Thursday, September 24, 2015

Lessons from Volkswagen

Volkswagen has had the audacity to cheat en-masse on fuel norms. About 11 million vehicles were surreptitiously fitted with a software that would recognise when a quality test was on and automatically switch to lower, acceptable emissions.

It beats one's comprehension how a 'reputable' manufacturer would take such a blatant risk. For a long time it was thought that corporate shenanigans were the preserve of accountants. Now, engineers have proved they are no less fraudulent.

Ferdinand Piech must be one of the happiest persons now. Recently (but before the fraud came to light), he resigned from Chairmanship of Volkswagen after he was outsmarted by the company's CEO, Martin Winterkorn in what appeared to be a corporate power struggle. Now, Winterkorn is left holding the bag. He has chosen to resign accepting moral responsibility. Thus within a short interval of time, a glorious organisation has lost both its Chairman and CEO.

Why did Volkswagen commit this suicidal blunder? Is it some invidious Thanatos in action?

It is suggested that the company was obsessed to overtake Toyota as the largest manufacturer of cars. At present, Volkswagen's market share in the U S is only about 3.5% After the debacle, it is bound to go further south. There are 5 famous brands with the group, Volkswagen, Audi, Porsche, Skoda and Seat. Of these, Porsche generates maximum profitability.

Corporate envy leads to greed and recklessness. Volkswagen's reputation is now in tatters. If at all the company did have Risk Managers, they must have been fast asleep.

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