Business Ethics and Corporate Governance Learning Journal

Learning Journal 2:

Q1a) Reasons for suspension of MNC activities:

In a competitive global market, profit maximization is the key component for any MNC despite the knowledge of corporate social responsibility. Ethics are often overlooked in third world or developing host countries due to the lack of regulations; human rights and union movements regarding operations that are taking place by MNCs in the host land and are negated through subcontracting of local companies that have a different code of conduct and don’t necessarily apply the codes of the contracting company. A good example of an MNC stopping production in host countries would be child labour. A whole heap of attention was drawn to the many scandals in countries such as Pakistan, Vietnam and Indonesia specifically targeting child labour practices that are taking place, from soccer balls to ordinary goods, MNCs have found ways to deal with ethics than obey them and avoid them without punishment until they’re caught.

Q1b) Causes of change:

Change often takes place when an organisation realises its value chain social impacts are bringing a negative image leading to potential boycotting of product or service, causing or supporting negative social impacts and actions directly affecting profits, furthermore, external factors such as environmental issues, health and wellbeing, laws and regulations that weigh heavily on an organisation in the form of fines and penalties are its main means of suspending, cancelling or continuing if the costs can be covered and the organisation is still profitable.

Q2) VW & BES:

In the last few months Volkswagen (VW) have been in the media regarding their diesel engines and its false emissions, consequently they have created a crises of deception and have been trying to recover ever since. By applying a defeat device, to reduce emission output during tests by triggering the device to detect when a test is being conducted based on the position of the steering wheel, vehicle speed, the duration of the engine's operation and barometric pressure (Wei, J., Zhao, M., Wang, F., Cheng, P., & Zhao, D. 2015).the vehicle would automatically adjust the emissions output accordingly and switch to test mode. Further investigations were conducted by the U.S environmental protection agency and found VW guilty and later VW admitted to the defeat device. VW’s response was apologising and admitting their mistake through several interviews and press conferences while also providing 6.5 billion euros to cover service costs and other provisions in an effort to restore public trust in the brand.