1. Company Introduction and Case Summary:
Background information:
Prior to the scandal, the automotive industry saw a rise in popularity of diesel engines due to their higher fuel efficiency and lower CO2 emissions compared to gasline engines. As a result, many automakers, including Volkswagen, invested heavily in developing diesel technology and marketing diesel vehicles. In EU, diesel cars accounted for 53 % of all new registrations in 2013 (ICCT, 2014, 6). In the US, diesel cars accounted for around 3% of the car market in 2014 (Chambers & Schmitt, 2015).
In 2014, Volkswagen Group was the second-largest automaker globally, taking up 12.8% of the global market share (Volkswagen, 2015).The company had built a reputation as a reliable and technologically advanced automaker, which played a significant role in its sales and customer loyalty prior to the scandal. In the market of diesel cars, it accounted for more than half of U.S. diesel car sales (Chambers & Schmitt, 2015). In EU, over 50% of new registration of passenger car from VW Group was for diesel vehicles (ICCT, 2014). 
Scandal Overview:
The Volkswagen emissions scandal, sometimes known as Dieselgate, first broke out in the US when it was discovered that Volkswagen had equipped some of its diesel vehicles with a "defeat device" software designed to manipulate emissions tests. Below is a summary of the key events:
Mid-2000s: Volkswagen introduces its first "clean diesel" models in the United States, marketed as TDI Clean Diesel. The engine performance was modified using software to trick the emission tests to show result within the US’s emission standard (Federal Tier 2 (Bins) and California LEV lII)
May - Dec 2014; a study by The International Council on Clean Transportation (ICCT) and West Virginia University revealed that Volkswagen was using software to cheat on clean air tests. Volkswagen denied the software irregularities but later agreed to recall its diesel cars and recalibrate the engines.
June -July 2015: CARB tested the updated emissions but found not enough improvement. It was only then that Volkswagen admitted to the software irregularities, disclosing that the software had a second calibration intended for certification testing.
Sep 2015: The United States Environmental Protection Agency (EPA) issued a Notice of Violation, accusing Volkswagen of using illegal software. Approximately 482,000 VW and Audi vehicles sold in the US since 2008 were equipped with the defeat device. Volkswagen's CEO, Martin Winterkorn, resigned, and the company announced plans to refit up to 11 million affected vehicles.
Sep-Oct 2015: Multiple EU governments announced investigations into the scandals and/or ban car sales from VW, including Switzerland, Germany, France, Italy.
Jan. 4, 2016: The United States Justice Department files a civil suit against VW seeking up to $46 billion for Clean Air Act violations.
By 2017, Volkswagen spent $1.2 billion to buy back affected vehicles, faced a $2.8 billion criminal fine, and announced a $14.7 billion settlement plan. An independent compliance monitor and auditor were appointed to oversee Volkswagen's activities for three years.
2018: Volkswagen was fined EUR 1 billion by German prosecutors for diesel emissions testing irregularities.
By the end of the second quarter of 2019, Volkswagen’s costs associated with the scandal were over $32 billion and mounting as various legal proceedings continued around the world.

2. Which stakeholder(s) was/were treated unethically in the case?
The Volkswagen diesel dupe crisis had far-reaching consequences on various stakeholders. Customers were misled by false information about emissions performance, resulting in disappointment and regret over their car purchases (ACCC, 2021). Shareholders suffered financial losses as the intentional manipulation of emissions tests caused a significant drop in the company's stock value (approximately 35%) (Fortune, 2020).
Employees experienced a tarnished corporate image, job losses, and decreased morale. After the scandal, more than 30,000 employees were laid off for organizational restructuring, while whistleblowers faced retaliation from Volkswagen. Both dealerships and suppliers of Volkswagen suffered damaged reputation and financial loss. According to a release from the Department of Justice (DOJ),  IAV - a software supplier for automakers, had to pay a $35 million fine for its involvement in the Volkswagen scandal. Volkswagen's deception undermined Government and regulatory agencies, damaging the trust and cooperation needed for effective regulation. Environmental organizations and local communities felt betrayed by Volkswagen's unethical actions, as the company's commitment to environmental standards was broken. Volkswagen's deliberate manipulation of emissions tests resulted in increased air pollution, which harmed public health. Guardian reports that "extra pollution from VW's cars caused around 31 cases of chronic bronchitis, 34 hospital admissions for respiratory and cardiac issues, and 120,000 days when people had to restrict their physical activity as a result" (Guardian, 2015).
2. How does the company meet the expectations of other stakeholders?
Prior to the disclosure of the Volkswagen emissions scandal, various stakeholders experienced favorable outcomes. Shareholders of Volkswagen reaped the benefits of heightened sales and associated financial gains during the period spanning from 2008 to 2015. Employees enjoyed the advantages of secure employment, with stability and a reliable income source. Customers expressed contentment with their Volkswagen vehicles, reporting enhanced engine performance and reduced fuel consumption, which translated into personal budget savings. Dealers, such as Auto Nation, witnessed increased sales and financial advantages throughout this timeframe. The communities where the affected cars were sold benefited from the tax revenues accumulated by the company during the aforementioned period.
After the case was disclosed, rival companies had the opportunity to leverage Volkswagen's tarnished reputation, potentially resulting in an expansion of their market share. Moreover, the scandal raised awareness regarding the significance of adhering to emissions regulations, which could have established a fair and equitable environment for competitors who had already been complying with these regulations.

3. How to apply three ethical theories to the selected case?
3.1. Virtue ethics.
The Virtuous Business Model, founded by De Voe Business School, integrates the virtuous leader and the moral organization, encompassing three aspects of virtue: being, knowing, and doing (DeVoe Business School, 2017). The Volkswagen case highlights the failure of virtuous leadership and a moral organization. Regarding virtuous leadership, the manipulation of emissions tests revealed a lack of character, integrity, and courage. The leaders prioritized their interests over the greater good, betraying trust and compromising ethical standards. Regarding the moral organization, the manipulation of emissions tests undermined the organization's spiritual capital by prioritizing profitability over values and eroded social capital by violating transparency, leading to a loss of trust. The case serves as a reminder of the importance of virtuous leadership and a moral organization that prioritizes values and the well-being of stakeholders. 
3.2. Utilitarianism.
Volkswagen's primary objective revolved around the maximization of shareholder value without giving due consideration to the ethical implications involved, contradicting the principles of utilitarianism. Although Volkswagen's actions may have temporarily satisfied its stakeholders' interests, utilitarianism considers the long-term well-being of all parties involved. Utilitarians concur that efficiency should not be solely equated with profit maximization but with maximizing human welfare. Consequently, the corporate and ethical policies of Volkswagen were incongruent with the principles of Utilitarian theory.
Utilitarian philosophies can be categorized into two types: Act Utilitarianism and Rule Utilitarianism. Act Utilitarianism focuses solely on the consequences stemming from individual acts, whereas Rule Utilitarianism considers the outcomes resulting from adherence to a set of conduct rules. In the case of Volkswagen, their actions are deemed unacceptable as they failed to maximize the greater good (Maclean, 1993). While the fraudulent activities initially yielded some benefits for Volkswagen, the subsequent detection of their deceit resulted in adverse consequences for all parties involved. Furthermore, Volkswagen's disregard for emissions regulations violated Rule Utilitarianism. The company's moral framework did not prioritize the observance of rules, and this noncompliance failed to maximize overall utility (Caria & Hermans, 2016).
3.3 Universal ethics. 
Universal ethics refers to ethical principles and values that are considered to be universally applicable, regardless of cultural, social, or individual differences. Some common examples of universal ethical principles include honesty, fairness, justice, respect for others, and promoting the greater good. Volkswagen's actions in the diesel dupe crisis violated several virtues and principles of Universal Ethics. By deliberately manipulating emissions tests, the company breached the virtues of honesty and integrity, misled regulators and customers, and eroded trust. The scandal also demonstrated a lack of fairness and justice, as it created an unfair advantage in the marketplace and affected competitors and customers negatively. Environmental responsibility was compromised as well, with increased air pollution and harm to global efforts against climate change. Furthermore, Volkswagen's lack of accountability, transparency, and social responsibility worsened the consequences. The scandal damaged the environment, stakeholders, and the company's reputation, highlighting the significance of ethical violations.

5. Were the company intentionally or unintentionally in the case? How was the case disclosed?
Volkswagen deliberately manipulated car emission performance to meet regulatory standards while concurrently executing an extensive marketing campaign in the United States to promote their diesel vehicles as environmentally friendly (BBC News, 2015). The Environmental Protection Agency (EPA) uncovered the presence of software known as a "defeat device" in certain Volkswagen diesel vehicles, capable of detecting emissions testing and altering the performance to conform to regulatory limits. However, during normal driving conditions, these vehicles emit pollutants significantly surpass legal thresholds (BBC News, 2015). Significantly, Volkswagen did not intentionally disclose the scandals and took active measures to eliminate pertinent documentation. Lawsuits filed by employees alleged that the organization commenced the destruction of all incriminating evidence, subsequently intensifying investigations into the emission fraud (Maclean's, 2016). Volkswagen's deliberate manipulation of car emissions and its efforts to conceal the transgressions have generated profound concerns regarding its commitment to ethical conduct and regulatory compliance. The legal actions initiated by employees have played a pivotal role in unearthing the extent of Volkswagen's malpractice and catalyzing further scrutiny of the emission fraud.

6. What did the company do when the case was disclosed? Did they improve the practice?
Initially, Volkswagen responded with a video statement from then-CEO Martin Winterkorn, expressing cooperation and a commitment to rectifying the situation (Shield, 2019). This initial response created an impression that the company would take the matter seriously and work towards transparency and resolution. However, subsequent developments revealed that Volkswagen did not fulfill its promises. In particular, the company admitted that a significantly higher number of vehicles, 11 million worldwide, were equipped with defeat devices, contradicting the initially reported figure of 500,000. Additionally, the company initially denied installing software to manipulate emissions in certain car models, only to later acknowledge the presence of a defeat device.
However, in an effort to address the misconduct and rebuild public trust, Volkswagen implemented several remedial measures. These included a massive vehicle recall, with the company issuing recalls for 482,000 cars in the US and halting sales of affected models (Topham & Clarke, 2015). Volkswagen also agreed to take financial responsibility by paying over $9.5 billion to US consumers affected by the misconduct. Furthermore, there were changes in leadership and branding, with Herbert Diess being appointed as the new CEO, promising substantial reforms and a focus on developing electric cars. In November 2017, Volkswagen made a significant decarbonization commitment, allocating 50 billion euros to launch a comprehensive electrification initiative.
While these later responses demonstrate some efforts to address the issue and improve practices, the initial mishandling of the situation and inconsistent communication have significantly impacted the company's credibility and trustworthiness. 
7. Recommendations
To address transparency and integrity issues in the emission case, Volkswagen's internal stakeholders should take several actions. The management team should establish a comprehensive ethical training program aimed at equipping employees with knowledge to navigate ethical dilemmas and uphold integrity in their actions and decision-making processes. Designating Ethics and Compliance Officers to enforce policies and implementing monitoring systems is also vital to ensure transparency and accountability. Employees should uphold high ethical standards, refuse unethical practices, and have whistleblower protection policy. Shareholders should monitor the company's response, demand transparency, accountability, and governance reforms.
To foster an ethical environment for businesses like Volkswagen, external stakeholders must also take proactive measures. Governments should strengthen whistleblower protection laws, conduct more regular audits, independent testing, and establish effective checks and balances to ensure companies' ethical compliance. Providing incentives and tax benefits for electric vehicle (EV) owners and manufacturers is useful to achieve sustainable goals. Consumers should boycott unethical companies and exert public pressure to force firms to adopt more ethical practices. Supply chain members should prioritize sustainable practices in their own operations and collaborate with partners that align with their ethical standards. Finally, non-governmental organizations (NGOs) and environmental organizations should continue conducting independent tests and studies to eliminate regulatory capture practices.

Using this analysis, write a conclusion of the business ethics case, highlight how VW was in a position that forces it to behave unethically to certain stakeholders. Also mention how although it is the  primary culprit, the scale of the scandal would not have been as great without external factors. 
You should also use sources and external researches to support your conclusion