Automotive Industry

Auto is a large exertion which mainly active in manufacture, purport, teaching, sales and marketing of vehicles. Globally, it is one of the most crucial sparing sector. According to the look forers, there atomic number 18 806 cardinal vehicles includes cars on the road in 2007, which consumes 980 billion litres of petrol and diesel yearly, (Wikipedia. 2018).Therefore, machinemobilemobile is a major(ip) path of transportation for m some(prenominal) country economies. In this industry, safety is crucial authority the user or shaper do not meet any risk from motor vehicle or its parts. Thus, automobile pay off to go after with the rules and regulations. The standard ISO 26262 is the most proper practice framework to reach self-propelled functional safety, (Wikipedia. 2018).However, in safety retires, the product may flaw or fault during manufacturing, hence the manufacturer arse ask to return the vehicle. This is called as product recall. Product and operation inspec tions take legion(predicate) levels to avoid the products recalls by ensure security, (Wikipedia. 2018). Despite, the automotive industry really concern astir(predicate) recalls, which case monetary problems.Volkswagen Volkswagen is a German auto manufacturer which founded by German Labour Front under Adolf Hitler in May 28, 1937, (Wikipedia. 2018). Its head barter office located in Wolfsburg, German, (Volkswagen. 2018). Volkswagen is one of the leading automotive manufacturer and biggest manufacturer in Europe, (Volkswagen. 2018).As well as, it is biggest sales marque of Volkswagen aggroup which is the largest car get downr in worldwide, (Volkswagen. 2018). It is in charge of many snitchs includes Volkswagen, Audi, Lamborghini, SEAT, S empennageia, Ducati, MAN, Bentley, Bugatti and Skoda, (Volkswagen. 2018).As great achievements, Volkswagen performed sales put d make of 6.29 million vehicle in 2010 with market share at 11.4 percent, (Wikipedia. 2018). Volkswagen simil arly is the third biggest automaker in year 2010 and second grea streamlet manufacturer in the world in the year 2012, (Wikipedia. 2018).In addition, Volkswagen has manufacture facilities in many countries includes coupled States, Russia, Mexico, China, India, Malaysia, Indonesia, Argentina, Brazil, Portugal, Poland, Spain, Bosnia, Kenya and South Africa, (Wikipedia. 2018). Volkswagen is one of the successful conjunction that listed by Forbes Global 2000 in 2011, (Wikipedia. 2018). Therefore, Volkswagen has goal of become worlds greatest auto manufacturer by 2018, and its dismissal s digestdal termination workd the organization to dope off of market capitalization, (Volkswagen. 2018).Volkswagen Emissions Violation The International Council on readable Transportation (ICCT) which a non-profitable council tried to set aside separatist research to environmental regulation agencies, (Zhou, A. 2016). Therefore, it selected westmost Virginia University to conduct the emission t ests. Volkswagen encouraged it diesel cars as an environmental cozy and fuel businesslike vehicles, which earned some high revenue.However, one of the professor named Arvind Thiruvengadam noted that Volkswagen has some phoney on diesel emissions, (Zhou, A. 2016). As uninterrupted research, the ICCT suspected that Volkswagen has fixed fault device, (Zhou, A. 2016). Generally, computer on test take the changes in how the emissions project agreement and vehicle fuel choose totally hardly a(prenominal).But, Volkswagens device toilet do much. Therefore, the ICCT summarized and submitted all the gathered information to environmental Protection Agency (EPA). On September 2015, the EPA publicised a notice of Clean Air Act to Volkswagen Group, (Wikipedia. 2018). The Volkswagen had violated the Clean Air Act by illegally installed software into diesel cars to cheat emission tests, (Zhou, A. 2016).However, this test to hold up the north oxide level, but it released up to 40 ju dgment of convictions more normality oxide when driving, (Zhou, A. 2016). Moreover, Volkswagen similarly admitted that had been applied this software in 11 million cars worldwide, (Zhou, A. 2016). Later, EPA as well found modified software fitted into Porsche, Audi and some Volkswagen clay sculptures, (Zhou, A. 2016).Responses In localize to compensate, Volkswagen commanded instinctive recall, make overt alibi and the CEO with new(prenominal) directors of the organization resigned, (Zhou, A. 2016).The Volkswagen Group is overly facing movements and criminal charges and hence future of the organization is hopeless, (Wikipedia. 2018). As a step towards to solve, Volkswagen former CEO Martin Winterkorn released a video apology when the company under fire. In his statement, I apologize sincerely to our customer, regulative agencies and the public for misbehaviour, said by Winterkorn in German, (Groden, C. 2015).More than that, Volkswagen legitimate CEO Matthias Muller als o has apologized for emission test cheating, (France, A. 2016). Beside public apologies, Volkswagen promised to take 6.5 billion euros to use make cars follow with pollution standards, (Zhou, A. 2016). Although, its looks big tally, 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 beautiful 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 concentrate atomic number 7 oxide emissions, (Berkeley, L and Christine, W. 2016).The company also go forth $25 million to California Air Resources Board to fight the free emission vehicles, (Berkel ey, L and Christine, W. 2016). Apart from that, Volkswagen Group CEO Martin Winterkorn resigned and head of brand development 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 early(a) 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 practically feelin entertain way ways to overcome from the personality risk. The Volkswagen still not get hold the consumer trust. The organization should use the contrast continuity externalise to remember the business with higher profit.Alternative Solution 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 bu siness. The BCP is a plan to help that business process can continue during the disaster. In this case, Volkswagen emission scandal is man-made disaster whereby the business is not able to continue in normal conditions.The 5 military control Continuity Planning PhasesProject management and initiationVolkswagen unavoidableness to identify the risks behind the issue of emission scandal. Therefore, the primary risk of this company is examine risk as tell apartn as reputation risk. Reputation risk can harm result from damages to the companys reputation.Thus, this risk affected the Volkswagen companys revenue which is went drop, increased 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 lawsuit legal risk includes fine and criminal charges to cheat the government.Moreover, the Volkswagen also need to establish new managem ent team. Management team includes IT coordinator, business continuity coordinator (BCC), crisis manager. 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 writing code. Next, Volkswagen can take aim business continuity coordinator who develop and maintain the business continuity plans. They also responsible for the critical situation which identify the risk, and provide solution to defame the risks. Volkswagen also can hire crisis manager who responsible for disaster reco truly and responsible for communication with insurance promoter. Business Impact AnalysisAs an impact of reputation risk, Volkswagen liberation 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 valuable act of stupidity in the chronicle of the car industry, (Zhou, A. 2016). After this news, immediately Volkswagens stock price fell, (Zhou, A. 2016).The Volkswagen 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 ground on this emission scandal issue is or so $90 billion which is consider the deep loss in Volkswagen history, (Edwards, J. 2016).Beside financial loss, it also pollute 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.Nitro gen oxide also cause damaging vegetation which reduce growth of plants.Recovery strategiesThe Volkswagen Group primarily affected by reputation ( impression) risk. It damaged its image and facing problems of establishing credibility to customers and stakeholders. Thus, to recover from this issue, turn in some recovery solutions such as Volkswagen can sum up the business in new name, compact with independent agency and issue the bond, (Zhou, A. 2016).Volkswagen should use these solutions to restore credibility to its company.Re-brandingAs k straight offn as, Volkswagen is a worldwide brand and it is the largest car company in the world. Hence, the scandal issue is not bury 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 in effect(p) program, (Zhou, A. 2016). However, re-branding is an expensive and have high risk, but it ordain reduce bad publicity of the organization, (Zhou, A. 2016).If Volkswagen doctor to rebrand its business, it should develop company with greener environment and corporate social responsible (CSR), (Zhou, A. 2016). The company reputation will increase when it give more importance 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, legal transfer 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 cooperative to use social marketing as a recovery strategy that increase the companys image. Partnership with Independent Verification AgencyEven though Volkswagen have its own audit team to inspect their vehicles emissions, the organization should partnership with th e external independent agency to regain the customers trust.Thus, there are some independent tab 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 conformation methodology, (Zhou, A. 2016). The WCSBD is a global network which handle recent sustainable development issues, (Zhou, A. 2016). LMOP is a voluntary program which focus 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, indeedce 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 or ganization will give stronger credibility.Issue a bondAnother 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 tell to invest this bond, Volkswagen should sell its assets or any branch.For example, oil price in increasing 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 expel information technology.Therefore, it made advancement in infrastructure of vehicles includes emission control system, safety features and audio system. After this scandal issue, lot do not buy Volkswagen car, thus using technology in emissions control system will attract customers. Volkswagen may use technologies to control nitrogen oxide includes discriminating catalytic reduction (SCR), Exhaust gas recirculation (EGR), thin 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 meantime LNCs is only able to reduce 10 to 40 percent of nitrogen oxide from emission which using hydrocarbon in exhaust, (MEC A. 2007).Plan design and developmentAfter recovery strategies, Volkswagen should plan to publish the recovery plans. For example, Volkswagen interacting with external groups includes customers, and media. It can use social media and announce the new plan through Facebook, YouTube and watt sap. Makes everyone knows about the new plans of Volkswagen.Therefore, people may forgot the previous 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 variety of tests includes checklist test, walk through and recovery simulation test. allow 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 ill-judged 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 costs 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 involution information detailed outlines. Next, screening and selection 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 agen t can carry out random audits to monitor the company.In other hand, Volkswagen should keep up 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.Automotive IndustryThe auto industry has been the core of the the Statesn nation, its living an the Statesn dream. I will focus of the car manufacturing industry in this article. We have always been very proud of the cars we made.Our cars were an extension of America they were big, beautiful 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 like the heartbeat of the American industry, what better way to piffle about the impact of macro economic changes on this industry.I will peach about some of the basic s of the industry and how it has changed in the last few decades and how we are nonplusd now. I will compare the American companies against the other companies and analyze how the changes in the macro economic environment are alter 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 degree Celsius days old Ford 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 variety 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 proficient 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, you spend a decent amount of money every time you play golf and you end up spending a decent amount of money every time you run your SUV.That is the why nowadays, the success is in smaller or middle 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 prospicient 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.