Organizational Ethics

Organizational Ethics

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Organizational Ethics

Porsche is an automaker built on heritage and driven by passion, so why would such a sought after car company need to make sure its ethical principles are in-check?  It was almost one year ago when its parent company (VW) ran into some serious legal and ethical issues of its own that seemed to have a serious impact on the company’s image.  The following will discuss the ethical principles of Porsche as well as how social pressures may influence the company and its decisions as well as the relationship between legal and ethical issues within the company.

External Social Pressures

Car companies across the world deal with many varying external social pressures, which can include the cars they produce, how they produce them, and who produces them.  In the past few years manufacturers have seen a push towards using clean energy and protection of natural resources. It is very important for large automakers to base decisions on external pressures such as this as it may attract a larger customer base and more importantly it can help them retain their previously established customer base.  This seems like it may be tough for a high-end sports car manufacturer to produce more efficient cars, and the vast majority of Porsche owners do not care about efficiency when buying a $100,000 plus vehicle.  The company’s code of ethics approved by the board of directors states, “promoting the protection of natural resources, the efficient use of energy as well as environmental safety and the environmental compatibility of activities and products are priority objectives for the company” (Code of Ethics, 2014).  Porsche ignored their customer’s blatant disregard for the environment and went ahead to produce 3 hybrid vehicles in the Cayenne SUV, Panamera sedan and the 918 Spyder.  Also, a Fortune article reveals, “Porsche will spend $1 billion to develop the Mission E” (Korosec, 2016) an all-electric project set for the following years.  To continue to align the company’s actions with its ethical principles, “Porsche has pledged to make its production “more environmentally compatible” by 2018, in part by assessing and implementing site-specific measures designed to reduce CO2 emissions and total energy used.” (Pratt, 2016).  

Relationship Between Legal and Ethical Issues

For many organizations legal and ethical issues go hand in hand and ethical principles directly align with the law.  Porsche aims their moral standards well above the mark as they are committed to reducing their production emissions as well as making more efficient vehicles “company has committed to going further with a pledge to reduce the fuel consumption and average emissions by around 10% when producing a new model generation compared to the previous version” (Pratt, 2016).  Porsche is not necessarily doing this simply to comply with emissions regulations in Germany, but possibly doing so in hopes to create a better image for themselves.  Recently, Porsche and its parent company Volkswagen have ran into some legal trouble when some of their diesel motors were found to be able to cheat their way through unites states emissions testing.  This legal issue points to poor ethical standards within the Volkswagen Auto Group which produces cars under 8 different brand names, 3 of which (Audi, Porsche, Volkswagen) are sold with over-emitting diesel engines in the united states.