Volkswagen - Reputation Management Plan to Neutralize the Negative Image of the Company due to the Scandal - Example

PUBLIC RELATIONS Name Institution Professor Course Date Introduction Following the request by the chairperson of the Board of Directors at Volkswagen, I will document this reputation management plan in response to the publicised emission scandal facing the company. The reputation management plan will incorporate situational analysis, research, objectives, strategies, and evaluation. Develop Problem Statements Situational Analysis Volkswagen is one of the giant companies in the automotive industry across the world. The German car giant has been on the media platform because of the emissions scandal, which has been able to attract more than 13,000 pieces of media coverage (Casasola, 2016; Mesch, 2016; Krall and Peng, 2015). In the course of 2015, the EPA (Environmental Protection Agency) was able to document that Volkswagen (VW) was able to sell numerous cars with a ‘defeat device’ or software. The software or device was in the diesel engines, which sought to detect any testing process, thus, the platform to facilitate change in the performance with the objective of improving the results (Hotten 2016; Terry-Armstrong, 2016). Additionally, the institution has been able to reveal internal investigation findings of more than 800,000 vehicles with substantive irregularities regarding carbon emissions inclusive of the petrol engines for the first time. The scandal continues to spread across the world, as far as Australia, thus, the tendency of numerous entities to file class actions while forcing the company to engage in numerous car recalls, as well as eventual launch of inquiries (Hermans and Cruz, 2016). These actions have been vital in destructing the image and reputation of the company in the highly competitive industry, thus, the need for the institution to integrate this reputation management plan in overcoming the situation. Evidently, VM continues to experience increased competitive pressure because of the growing focus on the global warming or climate issues, thus, the desire to invest more in the restoration of the reputation. Problem Statement In the midst of these negative publicities, the company seems to face a critical problem. Consumers, government authorities, environmental practitioners, and other business partners do not believe that VW products or cars are environmentally friendly. Research Overview Analysis of the Company Volkswagen (VW) continues to become a major force in the global automobile industry following its inception in 1937. The headquarters of the company are in Wolfsburg, Germany charged with the obligation to coordinate production of the VW vehicles, as well as other brands inclusive of Audi, Bugatti, Lamborghini, Porsche, Seat, and Skoda automobiles among others. The vision of the company is to engage in the creation of affordable vehicle for the ordinary people. In the current situation, VW is one of the largest car manufacturers in the global context. The company tends to offer employment opportunities to 590,800 employees with production plants across more than 31 nations across the world. As recent as 2014, the institution was able to make over €9.6 billion in sales revenue, thus, a platform to oversee an increase of 12.5 percent in the profit levels. During that period, the institution was able to sell more than 396,000 vehicles (Zhou, 2016; Hale, 2016; Vyas, 2016). The mission of the company is to continue to provide people across the world with affordable vehicles, which are attractive, safe, and environmentally friendly. In adherence to these mission and values, the institution has the obligation to offer customers the chance to own the German engineered cars at affordable costs or prices. Environment Analysis In the recent years, cars have grown to become a necessity for various people across the world. Individuals from diverse demographics have more choices available to choose from in accordance with the prices, model, and safety issues. Evidently, VW has been able to become the representative of the European car models with lower prices, as well as high selection and high safety performance (Kennedy, 2016; Rhodes, 2016). In the highly competitive automobile industry, the decision-making process of the institution, as well as sustainable development tends to depend on diverse macro-environmental factors. From a political perspective, car policies by a nation’s government have enormous influence on the operations of the car industry. This indicates that strategic decisions by VW in Europe are different to the ones across the Asian nations because of the need to adhere to diverse vehicle regulations in addressing different standards or obligations. Furthermore, high interest of stimulating the economy has forced numerous emerging nations to demonstrate willingness to welcome foreign automobile nations in the establishment of subsidiaries in their nations (Koplin et al., 2007; Karabakal, Günal, and Ritchie, 2000). Categorically, VW has been able to maximize the opportunity to gain more business platforms and positions in the foreign markets. From the economic perspective, automobile industry tends to suffer from diverse fluctuations in the oil price. Substantive increase in the cost or prices of oil plays critical role in reducing the volume of sales, thus, eventual reduction of the earnings by business entities such as VW. Moreover, uncertainties of the economic conditions resulting from debt crisis and financial issues have been critical to the manufacturing business entities such as VW. Increasing concerns among the customers on the environmental production has been vital in causing high demands relating to the technological changes and transformations for the automobile manufacturers. In this aspect, it is vital for the organizations to engage in the production of cars, which are environmentally friendly with high safety, as well as performance (Dyson, 2004; Fracarolli and Lee, 2016). It is ideal to elaborate the fact that VW has a commitment to the Thick Blue initiative regarding reduction of the environmental implications of the vehicles during production by 25 percent between 2010 and 2018. Furthermore, the institution has been able to emphasise on the R&D with the intention of improving efficiency in the driving technologies, as well as reduction of the carbon emissions. Industrial Assessment In the course of exploring or researching the automobile industry in which VW operates, it is vital to incorporate the concept of Porter’s five forces tool. The tool is vital in the illustration of the ability and potentiality of the firm to gain market share in the automobile industry. The findings of the analysis are critical for the managers to examine or assess diverse options with the intention of influencing the forces in the interest of the business entities. The objective of the VW in the industry is to maintain substantive competitive advantage in pursuit of sustainability (Nieuwenhuijsen, Khreis, Verlinghieri, and Rojas-Rueda, 2016). In this industry, the power of suppliers is relatively low. This is because of the high availability of the suppliers. Moreover, the industry associates with low switching costs for the manufacturers, thus, enormous reduction of the power of the suppliers in the automobile industry. Secondly, the power of buyers ranges from medium to high in the industry. This is evident because of the low switching cost for the buyers or consumers. On the other hand, as consumers, dealers have the ability and potential to procure almost all outputs. Moreover, there is abundance of the brand substitutes in the industry, thus, the platform for the buyers to have substantive power in the highly competitive industry. The threat of new entry in the automobile industry proves to range from low to medium. One of the entry barriers is the high entry cost for the potential business entities because of the need for high capital levels to compete effectively and efficiently. Additionally, the existing firms have the ability and potentiality to maximize the revenues though operating in economies of scale. This is through exploitation of their access to the valuable distribution channels in the industry. These attributes are critical in enabling the organizations to experience limited threat of entry into the industry. The threat of substitutes proves to be medium in the industry. This tends to associate with the increased gas prices, as well as increased concern of the environmental protection causing people to adopt and integrate other modes of transportation in addressing their goals and targets at the end of each fiscal period. The level of rivalry or competition in the industry proves to be high. This is because of the presence of numerous competitors in the industry. Additionally, there is lack of great differentiation among the competitors in the industry (Corless, Nicholas, and Nokes, 2001). There are also low switching costs among the consumers in moving from one manufacturer to the other in satisfying their needs and expectations. This contributes to the intensification of the level of competition among the existing companies, which have the ability to operate on economies of scale while exploiting diverse distribution channels in addressing the demands and expectations of their consumers. Target Publics This reputation management plan should focus on the diverse segments in the form of the publics. In the first instance, the plan will seek to improve the image and reputation of the VW among the EPA practitioners and professionals on the role and influence of the company in creating environmentally friendly products and services in the automobile industry. Secondly, there is need for the plan to focus on the consumers as valuable contributors to the realization of success of the VW in the highly competitive industry. Thirdly, the reputation management plan should focus on the relationship between the company and its business suppliers (Blackwelder, Coleman, Colunga-Santoyo, Harrison, and Wozniak, 2016). These targets have enormous implications on the performance and revenues of the company in the highly competitive industry. Goals and Objectives The reputation management plan will aim at realization of the following objectives: i. To improve the image and reputation of VM among the EPA, consumers, and suppliers ii. To demonstrate commitment by VM in addressing its environmental commitment and obligations iii. To build confidence among the consumers on the authenticity of the products by VM at their disposal in diverse markets iv. To enable the organization to increase its revenues and profit levels at the end of each fiscal period through increased sales Strategies and Tactics Before this scandal, VM had been able to win diverse awards as a learning green automotive institution. In the midst of the current carbon emissions scandal, various strategies or efforts toward cleaner production will be ideal in motivating VM toward rebranding the institution again as a top green automotive company. Strategy 1: Sponsoring online classes regarding effects of greenhouse gasses and carbon emissions It is the obligation of the company to demonstrate its commitment to the environmental protection or conservation. One of the most effective PR stunts to enable the organization to improve its image is to consider sponsoring online classes. The classes will enhance understanding of the society members or learners on the implications of greenhouse gasses and carbon emissions while enabling the firm to show its commitment to the environmental commitment and obligations. Strategy 2: Procure older, less fuel efficient cars in exchange for a low price on 50-miles-per-gallon clean diesel vehicles This strategy might play a critical role in improving the confidence of the products by VW through the efforts by the company to engage in addressing the issue regarding the emissions scandal. The strategy will associate with the role and influence of the company to engage in critical assessment of issues causing the scandal (Reitze, 2016). The company should sponsor such practices and efforts in pursuit of improved image and reputation in the market and industry of operation. Strategy 3: Focus on the Employees Evidently, it is difficult for the company to deal with the outside world because of the tendency to overlook the primary audience in the evaluation and addressing of the scandal. This calls for the strategy to focus on the staff or employees by informing them on what is happening. The audience is part of the crisis too, thus, the need to understand what is going on. The employees might have adequate platform for the generation of the solutions towards improving the image and reputation of the company. Evaluation One of the most important aspects any plan is the evaluation. In evaluating this plan, the focus will be on the examination of the ability of the strategies to address the objectives. For instance, the focus will be on the improvement of the image or reputation, increase in revenues, and potentiality of VM to win recognition concerning its efforts regarding environmental obligations and commitment. List of References Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J.S. and Wozniak, D., 2016. The Volkswagen Scandal. Casasola, A., 2016. Dieselgate: Managerial insights into the Volkswagen scandal (Bachelor's thesis, Università Ca'Foscari Venezia). Corless, I.B., Nicholas, P.K. and Nokes, K.M., 2001. Issues in Cross‐cultural Quality‐of‐Life Research. Journal of Nursing Scholarship, 33(1), pp.15-20. Dyson, R.G., 2004. Strategic development and SWOT analysis at the University of Warwick. European journal of operational research, 152(3), pp.631-640. Fracarolli Nunes, M. and Lee Park, C., 2016. Caught red-handed: The cost of the Volkswagen Dieselgate. Journal of Global Responsibility, 7(2). Hale, T., 2016. More than Material: The Vibrancy of the Car in the Volkswagen Diesel Scandal (Doctoral dissertation, Carleton University Ottawa). Hermans, M. and da Cruz Caria, P., 2016. ‘The Volkswagen’case; morally permissible? Hotten, R., 2016. Volkswagen: the scandal explained. BBC News. Karabakal, N., Günal, A. and Ritchie, W., 2000. Supply-chain analysis at Volkswagen of America. Interfaces, 30(4), pp.46-55. Kennedy, S., 2016. Corporate Sustainability & Green Cities. Koplin, J., Seuring, S. and Mesterharm, M., 2007, “Incorporating sustainability into supply management in the automotive industry–the case of the Volkswagen AG,” Journal of Cleaner Production, 15(11), pp.1053-1062. Krall, J.R. and Peng, R.D., 2015. The Volkswagen scandal: Deception, driving and deaths. Significance, 12(6), pp.12-15. Mesch, S., 2016. The Volkswagen Scandal: Let’s clear the air. Nieuwenhuijsen, M.J., Khreis, H., Verlinghieri, E. and Rojas-Rueda, D., 2016. Transport and health: a marriage of convenience or an absolute necessity. Environment international, 88, pp.150-152. Paicu, C.E. and Frâncu, L.G., 2016. Communication and PR in crisis situations. Theoretical and Applied Economics, 22(3 (608), Autumn), pp.361-370. Reitze, A.W., 2016. The Volkswagen Air Pollution Emissions Litigation. Environmental Law Reporter, 46, p.10564. Rhodes, C., 2016. Democratic Business Ethics: Volkswagen’s emissions scandal and the disruption of corporate sovereignty. Organization Studies, p.0170840616641984. Terry-Armstrong, N., 2016, “The Volkswagen Scandal-The high cost of corporate deceit,” Busidate, 24(1), p.9. Vyas Tippabhotla, V.K., 2016. Corporate and social responsibility. The case of Volkswagen. Zhou, A., 2016. Analysis of the Volkswagen Scandal Possible Solutions for Recovery. Read More