not finished also need references

Table of Contents
Introduction
第一章 Company Background of Volkswagen
1.1 Mission Statement of Volkswagen
1.2 Corporate Strategy of Volkswagen
1.3 Organizational Structure of Volkswagen
1.3 History of Volkswagen
第二章 Current State of Affairs of Volkswagen
2.1 Business Situation of Volkswagen
2.1.1 Volkswagen Passenger Cars
2.1.2 Audi
2.1.3 SEAT
2.1.4 SKODA
2.1.5 Porsche
2.1.6 Bentley
2.1.7 Bugatti, Lamborghini
2.1.8 Ducati
2.1.9 Volkswagen Commercial Vehicles
2.1.10 SCANIA
2.1.11 MAN
2.2 Financial Analysis of Volkswagen
第三章 Case Study of Volkswagen Emission Scandal
3.1 Case Situation
3.2 Cause of Incident
3.3 Consequences for Volkswagen
第四章 Business Analysis of Volkswagen
4.1 SWOT Analysis
4.2
结论（黑体小二）
注释（黑体小二）
参考文献（黑体小二）
附录（黑体小二）
谢辞（黑体小二）

Abstract Environmental protection is becoming more and more important throughout the world. So the automobile industry tries to develop vehicles with good and positive emission output. In my thesis paper I will write about the Volkswagen emission scandal which happened this year in September. The Volkswagen Group is one of the biggest automobile manufacturer in the world. However Volkswagen manipulated the emission output through so called defeat devices. Through this fraud Volkswagen lost trust and faith of customers, employees, suppliers, investors, buyers and many other groups. I will try to analyze and explain the reasons why Volkswagen came to this situation.

Introduction Volkswagen Group is a German corporation. It manufactures passenger cars, commercial vehicles, motorcycles and engines. It was the largest automobile maker in the world in 2011. The company owns 12 brands, which are Audi, Volkswagen, Bentley, Porsche, Skoda, Lamborghini, MAN, Scania, Ducati and so on.
In September 2015, the United States Environmental Protection Agency(EPA) declared that the German automaker Volkswagen had violated the Clean Air Act. Volkswagen used an illegal software, which was programmed in turbocharged direct injection(TDI) diesel engines to manipulate the emission of the car models from year 2009 to 2015. The software was programmed to recognize when the vehicles was in a test phase and the emission output would meet the U.S. standards. However the vehicles produced up to 40-times higher nitrogen oxide(NOx) on the streets. 11 million cars are estimated to be affected by this fraud.
The issue was uncovered by a research group of scientist at West Virginia University, who wanted to prove that Volkswagen cars were Clean Diesel. However they detected additional emissions during live road tests. They send the data to the International Council on Clean Transportation(ICCT). Then Volkswagen became the target of many investigations in several countries. After the news Volkswagen's stock prices decreased in value by a third. Many of the executive managers were suspended.
With the scandal of the Volkswagen group left a big damage in the quality symbol "made in Germany". Volkswagen lost the trust of many of its customers, workers, suppliers, investors and etc. The Volkswagen Group's risk management must handle this situation attentive and carefully.

第一章 Company Background of Volkswagen 1.1 Mission Statement of Volkswagen
The mission of Volkswagen is to build long term strategic partnership with their customers. Volkswagen assist them in making the right choice for their business needs, by minimizing costs and providing world class customer service. The company's goal is to offer attractive, safe, and environmentally automobiles which can compete in an tough market and set world standards with their respective class. The word Volkswagen means "People's car". It was Adolf Hitler's promise to produce a car that a German worker could afford. Therefore the business must serve the good of the people. Their Vision is to become the no.1 car producer in the world by volume overtaking Toyota by 2018. The company wants to make this world mobile, sustainable place with access to all the citizens.
1.2 Corporate Strategy of Volkswagen
Volkswagen focuses to become the world leader’s position in manufacturing automobiles by 2018. Currently the world leader of the automobile industry is Toyota. To achieve this goal and overcome Toyota Volkswagen set some baselines. Volkswagen intends to deploy intelligent innovations and technologies to become the best in customer satisfaction and quality. Customer Satisfaction is a mandatory requirement for the achievement of the long-term success. The company plans to sell 10 million units of automobiles per year. Particularly Volkswagen intends to capture an above-average share of growth in the major growth markets. For the times of recession Volkswagen wants to ensure a solid financial position and ability to act through a long-term return on sales before tax of at least 8%. In addition Volkswagen aims to become the most attractive employer in the car industry by 2018, because if the company wants to build the best vehicles, it needs the best and motivated workers. Volkswagen, in particular, focuses on an environmentally friendly orientation, so that it can have even more success in more challenging economic conditions. The environmentally and attractive range of vehicles and the strong position of the individual brands in the markets worldwide are the key factors allowing the Group to increase its competitive advantage. The activities are mainly oriented on new ecological standards in the areas of vehicles, gear and lightweight construction. Volkswagen tries to improve continually. Through this it allows the company to improve production efficiency and flexibility constantly, which eventually leads to profitability.
1.3 Organizational Structure of Volkswagen
The Volkswagen Group is one of the major multi-brand corporation in the automobile industry. The company's business activities are divided in Automotive and Financial Services divisions. With the exception of Volkswagen in the Automotive Division all other brands are independent distinct companies. The main business activities of the various companies are developing, producing and selling passenger cars, commercial vehicles, trucks and buses. The Volkswagen Group has many different products ranging from motorcycles, fuel-efficient small cars, sport cars to luxury vehicles. The biggest markets are Western Europe, China, Brazil, the United States, Russia, Mexico, and Argentina.
Volkswagen AG and the Volkswagen Group are managed by Board of Management of Volkswagen AG. The Board of Management is issues by the Supervisory Board. The Group Board of Management, which was formed to support the work of the Board of Management, ensures that Group interests are taken into consideration in decisions relating to the Group's brands and companies. The Group Board of Management consists of the members of Volkswagen AG's Board of Management, the chairmen of the subsidiaries and selected top managers with Group management functions. Volkswagen's strategic management is largely conducted at Group level by four committees. Their functions are product planning, investment, liquidity, foreign currency, and management issues.
Each brand of the Volkswagen Group is managed by a board of management. It guarantees its independent development and its business operations. The Group targets and requirements are decided by the Board of Management of Volkswagen AG. Through this Group-wide interests are pursued and it ensures each brand's independent characteristics.
The companies of the Volkswagen Group are managed separately by their respective managements. In addition to the interests of their own companies, each individual company management takes into account the interests of the Group and of the individual brands.
1.4 History of Volkswagen
The word “Volkswagen” means “people’s car”. Before the 1930’s there had been many who had the same concept and idea to create cars everyone could afford. However until then none could reach the achievement of that goal, because all cars before 1930 cost more than the yearly wage of an average worker. Hitler wanted that citizen of Germany could drive and own their own car with joy. In 1933 Adolf Hitler met with an Austrian automotive engineer Ferdinand Porsche to discuss Hitler’s idea of Volkswagen. Hitler required a car that could carry 5 people, speed of 100 km/h, and only cost around 1000 Reich Marks(about US$396 in 1930).
Volkswagen was first created in 1937 by the government of Germany under the National Socialist party as a new state-owned automobile company. The company was operated by a Nazi organization called the German Labor Front and it was headquartered in Wolfsburg, Germany. At that time it was known as Gesellschaft zur Vorbereitung des Deutschen Volkswagen mbH(Gezuvor). Later in the same year it was renamed as „The People’s Car Company”(Volkswagenwerk). The automobile which was displayed was called KdF(Kraft durch Freude)-Wagen(“Strength through Joy” car). But soon World War II began and the factory changed production to military vehicles for German forces. Many of the technologies, in which Ferdinand Porsche participated in the development, was used in the military vehicles “Kuebelwagen” and “Schwimmwagen”.
In the Second World War Volkswagenwerk provided goods for the German military. During that time about 20000 people had to serve as compulsory laborer, who were usually prisoners or people from concentration camps. Ferdinand Porsche’s son in law became the new managing director of Volkswagenwerk until 1945.
After the war in 1945 the first Beetle was produced, but the future of Volkswagenwerk was uncertain, because many foreign companies like Humber or Ford were interested in buying Volkswagen. However the company’s market profitability was misinterpreted and through the annihilating technical evaluation of the Beetle the foreign companies lost intention of buying the company, so it could still remain German. The rehabilitation process of the facility was aided by a British major Ivan Hirst, who helped improving the quality, productivity, customer service and marketing system of Volkswagen in inland and abroad. In 1949 the corporation was officially handed over to Germany and from then on it was called Volkswagenwerk GmbH. The Volkswagenwerk should become the biggest automobile factory in the world. Later on, the German government decided to privatize the company and it changed to “Volkswagenwerk Aktiengesellschaft”. In 1962 the whole corporation had 69,000 workers and generated 6.4 billion Deutsche Mark. in 1970 Volkswagen introduced “K 70”, which was the first car with a front engine, a front wheel drive, and water cooling. It was new innovation and a breakpoint in the history of Volkswagen. 2 years later Volkswagen had 192,000 employees and generated 16 billion DM. In addition it became the world champion in production. The VW Beetle was the third most sold automobile throughout history with 21,5 million cars built after Toyota Corolla on the first place and Volkswagen Golf on the second.
In the beginning of the 1970s Volkswagen got into economical problems, because the demand of the Beetle declined steadily. The savior turned out to be the subsidiary company “Auto Union GmbH”(since 1969 Audi NSU Auto Union AG). With the use of the technologies of their subsidiary company Volkswagen succeeded to produce a new attractive model in a short time. In 1973 the Volkswagen Passat was introduced and was the first representative of the water cooling front wheel models. Passat was almost identical to Audi 80 which was produced in 1972. In 1974 the Golf was the most profitable car of Volkswagen and in 1975 the Polo was released. Under the leader of Carl H. Hahn in 1982 Volkswagen slowly began to become a global enterprise. In the same year a contract was signed with the Chinese company SAIC Group to produce Volkswagen Santana in China, which started the production in 1988. In 1986 Volkswagen AG took over the majority of the brand Seat and in 1991 Skoda Auto was bought. The board of directors decided to rename the corporation from “Volkswagenwerk AG” to “Volkswagen AG”. In the year 1998 Volkswagen presented the VW New Beetle. It was marketed as a “Fun-Car”, which brought a big success in the US market with its retro design to Volkswagen.
In 2004 Volkswagen was under economical pressure. The corporation lost 50% of its profits in 2003 and the board of management decided to reconstruct the corporation to lower the costs and to make production sites more competitive. The main reasons of the crisis were the high salaries and production costs.
In 2007 Martin Winterkorn became the CEO of the Volkswagen Group, who was the CEO until 2015 September. On the September 20h 2015 Volkswagen acknowledged that it manipulated emission test results with an illegal software. CEO Martin Winterkorn resigned on the 23rd of September.

第二章 Current State of Affairs of Volkswagen 2.1 Business Situation of Volkswagen
Volkswagen Group comprises twelve brands from seven European countries. The brands include Volkswagen Passenger Cars, Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN. Each brand has its own color and operates as its own entity on the market. The group as a whole has a wide spectrum of products which include motorcycles, small cars, medium cars, luxury cars, pick-ups, buses, heavy trucks and so on.
In addition to the cars Volkswagen also produces many different products and components. The company manufactures large-bore diesel engines for marine and stationary applications, turbochargers, turbomachinery, compressors and chemical reactors, vehicle transmissions, special gear units for wind turbines, slide bearings and couplings, and testing systems for the mobility sector.
Next to the Automotive Division the Volkswagen Group offers a wide range of financial services, like dealer and customer financing, leasing, banking and insurance activities, and fleet management.
As of May 26, 2015, the Volkswagen Group operated 119 production plants in 33 countries in Europe, America, Asia and Africa. Every working day almost 600,000 employees worldwide produce around 41,000 vehicles. These are sold in 153 countries.

2.1.1 Volkswagen Passenger Cars
Volkswagen uses the slogan “Volkswagen – Das Auto.” The core messages of Volkswagen are innovative, offering enduring value and responsible. Customers over the world unify the thought of quality, reliability and German engineering skill with Volkswagen Passenger Cars. The company is the first choice for millions of customers when buying a car. The Volkswagen Passenger Cars brand want to become the most innovative and quantitative producer with the best quality for their class. It is an all-rounder and we can say that the Volkswagen Passenger Cars brand is the flagship of the group. It is a dominant player in Western Europe, China and Brazil, but it falls behind in the U.S., Russian and Indian markets.
2.1.2 Audi
Audi’s slogan “Vorsprung durch Technik” means “lead through technology”. Audi is a sportive, progressive and premium brand. It is one of the strongest brands worldwide. The company aims to become the market leader in its branch. The success of Audi relies on the brand strategy of innovative engineering solutions, an emotional design language and smart marketing. Audi is the Volkswagen Group’s gold mine. By 2020 its goal is to sell 2 million cars.
2.1.3 SEAT
The Spanish brand SEAT regularly wins rewards for outstanding design. SEAT is one of the weaker subsidiaries of Volkswagen Group. Currently it is largely dependent on the Spanish market but the aim is to grow bigger in Europe. SEAT has been always struggling to survive. The company focuses on its distinctive brand values of being dynamic, young design-oriented. The motto of the brand is “Enjoyneering.”
2.1.4 SKODA
The slogan of SKODA is “Simply clever”. It is the third oldest automobile manufacturer in the world. In China and Europe SKODA has become one of the fastest emerging brands. The brand image is dominated by an attractive design and a compelling value proposition. It is coupled with intelligent ideas for the use of space that are technically simple but offer refined and practical details. Since the acquisition the company had a steady success and sometimes it is also called the “better Volkswagen” because it uses the technology of Volkswagen brought together with the simplicity of its design for an affordable price. This can be an internal threat to Volkswagen.
2.1.5 Porsche
Porsche is a very popular sports car brand worldwide. It is said that 70% of all Porsche vehicles that have ever been manufactures are still on the roads in many countries around the world. Porsche relies on very high quality standards. The main strengths of Porsche are exclusivity and acceptance, tradition and innovation, performance and suitability for daily use, design and functionality. The motto of Porsche is “to achieve maximum output from minimum input from opportunities”. After the failure of Porsche to take full control over Volkswagen
2.1.6 Bentley
Bentley is an elegant and luxury car brand which has been in the part of the Volkswagen Group since 1998. The Volkswagen Group acquired Bentley to get close to the Rival Rolls-Royce. Bentley designs and manufactures around 11,000 cars every year in England and delivering them worldwide.
2.1.7 Bugatti, Lamborghini
These are the foreign exotic brands of the Volkswagen Group. These brands display elegance, exclusivity and power. With these Volkswagen Group round of the brand diversity in the passenger cars segment. Bugatti is a French sportive automobile brand which is one of the most famous brands. It aim was to construct the perfect automobile in the harmony of art and technology. Lamborghini is an Italian sports car manufacturer and has been part of the Volkswagen Group since 1998.
2.1.8 Ducati
Ducati is an Italian brand which only produces premium motorcycles. Its products have the highest level of quality craftsmanship, uncompromising performance and challenging dynamics. Since the purchase of the Italian firm, Audi’s motorcycle unit generated a 33 million euro operating profit after depreciation.
2.1.9 Volkswagen Commercial Vehicles
Volkswagen Commercial Vehicles stands for superior mobility. The three core values are reliability, economy and partnership. The brand offers a range of different transport vehicles at the highest levels of engineering for different customers. It has light commercial vehicles like the Caddy, Saveiro, Multivan/Transporter, Crafter and Amarok in stock for the customers in retail and craft businesses, civil authorities and service providers.
2.1.10 SCANIA
It is a Swedish brand and the core values are “customer first”, “respect for the individual” and “quality”. The company has been producing high-performance trucks and busses for over 100 years. The company offers its customers efficient transport vehicles with service offerings and financial services.
2.1.11 MAN
This is another heavy vehicle brand of Volkswagen Group. The core values of the MAN brand are reliability, innovation, dynamic strength and openness. MAN is currently one of the leading European manufacturers of commercial vehicles, engines and mechanical engineering equipment. In addition it also manufactures diesel engines, turbomachinery and special gear units.

2.2 Financial Analysis of Volkswagen

第三章 Case Study of Volkswagen Emission Scandal
3.1 Case Situation
On the 18th September 2015, the United States Environmental Protection Agency (EPA) reports that the German Volkswagen Group violated the Clean Air Act. The company intentionally programmed a cheating software on turbocharged direct injection (TDI) diesel engines. The cheating software is an illegal software, which shows certain emission values only during laboratory emissions testing. During the tests the vehicles would meet the requirement of the nitrogen oxide (NOx) limit. However in normal driving the cars would produce up to 40 times higher nitrogen oxide. It is estimated that more than 11 million cars are affected throughout the world. The vehicle models produced between 2009 and 2015 have been manipulated by the cheating software.
These findings comes from a study on emission difference between European and U.S. models of vehicles in 2014 by the International Council on Clean Transportation (ICCT). Five scientists at the West Virginia University detected the additional emissions during live test. With data from other sources, the International Council on Clean Transportation reported to the California Air Resources Board (CARB) in May 2014. Then Volkswagen became the target of many investigations in multiple countries and the U.S. EPA required an explanation for the bad real world nitrogen oxide emissions. So Volkswagen only recalls TDI cars voluntarily but the U.S. organizations aren’t satisfied and they threaten not to certify cars for 2016. In September 2015 Volkswagen admits the lie by using a cheating software in the TDI engines and apologizes to the public. The first day after the news the stock prices dropped by 20% and on the next day it dropped another 17%, because Volkswagen Group had to spend $7.3 billion to cover the costs of the scandal. The CEO Martin Winterkorn resigned and the head of brand development Heinz-Jakob Neusser, Audi research and development head Ulrich Hackenberg, Porsche research and development head Wolfgang Hatz were suspended.
On November 3, 2015, Volkswagen reported that CO2 emissions and fuel consumption were also affected by “irregularities”. Volkswagen said that it mainly affects diesel vehicles, but some gasoline models are affected as well. Approximately 800,000 vehicles from the brands VW, Skoda, Audi and Seat with 1.4, 1.6 and 2.0 liter engines are modified. The company announced that it might cost another 2 billion to fix it.
3.2 Cause of Incident
The Volkswagen’s emission scandal affects 11 million cars worldwide. It is said that two high-level engineers are “responsible” for the incident. But it should be blamed in the beginning of the VW’s diesel strategy.
From 2005 to 2007 the brand Volkswagen of the Volkswagen Group was leaded by Wolfgang Bernhard. Before Bernhard was in a leading position for Mercedes and Daimler. So Bernhard was seen as an outsider and faced opposition, for example from the Audi’s CEO Martin Winterkorn. Both parties had a conflict during the planning phase of VW’s EA189 2-liter TDI engine, which is the reason of the current crisis. The Diesel emission standards kept rising and Bernhard used clean-diesel technology called “BlueTec” from Mercedes-Benz, while Winterkorn planned a new diesel engine developed in the company, which became the EA189 2-liter TDI engine. Many VW engineers evaluated that the company’s inhouse engine and technology was not good enough to meet the emission standards. In December 2006, with the change of CEO in the Volkswagen Group from Pischetsrieder to Martin Winterkorn, Wolfgang Bernhard was replaced as well, even though Bernhard already had a functioning engine. The EA189 engine started its production in 2008. During this time the cheat software was installed on the EA189 engines and Bernhard’s engine using Mercedes technology was rejected. With the emissions-cheating engines Volkswagen has become the biggest car company in the world. The EA189 became the main engine of Volkswagen, and it was selling in many Volkswagen brands throughout the world. The successor of Winterkorn is Porsche CEO Matthias Mueller. The corporation lost more than $30 billion in stock-market value since Volkswagen admitted the fraud.
3.3 Consequences for Volkswagen
Since the emission scandal of Volkswagen in September, Volkswagen announced that the company achieved its first loss in 15 years for quarter 3 of 2015. Volkswagen probably have to face huge consequences. First the resignation of the chief executive officer Martin Winterkorn was expected by everyone. Before his resignation Winterkorn apologizes and says that he will take responsibility for the actions Volkswagen, even though he is not guilty of this fraud. The responsibility is evaded and it is reported from Volkswagen that only a few lower authorized employees made that decision. The following CEO is Matthias Mueller, who was the CEO of Porsche. The U.S. government doesn't believe that the higher management didn't know about this situation. Now Volkswagen has to pay up to 18 billion U.S. dollar. Volkswagen must pay around 9.5 billion for fines of the emission scandal, around 2 billion for economic risk and CO2 emission and around 7 billion to fix vehicles which have the cheating software in its engines. This still can be a start for potential other penalties. The company might have to pay for victims, who suffered through the fraud. Also when fixed the vehicles will not perform as well as with the cheat software. The engines will drink more fuel and the performance will drop as well. It is most likely that customers will sue Volkswagen. Customers will get the same products but not with the same qualities anymore. Volkswagen misinformed the customers, which can also lead to return of the vehicle. Also Volkswagen lied earlier before admitting its mistakes to the U.S. government. Then the government can charge Volkswagen for making false statements and fraud. Maybe Volkswagen can come to agreement with the government by being cooperative and telling all the names who were responsible for this.

第四章 Business Analysis of Volkswagen

SWOT Analysis
Strength
SWOT Analysis
Strength
Even after the emission scandal of Volkswagen the company is still in a strong position because the stable foundation Volkswagen possesses. It has a worldwide presence in more than 150 countries.
The company has diversity of products and brands. It possesses 12 brands, which sell all kinds of different cars ranging from small cars to luxury cars and motorcycles. This can be a good synergy since all of the brands are separate. All the brands can then share R&D and learn from each other.
The history of Volkswagen is one of the oldest car companies and it has still a fast growth in the automobile market.
Volkswagen has a very strong market share in China, which is the biggest market in the world. The company had 20% of the market share through all of its brands.
Volkswagen has around 350,000 employees around the world.
Almost all of its brands are solid and perform well in the market.
Volkswagen has many manufacturing and assembly plants in many different nations.
Volkswagen has a strong research and development and engineering

Weaknesses Most of Volkswagen’s automobiles aren’t environmental friendly and not fuel efficient. After the removal of the cheating software in the TDI 2 liter engines fuel efficiency will decrease further. The company has competitive problems, which is why the scandal happened. They almost arrived to the limit of improvements. Through the scandal Volkswagen lost trust, faith and image. Volkswagen has a strict company culture. Volkswagen also has a short term leadership style and most of the leaders are insiders of Volkswagen. After the scandal the stock prices of Volkswagen dropped, which can lead to less investments.

Opportunities Because Volkswagen is very influential, it can easily create long term relationships with non-German car manufacturers. Through the scandal Volkswagen can learn from its mistake and make better products in the future. Volkswagen can enter many different markets through its large range of products. The Volkswagen Group can target markets effectively. Volkswagen needs to stay innovative. In the future electronic technology will be the key factor in the automobile industry. Volkswagen needs to be flexible and needs to satisfy the changing customer needs. The limited and increasing fuel prices will be a game changing market in the future. Volkswagen can invest in renewable and green cars. The Volkswagen Group can even grow bigger through merging and acquisition of other brands. India and China are countries with the biggest population with over 1 billion each. If Volkswagen can enter these market successfully, it will do a great impact on its sales.

Threats There is a big competition in the automobile market, external as well as internal. Some of the brands of the Volkswagen Group share the same market. The big threats come from the IT companies and “green” companies. They produce AI cars and cars powered by electricity which can be substitutes for fuel cars in the future. Since the resources of the world are limited, the costs of the materials will rise eventually. This can lead to higher production costs and in the end higher cost for the customer. The Environment protection regulations are becoming stricter and Volkswagen needs to do huge investments to manufacture low emission engines.

Conclusion
In my point of view it is very hard to believe that Volkswagen’s higher management wasn't aware of this situation. The EA189 2-liter TDI engine which was the root of the cause was also developed by Martin Winterkorn, who was the CEO when the scandal occurred. He is only taking action by resigning from his position and waves all other responsibilities away from him. Instead he accuses lower employees for the scandal.

This case shows us that Volkswagen decided to ignore the illegal activities even though the company was aware of the problem. The management thought that they could overcome claims and violates the rules intentionally. I believe that the higher managements act like dictators that decides everything for themselves and lower employees. Volkswagen must have faced a limit in their engineering constructions and to stay competitive the fraud must have been a viable option for the company. After the