Volkswagen was found to have cheated emissions tests by installing software on 11 million diesel vehicles worldwide that could detect when they were being tested and reduce emissions output, violating environmental standards. The scandal could cost the company $18 billion in fines in the US alone and led to a 30% drop in its stock price. In response, VW's CEO resigned and the company set aside $7.3 billion to fix affected vehicles and launched initiatives to compensate customers and retain brand loyalty. To prevent future crises, experts say VW should move to a more open structure with transparent governance.

1. DIESELGATE - HEAVY FUMES
EXHAUSTING THE
VOLKSWAGEN GROUP
Group 5:
Gargi Mangal
Mansi Jain
Nikhil Takkar
Nimisha Agarwal
Ojoshwi Bhattacharjee
Paridhi Garg
Harsh
20DM077
20DM115
20DM143
20DM144
20DM146
20DM148
20DM259

2. INTRODUCTION TO COMPANY
 Established in 1937
 Volkswagen is a German car manufacturer headquartered in Wolfsburg, Lower Saxony, Germany
 The word Volkswagen means "People's car" in German
 Its CEO is Matthias Muller in 2015
 Volkswagen surpassed Toyota as the world's largest automaker in the first half of 2015
 Volkswagen sold 5.04 million vehicles in the first six months of the year, edging Toyota's 5.02 million
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3. VOLKSWAGEN EMISSION’S SCANDAL
3
Total cars affected
11million
Cars worldwide
482,000
In the United States
So, what’s the scandal all about?
Volkswagen said on Sept. 21 that
11 million of its diesel cars were
equipped with software that was
used to cheat on emissions tests.
The software activated equipment that
reduced emissions while the car was being
tested. But then the equipment turned off
making emissions above legal limits, possibly
to save fuel or to improve the car’s torque
and acceleration.
Cost for the company
It could face up to
$18
billion
In the United States
alone
Its stock dropped about
It has put aside
$7.3
billion
30%
(half a year of the
company’s profit)

4. VW response to the Dieselgate scandal after identifying causes and preventive measures
 The CEO apologized and admitted to cheating and he resigned.
 New portal was launched for customer opinions.
 Volkswagen is providing financial compensation in order to save and retain its clients.
o a reward of $2000 to the current owners of Volkswagen cars
o a goodwill package
 The company set-aside $7.3 million dollars to fix the cars in order to comply with the
standards of prevention of environmental pollution.
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5. Difference between Anglo-American and German corporate governance structures.
 It is a one-tier board model
 This is shareholder oriented model.
 The board usually consists of executive directors and
few independent directors.
 Engagement of banks in the operations of the
company is very less.
 It is a two-tier board model.
 The two boards are:
o Supervisory Board
o Management Board
 Banks or Financial institutions are usually major
shareholders.
 Same person cant be the member of both boards.
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German Model
Anglo-American Model

6. Corporate governance structure of VW group
 Split into two boards: Management board and Supervisory Board
 Voting Rights:
o Piech and his cousin Wolfgang Porsche – 50.7%
o Government or State of Lower Saxony – 20%
o Qatar – 17%
o Other Institutions – 12.3%
 The half of them selected by the employees and the other half comprised of:
o 5 members of Porche and Piech families
o 2 from state of Lower Saxony
o 2 from Qatar
o 1 from Swedish Bank
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7. Causes of corporate misbehavior on such a large scale. What could be done to prevent
a similar crisis in the future?
 Aggressive goals
 Stringent laws
 Disregard
 Move towards a more open and less
hierarchical structure
 Test should be conducted by a
governing body
 Allow all supervisory board members
to be elected by employees
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Causes of corporate misbehavior
on such a large scale
To prevent a similar crisis in the
future:

8.  CSR means taking into consideration interest of public through physical needs and Media.
 VW had a weak long social media presence.
 Sept 18: VW story came to light
Sept 21- VW admitted their mistake
Sept 22- VW released a statement on social media to gain attention.
 VW needs to fix the problem.
 Transparency and active engagement with their shareholders will play a crucial role.
 VW provides incentives to their customers in order to gain confidence and launching E-vehicles to contribute to
the society. 8
What should corporate social responsibility (CSR) truly mean? How can VW Group
integrate CSR throughout the company?

9. Thank You!