Automotive Industry

Auto is a large industry which mainly engaged in manufacture, design, discipline, sales and marketing of fomites. Globally, it is wizard of the most crucial economic sector. correspond to the researchers, there are 806 million vehicles includes railroad cars on the road in 2007, which consumes 980 billion litres of petrol and diesel yearly, (Wikipedia. 2018).Therefore, railway car is a major mode of transportation for galore(postnominal) country economies. In this industry, safety is crucial elbow room the usager or manufacturer do not meet each pretend from motor vehicle or its parts. Thus, automobile attain to come about with the rules and regulations. The model ISO 26262 is the most proper practice framework to spend a penny automotive functional safety, (Wikipedia. 2018).However, in safety issues, the product whitethorn flaw or fault during manufacturing, therefore the manufacturer force out ask to return the vehicle. This is called as product recall. Product and operation inspections lead legion(predicate) levels to avoid the products recalls by ensure security, (Wikipedia. 2018). Despite, the automotive industry really concern about recalls, which cause pecuniary riddles.Volkswagen Volkswagen is a German auto manufacturer which founded by German labour Front under Adolf Hitler in May 28, 1937, (Wikipedia. 2018). Its head office located in Wolfsburg, German, (Volkswagen. 2018). Volkswagen is one of the leading automotive manufacturer and biggest manufacturing line of products in Europe, (Volkswagen. 2018).As well as, it is biggest sales marque of Volkswagen class which is the largest automaker in orbwide, (Volkswagen. 2018). It is in betoken of many brands includes Volkswagen, Audi, Lamborghini, SEAT, S usher outia, Ducati, MAN, Bentley, Bugatti and Skoda, (Volkswagen. 2018).As great achievements, Volkswagen performed sales record of 6.29 million vehicle in 2010 with market care at 11.4 percentage, (Wikipedia. 2018). Volkswagen all overly is the third biggest automaker in year 2010 and second greatest manufacturer in the world in the year 2012, (Wikipedia. 2018).In addition, Volkswagen has manufacture facilities in many countries includes United States, Russia, Mexico, China, India, Malaysia, Indonesia, Argentina, Brazil, Portugal, Poland, Spain, Bosnia, Kenya and South Africa, (Wikipedia. 2018). Volkswagen is one of the roaring company that listed by Forbes Global 2000 in 2011, (Wikipedia. 2018). Therefore, Volkswagen has goal of become worlds greatest auto manufacturer by 2018, but its spark scandal issue caused the geological formation to drop of market capitalization, (Volkswagen. 2018).Volkswagen Emissions Violation The International Council on Clean Transportation (ICCT) which a non-profitable council tried to provide separate research to environsal regulation agencies, (Zhou, A. 2016). Therefore, it selected westside Virginia University to conduct the emission tests. Volkswagen encouraged it diesel cars as an environmental friendly and give the sack streamlined vehicles, which realize slightly high revenue.However, one of the professor named Arvind Thiruvengadam noted that Volkswagen has some fraud on diesel emissions, (Zhou, A. 2016). As continuous research, the ICCT suspected that Volkswagen has fixed fault device, (Zhou, A. 2016). ecumenically, computer on test accept the turns in how the emissions rig system and vehicle can choose only few.But, Volkswagens device can do more. Therefore, the ICCT summarized and submitted all the collected information to environmental Protection Agency (EPA). On September 2015, the EPA issued a notice of Clean blood line Act to Volkswagen Group, (Wikipedia. 2018). The Volkswagen had violated the Clean Air Act by illegally installed software product into diesel cars to hoaxer emission tests, (Zhou, A. 2016).However, this test to control the due north oxide level, but it released up to 40 times more nitrogen oxide when drivin g, (Zhou, A. 2016). moreover, Volkswagen also admitted that had been applied this software in 11 million cars worldwide, (Zhou, A. 2016). Later, EPA also found modified software fitted into Porsche, Audi and some Volkswagen models, (Zhou, A. 2016).Responses In order to compensate, Volkswagen commanded voluntary recall, make public apology and the chief executive officer with new(prenominal) directors of the organization resigned, (Zhou, A. 2016).The Volkswagen Group is also facing casings and criminal charges and hence future of the organization is hopeless, (Wikipedia. 2018). As a ill-treat towards to solve, Volkswagen former CEO Martin Winterkorn released a video apology when the company under fire. In his statement, I explain sincerely to our node, regulatory agencies and the public for misbehaviour, said by Winterkorn in German, (Groden, C. 2015).More than that, Volkswagen current CEO Matthias Muller also has apologized for emission test cheating, (France, A. 2016). Besid e public apologies, Volkswagen promised to reserve 6.5 billion euros to use make cars follow with pollution standards, (Zhou, A. 2016). Although, its looks big amount, but it is only the half year of company profit.Furthermore, Volkswagen meet 3.3 billion euro lawsuit and experience some criminal cases, (Zhou, A. 2016). In the United States, the company encountered fine up to $30,000 per car, (Zhou, A. 2016). In addition, the share price of Volkswagen fell over 20 percent, (Kollewe, J. 2016).Moreover, Volkswagen officially announced vehicle recall which recalls the 83,000 three litre diesel vehicles with model year between 2009 and 2015, (Berkeley, L and Christine, W. 2016). Volkswagen also spend $225 million to crucify nitrogen oxide emissions, (Berkeley, L and Christine, W. 2016).The company also name $25 million to California Air Resources Board to support the bountiful emission vehicles, (Berkeley, L and Christine, W. 2016). Apart from that, Volkswagen Group CEO Martin Winter korn resigned and head of brand farmment Heinz-Jakob Neusser, Porsche research and development director, Wolfgang Hatz, and Audi research and development director, Ulrich Hackenberg were suspended, (Wikipedia. 2018).Further, the Volkswagen headquarter and new(prenominal) branches were raided for further investigation, (Zhou, A. 2016).It Is Effective Although Volkswagen responded with public apology, lawsuit and voluntary recall on its emission violation, it is not much effective ways to overcome from the study risk. The Volkswagen still not recuperate the consumer trust. The organization should use the business continuity syllabus to recover the business with higher profit.Alternative settlement Volkswagen Group is still facing many problems of establishing credibility to their customers. Hence, I suggest business continuity plan (BCP) that can apply into the Volkswagen business. The BCP is a plan to help that business process can continue during the disaster. In this case, Vo lkswagen emission scandal is man-made disaster whereby the business is not able to continue in expression conditions.The 5 Business Continuity Planning PhasesProject management and initiationVolkswagen need to identify the risks behind the issue of emission scandal. Therefore, the primary risk of this company is image risk as known as reputation risk. spirit risk can loss result from damages to the companys reputation.Thus, this risk affected the Volkswagen companys revenue which is went drop, extendd operational expenses including compensation and fines and also kills corporate trust of consumers and stakeholders. Next, legal risk is also one of the main risk which also need to consider. Volkswagen need to face legal risk includes fine and criminal charges to cheat the government.Moreover, the Volkswagen also need to establish new management team. Management team includes IT coordinator, business continuity coordinator (BCC), crisis motorcoach. IT coordinator to provide advice on best programming and provide technical support for system. In this case, the IT experts of Volkswagen installed defeat device.They cheated on programming committal to writing code. Next, Volkswagen can hire business continuity coordinator who develop and maintain the business continuity plans. They also liable for the critical situation which identify the risk, and provide solution to minimize the risks. Volkswagen also can hire crisis manager who responsible for disaster reco really and responsible for communication with insurance doer. Business Impact AnalysisAs an impact of reputation risk, Volkswagen loss trust credibility among the customers and shareholders.More than that, Volkswagen became the target of regulatory investigations in many countries. In fact, one of the German newspaper labelled this issue as most expensive act of stupidity in the history of the car industry, (Zhou, A. 2016). After this news, immediately Volkswagens stock price fell, (Zhou, A. 2016).The V olkswagen also affected on legal risk which facing some lawsuits and fines, (Edwards, J. 2016).The United States Justice Department has sued Volkswagen with $48 billons under environmental laws, (Edwards, J. 2016). It also give $14.7 billion as penalties to the Clean Air Act violation, (Zhou, A. 2016). However, the total loss of Volkswagen Group based on this emission scandal issue is almost $90 billion which is consider the trench loss in Volkswagen history, (Edwards, J. 2016).Beside financial loss, it also contaminated the environment. The scandal tragedy released extensive amounts of nitrogen oxide. It is polluted the environment. Moreover, nitrogen oxide cause smog, greenhouse effect, acid rain and tropospheric ozone which associated with health effect such as respiratory problem includes lungs irritation, wheezing, asthma, emphysema.Nitrogen oxide also cause damaging vegetation which reduce growth of plants.Recovery strategiesThe Volkswagen Group in the main affected by reputa tion (image) risk. It damaged its image and facing problems of establishing credibility to customers and stakeholders. Thus, to recover from this issue, have some recovery solutions such as Volkswagen can restart the business in new name, partnership with separate agency and issue the deposit, (Zhou, A. 2016).Volkswagen should use these solutions to restore credibility to its company.Re-brandingAs known as, Volkswagen is a worldwide brand and it is the largest car company in the world. Hence, the scandal issue is not forgotten easily, unless restart the business with new name. Re-branding may improve the brand image and it make easier for the business to speed up efficient program, (Zhou, A. 2016). However, re-branding is an expensive and have high risk, but it will reduce bad publicity of the organization, (Zhou, A. 2016).If Volkswagen ready to rebrand its business, it should develop company with greener environment and corporate societal responsible (CSR), (Zhou, A. 2016). The company reputation will increase when it give more impressiveness for environmental friendly and sustainability. Thus, the re-branding company should collaborate with Federal Trade Commission which give importance to sustainability work, (Zhou, A. 2016).More than that, the re-branding company should concentrate on minimizing energy consumption, saving water, minimizing carbon emission and reducing waste. Further, the re-branding company can engage with communities or NGOs to show the public that they have care about society, (Zhou, A. 2016).However, these are helpful to use social marketing as a recovery strategy that increase the companys image. Partnership with Independent handicap AgencyEven though Volkswagen have its own audit team to inspect their vehicles emissions, the organization should partnership with the external independent agency to regain the customers trust.Thus, there are some independent verification agency includes Fair Labour Association (FLA), World Business Council for sustainable Development (WCSBD), Landfill Methane Outreach Program (LMOP) and the Federal Trade Commission (FTC), (Zhou, A. 2016).As more information of these independent agencies, FLA has own Code of Conduct and sustainable compliance methodology, (Zhou, A. 2016). The WCSBD is a ball-shaped network which handle recent sustainable development issues, (Zhou, A. 2016). LMOP is a voluntary program which concentrate on to reduce the methane emissions from land by using renewable energy, (Zhou, A. 2016).Finally, FTC that mainly focus on customer protection, (Zhou, A. 2016).However, if Volkswagen partnership with any independent verification agency, thus not only can rebuild the consumer trust, but also can get rewards and recognition from NGOs based on CSR practices. More, if Volkswagen partnership with prestigious global organization will give stronger credibility.Issue a bandageAnother recovery method to achieve again the customer trust is Volkswagen should issue bond. This is because bond is benchmark of credibility. Also Volkswagen can announced that if again the cheating is happen, they will pay a bond to the European Commissions, (Zhou, A. 2016). This will motivate the regulators to be strict in audit.Hence, the amount can use for develop environment good vehicle, decarbonisation of engine and information technology infrastructure. Volkswagen should issue high price bond, thus customer will know that the company regret on emission scandal issue. This is because Volkswagen Company have many assets. In order to invest this bond, Volkswagen should sell its assets or any branch.For example, oil price in increase rapidly, thus Volkswagen should sell its companies to make environmental good vehicles such as electric vehicle. If Volkswagen can capitalized, then it became the great company in automotive industry.Information technology infrastructureVolkswagen should use advance information technology.Therefore, it made progress in infrastructure of v ehicles includes emission control system, safety features and audio system. After this scandal issue, people do not buy Volkswagen car, thus using technology in emissions control system will force customers. Volkswagen may use technologies to control nitrogen oxide includes selective catalytic reduction (SCR), Exhaust gas recirculation (EGR), fly the coop NOx traps (LNTs) and Lean NOx catalysts (LNCs), (MECA. 2007).The SCR is a reducing agent which able to reduce nitrogen oxide from 75 to 90 percent, (MECA. 2007). EGR technology reduce lowest engine emission which can reduce 50 percent of nitrogen oxide emissions, (MECA. 2007). Moreover, LNTs is more efficient technology which able to minimize up to 80 percent retardation LNCs is only able to reduce 10 to 40 percent of nitrogen oxide from emission which using hydrocarbon in exhaust, (MECA. 2007).Plan design and developmentAfter recovery strategies, Volkswagen should plan to publish the recovery plans. For example, Volkswagen inte racting with external groups includes customers, and media. It can use social media and advertise the new plan through Facebook, YouTube and watt sap. Makes everyone knows about the new plans of Volkswagen.Therefore, people may forgot the antecedent scandal issue and this will improve the Volkswagens image as well.Testing, maintenance, awareness and trainingHowever, measure the success by testing. Volkswagen can test the plans which execute by the company. This will also improve the plans.There are several(prenominal) kind of tests includes checklist test, walk through and recovery simulation test. Let say, if the company found any problem while testing they can do maintenance. Meaning can modify the technical problems and for more efficient can do internal and external audit. This will identify the mistaken of the process.Meanwhile, it is also important to Volkswagen to having business continuity plan training and awareness. This will increase the value of the company and reduce c osts by managing risk. For example, Volkswagen should provide training and awareness campaign to all level of employees who working in the company.Hence, this will improve the business continuity knowledge and skills among the staffs.Recommendation In order to overcome the reputation risk, first Volkswagen should focus on contract design of agent that make penalty or rewards. For example, European Commission or Environmental Protection Agency are non-profitable agencies, (Zhou, A. 2016).Therefore, Volkswagen should have up to date information detailed outlines. Next, screening and survival of the fittest mechanisms to minimize the irregular information, (Jesus, N.D. 2015). For evidence, if the Volkswagen hired trust employees then this emissions scandal may not happened. Furthermore, Volkswagen should manipulated by agents, (Jesus, N.D. 2015).The agent can carry out random audits to monitor the company.In other hand, Volkswagen should comply environmental regulations, (Jesus, N.D. 2015). This will increase companys reputation. Meanwhile, Volkswagens managers and employees are responsible for law and order to get corporate governance outcome. If the corporate governance standard is high, then company such as Volkswagen do not able to fraud in future.self-propelling IndustryThe auto industry has been the core of the American nation, its living an American dream. I will focus of the car manufacturing industry in this article. We have incessantly been very proud of the cars we made.Our cars were an extension of America they were big, pulchritudinous and made a statement. The reason I chose to write about the auto industry is that I have always felt that the auto industry is exchangeable the heartbeat of the American industry, what better way to parley about the impact of macro economic changes on this industry.I will talk about some of the bedrock of the industry and how it has changed in the stick out few decades and how we are placed now. I will compare t he American companies against the other companies and analyze how the changes in the macro economic environment are affecting companies from America and the companies from other parts of the world.History of the industryCarol Loomis in The tragedy of General Motors mentions that the auto industry in America is just over a hundred years old crossing completed its 100 years a few quarters back and the rest are getting there. We have always been known for our big 3. General Motors, Ford and Chrysler. Chrysler is now of course Daimler Chrysler and the other 2 can always use tie ups with other companies to take themselves forward.The major change in the last few years has been the rise of oil prices. We always loved our Hummers and the big SUVs, they seemed to be the right choice for every user but off the last few years that choice has suddenly become a very expensive passion, it has become like playing golf game, you spend a decent amount of money every time you play golf and you end u p spending a decent amount of money every time you brave out your SUV.That is the why nowadays, the success is in smaller or mid sized cars and smaller SUVs. the average fuel prices are across America are expected to be at $2.71 per gallon and its getting very expensive compared to the good days when we could get gas for less than a dollar a gallon.This change in gas prices has affected the kind of choices consumers are making. The consumers were choosing the small and easy to drive Japanese cars for a long while but the lucrative SUV market was still a place where GM and Ford used to make lots of money, but now that markets has gradually and now rapidly dwindled. Let us see how the major manufacturers are doing in the industry.