen in the U.S., testified
in November 2015 that affirmatively it was not a corporate decision but a group of
software engineers who started this ​(CNN Network, 2016).

Even though it apparently wasn’t the corporation’s fault, many employees were
suspended because of suspicion on their association to the scam ​(Boston, Varnhold and
Sloat, 2015)​.
  

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3. Why did they do it?

There is no official answer to this question, but it is speculated that it was so that
they could sell their cars in countries that are more restrictive in terms of
contamination levels and so that they could make more profit out of cheaper cars
(Turner and Tanneau, 2015)​, they were able to do so since they didn’t have to redesign
the engines to make a more efficient and eco-friendly car.

4. How did they get away with it?

They were able to get away with their illegal engines for seven years. How this
worked was, every time someone called to test on their cars, Volkswagen installed
the cheat softwares on their cars, and when the cars were submitted to the diesel
emissions tests, the software would detect it and it would make the engine run
differently than usual, reducing the amount of pollution it usually emits. So they
would never get caught. ​(Moshinsky, 2015)

5. Who discovered this fraud?

On the year 2013, The ICCT and the University of West Virginia do a study on the
diesel cars, but Volkswagen was not aware of this study. ​(Moshinsky, 2015)

The fraud being discovered was an accident, since the researchers did not mean to
expose the company, quite the opposite, they wanted to use it as an example of a
low emission diesel car. ​"We had no cause for suspicion," Said John German, the
co-lead of the International Council on Clean Transportation (ICCT). ​(Moshinsky,
2015, supported by Kretchmer, 2015)
  

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6. Who (or what) did this issue affect?

This issue affected primarily the customers, who, for starters, have been hoaxed by
Volkswagen and additionally when they later tried to get rid of their cars or sell
them, they couldn’t since the negative publicity of the company devalued their cars
(CNN Network, 2016).

It also had a serious effect the environment, since the gases it releases
–Nitrogen-oxide and Carbon-dioxide– are gases that not only contribute to climate

change, a​ s much as 1 million tonnes of air pollution in total and the pulmonary

diseases, but these gases could also be a cause of cancer, though it has not been
proven yet. ​(Greenpeace, 2016, supported by Cancer Research UK, 2016 and Moshinsky, 2015)

It also affected the company and their investors directly since it lost its good
reputation, their relationship with their customers, their credibility and their stock
market value dropped dramatically, as showed in the next graph.

​(MarketWatch, 2016)
  

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7. What has been done to solve this issue?

Volkswagen has been sued by many countries such as the U.S., Germany, France,
Italy and Korea, not only that but the U.S. Environmental Protection Agency as
well ​(Smith and Parloff, 2016)​. Not to forget the lawsuits from many indignated
customers who claimed their cars had lost value because of the softwares and
wanted a buy-back from Volkswagen. All this trouble costed the company around
18 billion U.S. dollars, or 65,545,200,000 Qatari Riyals. ​(CNN Network, 2016).
There was also a public apology from the company’s former CEO, Martin
Winterkorn in 2015 where he promises to solve the issue and the company to
“proceed with the highest possible openness and transparency”. ​(Groden, Translated

statement from Martin Winterkorn - Volkswagen former CEO, 2015).

8. Have they done anything like this formerly?

To my surprise, Volkswagen have been involved less than a few scandals, even
being the victim on some cases.
They were only involved in three scandals that were their fault and these have all
only been recent. In 2005 there was a case concerning one of VW’s executives and
their bribery which resulted in the temporal suspension of this individual, later the
same year there was an executive who promised the building of a factory in
exchange of money in India, and finally in 2006 some other executives were
accused of taking bribes from suppliers which resulted on the resignation of one
french chairman of the company. ​ (Odell, M. 2015)
  

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CONCLUSIONS
Volkswagen was mistaken in letting avarice run their products, focusing on
their profits rather than the environment and the health of our systems and people
and was also wrong in lying to get past countries’ laws. As a matter of fact, what
this company has done is illegal and the individual (or group) responsible should
be under arrest.

This has not only affected their leadership on the market though, since they
lost a lot of money and they still have to pay the bills of their workers which
probably means that they would have to cut on employees and materials for their
cars, also losing some of their major executives. Not only that, but they lost
reliability and gained all of this negative publicity from many newsletters and
magazines which means many people do not believe on their values anymore and
will rather choose a different brand over a VW, which ended up being worse for
people who already bought their cars with the cheat system on their motors because
the value of their cars decreased and could not sell them easily, resulting on them
later demanding for buy-backs from the company. In a way, it affected everyone
really, since pollution from car engines (not only VW) is a serious issue affecting
everyone’s well-being and the air that we all breathe.

On the other, they have admitted and owned up to their offence as well as
agreed to pay the 17 billion dollar fee and comply to the customer’s requests for
buy-backs, not to mention, there was an official apology and a promise for a better
work in the future. Besides, this company appears to not be usually involved in
scandals or having major issues with their motors or with reliability, in fact, before
this broke out, they used to be the leading car company (they’ve lost that title to
Toyota).
  

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In the end, yes, their cars were over the prize they said it was and, yes, they
cheated the system in order to win profit, however, the gas emissions are still low
compared to other cars on the market that might be ‘reliable’ on the sense that their
companies haven’t been involved on major frauds nor lied to their clients but that
doesn’t change the fact that these cars are bad for the atmosphere and produce
many dangerous gases that, as I mentioned before, really damage our community’s
health and daily life.

As much as I think Volkswagen should be held accountable for their

inexcusable transgression, I cannot help but also realize that the company's
employees and their new CEO are working towards building an honest company
and will probably not fall back to cheating any time soon, since they had a very
high price to pay and a big part of the company’s reputation was ruined. I think
overall, Volkswagen has learnt its lesson, and not only them, but other companies
will think twice before installing a cheat system or something of that nature.

So, is Volkswagen a bad company? I don’t think they are, compared to other
companies. They seem to be an honest company that believes in making ecological
cars that are definitely less damaging than other carmakers, they appear to just have
slipped and fallen really hard and I don’t think they’ll slip again anytime soon.

 
  

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APPENDICES*

.  
Source: ICCT, BBC.

Source: Transport & environment think tank.

*Graphs on specific information about nitrogen-oxide diesel emissions.

  

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BIBLIOGRAPHY
Car and Driver​; Atiyeh, C. (2015) ​Everything you need to know about the VW diesel-emissions
scandal​. Available at:
http://blog.caranddriver.com/everything-you-need-to-know-about-the-vw-diesel-emissions-scand
al/ (Accessed: 17 December 2016).

Wall Street Journal;​ Boston, W. (2016) ​EU report suggests wider Volkswagen emissions
cheating​. Available at:
http://www.wsj.com/articles/eu-report-suggests-wider-volkswagen-emissions-cheating-14817410
50 (Accessed: 17 December 2016).

Wall Street Journal; ​Boston, W., Varnholt, H. and Sloat, S. (2015) ​Volkswagen blames ‘chain
of mistakes’ for emissions scandal​. Available at:
http://www.wsj.com/articles/vw-shares-up-ahead-of-emissions-findings-1449740759 (Accessed:
17 December 2016).

Cancer Research UK;​ (2016) ​How air pollution can cause cancer​. Available at:
http://www.cancerresearchuk.org/about-cancer/causes-of-cancer/air-pollution-radon-and-cancer/
how-air-pollution-can-cause-cancer (Accessed: 19 December 2016).

GREENPEACE​; (2016) ​Volkswagen’s CO2 emissions: Das problem​. Available at:

http://www.greenpeace.org/international/en/news/Blogs/makingwaves/volkswagen-co2-emission
s/blog/54697/ (Accessed: 18 December 2016).

Fortune;​ Groden, C. (2015) ​Volkswagen CEO apologizes for emissions cheating scandal​.
Available at: http://fortune.com/2015/09/22/volkswagen-apology-emissions-cheating/ (Accessed:
17 December 2016). ​Translated statement from Martin Winterkorn, Volkswagen CEO.

BBC News;​ Kretschmer, H. (2015) ​The man who discovered the Volkswagen emissions scandal​.
Available at: http://www.bbc.com/news/business-34519184 (Accessed: 19 December 2016).
  

  20 

MarketWatch;​ (2016) ​Volkswagen Market Value​. Available at:

http://www.marketwatch.com/investing/stock/vow?countrycode=xe (Accessed: 19 December
2016). ​Graph on VW stock values over the years.

Business Insider;​ Moshinsky, B. (2015) ​Here’s what Volkswagen did and how it got caught​.
Available at:
http://uk.businessinsider.com/heres-what-volkswagen-did-and-how-they-got-caught-2015-9/#in-
2013-the-international-council-on-clean-transportation-teams-up-with-west-virginia-university-fo
r-a-study-on-the-volkswagen-diesel-cars-2 (Accessed: 19 December 2016).

CNN Network;​ (2016) ​Volkswagen emissions scandal: A timeline - CNN video​. Available at:
http://edition.cnn.com/videos/cnnmoney/2016/06/28/cnnmoney-volkswagen-emissions-scandal-ti
meline.cnn (Accessed: 17 December 2016). ​Video explaining the scandal.

Fortune;​ Smith, G. and Parloff, R. (2016) ​Inside Volkswagen’s diesel fraud​. Available at:
http://fortune.com/inside-volkswagen-emissions-scandal/ (Accessed: 17 December 2016).

Driving;​ Turner, B. and Tanneau, F. (2015) ​To diesel or not to diesel? Pros and cons of diesel
vs. Gas​. Available at:
http://driving.ca/volkswagen/golf/auto-news/.../to-diesel-or-not-to-diesel-that-is-the-question
(Accessed: 18 December 2016).

Financial Times;​ Odell, M. (2015) ​Volkswagen: A history of scandals​. Available at:

https://www.ft.com/content/22ca0e9a-6159-11e5-9846-de406ccb37f2 (Accessed: 8 January
2017).
  

  21 

REFERENCES
(Atiyeh, 2015)

"While this mode likely delivers higher mileage and power, it also permits heavier
nitrogen-oxide emissions (NOx)—a smog-forming pollutant linked to lung cancer—up
to 40 times higher than the federal limit. That doesn’t mean every TDI is pumping 40
times as much NOx as it should."

(Boston, 2016)

"a luxury compact car built by Volkswagen’s Audi unit produced higher emissions of
nitrogen oxide, or NOx, outside of routine test conditions. Experts say that could
indicate use of a “defeat device"."

(Boston, Varnholt, and Sloat, 2015)

"Mr. Pötsch, who until the crisis broke, was the company’s chief finance officer, said
the company believes a small group of employees carried out the deception. An internal
audit found no evidence to suggest that members of the executive board or supervisory
board were involved in the diesel fraud, he said."​ (Boston, Varnholt, and Sloat, 2015)

“Volkswagen has suspended nine managers suspected of being involved in the fraud,
but remained unclear if all or any of them were involved in wrongdoing.”

"the company’s chairman and chief executive acknowledged that engineers introduced
software that would lower emissions of nitrogen oxides in many of its diesel engines
after realizing there was no legal way for those engines to meet tight U.S. emissions
standards “within the required time frame and budget.”"

(Cancer Research UK, 2016)

  

  22 

"Air pollution is associated with an increased risk of lung cancer. ... At the moment it is
unclear whether NO2 could directly cause cancer."

(GREENPEACE, 2016)

"But in cheating on nitrogen oxide emissions tests, Volkswagen has instead put public
health at greater risk of pulmonary diseases, while 'irregularities' in its CO2 emissions
also show how the company is complicit in and profiting from climate change."

(Groden, 2015)

"We are working intensively in necessary technical solutions and we will do everything
to undo damages done to our customers and employees. I give you my word. We will
proceed with the highest possible openness and transparency."​ ​(Translated statement of
Martin Winterkorn)

(Kretchmer, 2015)

""There's been a consistent stream of data suggesting that diesel cars in Europe have
high NOx (nitrogen oxides and dioxides) emission," he says. "So we had this bright idea
- let's look at US where the emissions standards are more stringent. We thought the
cars there would be clean, and we could take the results to Europe and say, 'hey look,
they're clean in the US, why can't you do it in Europe?'""

(Moshinsky, 2015)

"In 2013, The International Council on Clean Transportation teams up with West
Virginia University for a study on the Volkswagen diesel cars."​ (Moshinsky, 2015)

"The company cheated diesel emissions tests in the US for seven years. It did so through
a clever piece of software that could identify when it was being tested and reduce
harmful exhaust so it looked as if the cars met requirements, when in fact they didn't."
  

  23 

"The Volkswagen diesel cars may be responsible for as much as 1 million tonnes of air
pollution globally... the 11 million cars affected globally might have emitted the same
amount of pollution as all power stations, vehicles, industry and agriculture in the
whole of the UK combined every year – 948,691 tonnes of nitrous oxide."

(CNN Network, 2016)

"Volkswagen was using software in its diesel cars to cheat on clean air tests, the
software detects when the engine is being tested, the engine then runs differently,
making emissions seem cleaner than they ordinarily are"

(Smith and Parloff, 2016)

"The U.S. Department of Justice and the EPA have filed a civil suit that could
theoretically subject VW to up to $45 billion in fines (though, in fairness, no one expects
penalties quite that draconian). The DOJ and the EPA are also pursuing a criminal
inquiry, as are prosecutors in Germany, France, Italy, Sweden, and South Korea. All 50
state attorneys general in the U.S. are also on the warpath, armed with state laws that,
nominally at least, are every bit as crushing as the federal law. Volkswagen has set
aside 6.7 billion euros ($7.3 billion) to make its cars comply with emissions rules—but
the sum doesn’t begin to take into account the fines, compensation, restitution, and
attorney's’ fees the company will eventually have to fork over."

(Turner and Tanneau, 2015)

"Fuel costs: On average, diesel engines are rated about 25% more fuel efficient than
similarly sized and power rated gasoline engines. Currently, diesel fuel is about 20%
more expensive than gasoline, but prices are volatile and in some Canadian markets,
diesel is actually slightly cheaper than gasoline."
  

  24 

(Odell, 2015)

"In the same year, VW was also caught up in a corruption scandal in India when a
senior executive promised to build a factory in the Andhra Pradesh state in return for a
€2m payment."

"Volkswagen was embroiled in a wider auto industry corruption scandal after

executives at some carmakers were accused of taking bribes from suppliers."

"State prosecutors opened an investigation into allegations of bribery involving a

senior VW executive — a case that quickly became known as the perks and prostitution
scandal."