Public Relations in Volkswagen Crisis Essay Example
Public Relations in Volkswagen Crisis Essay Example

Public Relations in Volkswagen Crisis Essay Example

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  • Pages: 10 (2483 words)
  • Published: October 7, 2021
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Abstract

The business environment comprise of a number of situations, where each situation has a certain degree of effect to an organization. Some of these situations occur abruptly without warning, leading to negative impacts on the affected parties. This results in a crisis which can lead to a diverse effects, instability and loss to the affected organization. Just To mention a few, some of the losses includes poor revenue streams, loss of stakeholders and poor public image. It is during such times when the affected organization must come up with the ultimate means of improving its public relations to manage the crisis before it ruins its reputation. Therefore, public relations becomes very crucial tool to the organizations in its effort to manage the crisis. This is done through crisis communication which serves as the most effective means in averting t

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he negative impact of a crisis to an organization. In my essay, I will focus on the Volkswagen crisis that involved a software fixation on vehicles to escape emission tests, commonly known as “diesel dupe”. It involves a research from articles that cover comprehensive information about the crisis. The essay analyzes a crisis at Volkswagen in a bid to understand the role of public relation in crisis management by first explaining the crisis scenario and comprehensively assessing how the system theory applied to this context.

Situation

In September 2015, a German car maker, Volkswagen Company, was sent to shock when the trick that it had been using on its automobiles leaked out. It was confirmed that the company had installed “defeat devices” software that that enabled vehicles to cheat during tests on emissions. The scandal, dubbed as the “diesel

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dupe”, made the cars look cleaner than the actual sense. The software allowed beating the tests in a laboratory during manufacturing, but in the roads, the controls of the emissions would switch-off, forcing the vehicles emit nitrogen oxide (NOx) pollutant by 40 times above the legal limit (Tuttle, 2015). Ironically the software was able to know the test times, hence allowing the control switches to be on and off. It uses a special algorithm that applies information on patterns of steering the use of engines and the atmospheric pressure to identify times of scrutiny. According to Wolf (2016), the company had been installing this software on certain car models for over six years before the information reached the public. By the time investigations were carried out, the company found out that about 800,000 cars were having irregularities that involve emissions of carbon dioxide (CO2), a gas that affects the atmosphere by contributing to global warming (Wolf, 2016). Volkswagen Company, being a giant car manufacturer came to admit cheating on the emission tests in the United States. It had been pushing to sell its diesel cars in America, being backed by the marketing campaign for cars of low emissions. In the United States, the Environmental Protection Agency (E.P.A) came to find out that the cars sold had the cheating device and that there were over 482,000 cars in the country (Jennings and Trautman, 2015).

These included models like the Audi A3, Beetle, Jetta, Passat, SEAT, Scoda and Golf. According to Wolf (2016), the company claimed that out of the 11 million cars worldwide, 8 million in Europe had the device. Furthermore, the Environmental Protection Agency accused the

company of modifying three-liter engines found in Audi and Porsche models. This affected about 10,000 vehicles but the company denied the allegations (Tuttle, 2015). About 1.2 million cars were also affected in the UK. The company faced about $18 billion in the penalties as per the Clean Air Act in the U.S that also allows fines up to $37,500 per vehicle (Blackwelder, 2016). The Justice Department of the United States, together with the Federal Bureau of Investigations (F.B.I), is also expected to bring out the cases of criminality. The European Union may also impose fines, without forgetting many civil groups that have threatened to file lawsuits (Wei et al., 2015). Due to the huge fines and penalties, Volkswagen set aside 6.5 million Euros to cater for the fines. The greatest blow went to the investors who own substantial shares in the Volkswagen Company. The shares dropped by about a third, two days after the revelation of the scandal. This had been found out in early 2014 by transport campaigners, John German, and Peter Mock, who stumbled on evidence that the company was on something sinister. They intended to bring a prove to Europe that the existence of clean cars was possible and then drove several models of cars for about 1300 miles between San Diego and Seattle in order to prove this point (Jennings and Trautman, 2015). When the results came out, they made no sense as the vehicles emitted dangerous toxin levels despite going through tests in the lab. This information attracted the attention of E.P.A, prompting intensive investigations. At this point, the company had no option other than to admit the malpractice and

find the appropriate means of counteracting with the scandal.

Public Relations

The public relations in a company play a very crucial role during a crisis such as that of the Volkswagen’s “diesel dupe” case. The main responsibility of the public relations is to maintain and improve the company’s relationship through effective communication with the targeted audiences. Experts in public relations asserted that the issue was marked by missteps in corporate communications. After the news had gone viral on September 18th, the company’s reputation that was based on reliability and trust faced a big challenge in trying to respond to the scandal (Grunig, 1992).In fact, admitting the mistake and making apology to the public as well as its customers was not sufficient. Citing Krall and Peng (2015), the company initial statement to the public was very weak and miscalculated. A good instance of such action is the Company’s initial statement that it had received a notice of the Environmental Protection Agency investigation, hence it “takes the matter very seriously and is cooperating with the investigation” (Dimitrov, 2015). In public relations, such kind of statement is nothing other than a typical comment made for compliance other than information. In addition, the lack of the personal human response that this point was just damaging the company, other than reflecting a state of shock to the company management. However, a few days later, the Company CEO Michael Horn addressed the issue very effectively, hence improving the company reputation, alongside building its trust. This followed his statement in various social Medias, such as Twitter and Facebook that “we have totally screwed up” (Brandbastion.com, 2015). Indeed, this is a powerful statement in public

relations that helped in convincing the customers that the Company really understands the seriousness of the situation. In addition to this, the immediate resignation of the Volkswagen Group CEO Martin Winterkorn acted an excellent strategy in public relations to assure the customers that the company treated the scandal with a lot of seriousness.

According to Smith (2012), the goal of the public units during this scandal is to get the company through the issue with very little damage to the reputation, key relations and credibility. What was required during the crisis was to make an effective communication to enhance the reputation of the company. In this regard, the company activated their communication in social media such as the Twitter and Facebook by posting apologies and promises that the company is doing everything to fix the matter. According to Dimitrov (2015), although during crises, quick responses are demanded, the public relations practitioners ought to maintain a perspective that is long-term aiming to enhance a relationship that is also long-term with the important public. Sometimes it requires short-term actions that are unpleasant or painful like when one has to admit doing a wrong (Smith, 2012). Such as instance is the immediate resignation of the Volkswagen Group CEO Martin Winterkorn and the personal consequences that was promised by the company. In this case, the company public relations ought to recognize and admit the situation that faced the company critically. This is what was done by the company management in all the social platform and other means of reaching the public such as press briefing. At this point I wish to quote one their message that has been clear on

every channel: “We messed up. We are sorry. We will fix it” (Brandbastion.com, 2015). It is required that they should not deny the case since it cannot disappear even if it is denied.

According Kundnani (2015), public relations is a powerful tool, hence the Company should assess the situation as thorough as available resources and time could allow before they decide on the plan to say what and to whom. They should target the most important audience to the company and make messages through the media that are specifically addressing the crisis and the likely impact on them. A good instance of such action is the company’s decision to communicate and convey messages to the targeted audience and give them time to react, while revising the messages when necessary(Krall and Peng, 2015). This worked very well and more people have started supporting the company. In fact, more long-time Volkswagen car owners are now stepping forward claiming this was just a single mishap and the whole company should not be blamed for it, however big it is. It becomes possible to communicate key and planned points to the media as well when they question.

Systems theory

Systems theory is the trans-disciplinary study of an abstract organization as it appears to be, independent of their type, substance, a temporal or spatial scale of existence. The theory investigates the principles that are common to the complex entities together with models used in the description (Luenberger, 1999). A system is an interacting unit set within the time which has an established boundary. Public relations deals with the perspective of the system being mutually dependent and the relationship is done within the organizations

and publics. The terms adjustment and adaptation are commonly used in public relations. During the crisis, Volkswagen had to adapt and adjust to the business environment which included the political, economic and social issues. The company had to send apologies to the government regulator, please the countries which attempted to take legal actions and provide advanced technology services to some customers. To save itself from the sinkhole the company has tried to adapt to the crisis by adjusting to new management.

Closed systems cannot exchange energy or any other form of matter with their environments since they have impermeable boundaries. Open systems on the other hand have continuous interaction between the inputs and outputs with their environments since they have permeable boundaries. In order to describe programs in public relations, the practitioners uses terms such as reactive and proactive. The former employs closed system approach to program planning of a system. Volkswagen acted as an open system since it communicated to the media and organization’s publics. When the incident occurred Volkswagen engineers reported to the United States protection agency admitting that around half million diesel cars were fitted with the illegal device that was used to understate the official tests (Wei et al. 2015). Volkswagen reacted to this issue though at a low pace which facilitated the crisis to go beyond their control. The company could have given an immediate detailed response which could have helped to quickly restore its reputation. On the reports to the media, the company gave acknowledgement that over ten million cars have the tricks emissions test software

Dynamic goal states are acknowledged as open systems while static goal states are closed systems.

The goal states are referred as homeostasis despite being either stable or instable. The stability of a system goal state is recognized by homeostasis and the changes in structure in the open system model is known as morphogenesis. Volkswagen applied morphogenesis when the then chief executive officer resigned. The company has also acted decisively by firing Winterkorn and other several key executives who knew about the fraud but never acted on it and began a thorough investigation within the organization. (Tuttle, 2015). It has also replaced the chief executive officer with a new one, Matthias Mueller to take the reign. He made it clear that the company ought to change by addressing its tribal and hierarchical culture to encourage great collaboration which has the freedom of challenging bad decisions. The company’s management undergone tremendous changes as it was replaced with new staff. This showed the company’s commitment to recover their reputation.
Inputs or feedbacks in an organization are referred to the actions by the publics while the organization provides outputs by reacting to the actions by the public. During the crisis, the publics provided inputs to the company, for instance, the United States environmental protection agency came up on air though Volkswagen did not take immediate response but later their chief executive by then Martin Winterkorn gave a taped video apology. This apology and delay in response was taken as a form of dishonest. Many other countries and investors opted to take legal action against the company. The company provided output to the actions by trying to remove the negative image from the United States customers by providing them with some diesel models. These models were

more advanced with technology in order to eliminate emission testing regulations.

Conclusion

The VW crisis brought adverse damages on the reputation of the company by destroying the original public trust that once existed between them. This is due to poor decision making by the key players of the company who thought that by using the cheating software the company would sail higher regarding output. This was wrong as the crisis came with a lesson to the management. The opposite happened that led to losses by the company regarding revenue, cash regarding fines and also the name and brand of many years. This forced for tremendous changes to be made to bring the company to its original place in the market. Poor communication strategies also cost the company. The closed form of the system made the company sink farther in its problem. Rather than reacting in time from the first allegations, the waited until the scandal erupted so as to react.

References

  1. Kundnani, H. (2015). Leaving the West Behind: Germany Looks East. Foreign Aff., 94, 108.
  2. Brandbastion.com.(2015).Volkswagen Scandal on Social Media | FaceForce.. Retrieved 19 March 2016, from https://www.brandbastion.com/volkswagen-scandal-on-social-media
  3. Dimitrov, R. (2015). Silence and invisibility in public relations. Public Relations Review, 41(5), 636-651.
  4. Tuttle, H. (2015). Volkswagen Rocked by Emissions Fraud Scandal. Risk Management, 62(10), 4.
  5. Wei, J., Zhao, M., Wang, F., Cheng, P., & Zhao, D. (2015). An Empirical Study of the Volkswagen Crisis in US: Customers’ Information Processing and Behavioral Intentions. Risk analysis.
  6. Wolf, M. (2016). Embedded Software in Crisis. Computer, 49(1), 88-90.
  7. Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J. S., & Wozniak, D. (2016). The Volkswagen Scandal.
  8. Jennings, M. M., & Trautman, L. J. (2015). Ethical Culture and

Legal Liability: The GM Switch Crisis and Lessons in Governance. Available at SSRN 2691536.

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