Volkswagen: A Company Profile

Lora Kirmer

COMM 716 - Small Group Theory

December 18, 2019

Volkswagen: A Company Profile

Volkswagen Group

Jana Jonasa 1 Wolfsburg, 38440, Germany

Phone: 49-5361-9-0

Annual Sales: $262,183,831,750 (USD)

Total Employees: 642,418 Employees (Bloomberg, 2019)

Primary Line of Business: Automotive

Management Directory:

Dr. Herbert Diess, Chairman-Management Board/CEO

Frank Witter, Chief Financial Officer

Saad Chehab, Chief Marketing Officer

Dr. Kurt Michels, Chief Compliance Officer

 

 

 

                                                         Company Overview

Industry Snapshot: The automotive industry is experiencing declining sales in sedan models and an increase of alternative fuel powertrains. Alternative forms of vehicle ownership, subscription, and rideshare services are affecting sales of passenger vehicles (PRNewswire, 2019).

Background and Development: Volkswagen started in 1937 and expanded globally by the 1950s. Volkswagen started as a passenger vehicle company and acquired international luxury and fleet brands underneath the Volkswagen Group corporation, but Volkswagen remains the marque (Bloomberg, 2019).

Industry Leaders: Toyota Motor Corporation, Volkswagen AG, Ford Motor Company, General Motors Corps. (PRNewswire, 2019).

Key Processes: The industry is becoming more digital since the inclusion of autonomous intelligence in different vehicle components. Basic manufacturing processes start with the chassis of the vehicle, on which the frame of the body is built. The body is built literally from floor up, and doors are added once the main frame is complete. Then, paint coats the body. Interior assembly includes putting in seats and dashboards, covering the doors, floor, and ceiling with material, and adding finishing touches like trim and logos. From here, the engine is added into the engine bay and the vehicle is essentially complete. This process looks different depending on the vehicle type, and how many digital components need to be added.

 

The Importance of Groups/Teams: Groups and teams are what make up a corporation. Volkswagen Group (collectively known as Volkswagen) is a global company that serves 153 countries. In the following pages, Volkswagen’s group communication, and the importance of proper symbol use, is expanded on.

 

Introduction

Volkswagen has been the center of research on corporate social responsibility (Siano et al. 2016), crisis communication (Opitz, Chaudhri, & Wang, 2017), and corporate historic responsibility (Janssen, 2013). To my knowledge, Volkswagen has not been studied from a symbolic-interpretive perspective on groups angle. A company profile and analysis from the symbolic-interpretive perspective on group communication will contribute a cohesive collection of symbol usage at the group level. The final product will be a source of knowledge of symbolic management and symbol usage by a large group.

Not only will it serve as source or example of the symbolic-interpretive perspective on a group’s interactions, it will provide suggestions for putting group theory into practical application outside of academia. Contribution to academic efforts and knowledge production is important but is not the main goal of my project. The SWOT analysis and best-and-worst practices suggestions for group management through the symbolic-interpretive perspective will be a real-world tool that can be used by groups, businesses, and large corporations.

This company profile incorporates Volkswagen’s corporate social/historic responsibility, greenwashing communication, the corporation’s response to the communication, and the symbolic management of the corporation. Through the symbolic-interpretive lens, employee attitudes and group culture, traditional hierarchical structure, and group re-alignments are also explored.

Symbolic-Interpretive Perspective

The symbolic-interpretive perspective on group communication looks at a group’s use of symbols, or the “words, objects, or actions that stand for or represent something else” (Frey & Sunwolf, 2004, p. 277). The perspective’s premise is that symbolic interaction is a primary social process (Frey, 2009). According to Frey and Sunwolf (2004), the S-I perspective has four assumptions about groups:

1.     Groups are socially constructed concepts that do not exist in an objective sense.

2.     Groups are not fixed or static but rather they are characterized by shifting boundaries and interdependence within the group’s contexts.

3.     Groups are constructed by the members’ symbolic activities that create a binding shared reality.

4.     Those who study groups (from the S-I perspective) employ necessary methods that privilege the use and interpretation of symbols in group dynamics.

The S-I perspective focuses on three domains of symbolic activity in particular: symbolic predispositions, symbolic practices, and symbolic processes and products (Sunwolf & Frey, 2004). Symbolic predispositions are symbolic resources persons use to guide their own symbolic behavior as well as the interpretations they make of others’ symbolic behavior that they believe are meaningful (Frey & Sunwolf, 2004; Frey, 2009). Symbolic predispositions are brought in by peoples’ previous symbolic group interactions.

            Symbolic practices are the interactions between group members, or forms of communication, like humor, metaphors, rituals, etc. (Frey & Sunwolf, 2004, Frey). Symbolic practices also include, but are not limited to, dress, fantasies, gestures, humor, as well as nonverbal communication (Frey & Sunwolf, 2004). Symbolic processes and products are the micro- and macro-level group dynamics and outcomes of symbolic practices. Symbolic practices and products are linked together, rather than treated as separates, to show their reflexive and recursive relationship (Frey & Sunwolf, 2004, Frey, 2009). Some group dynamics are both a process and a product, like group climate and culture, which are products that simultaneously influence symbolic practices (Frey & Sunwolf, 2004).

            Each of these domains have the potential to influence, and are influenced by, the group contexts (Frey, 2009). The symbolic-interpretive perspective on group communication is focused on the influences that happen on and are created by symbolic interactions, because the perspective is grounded in interpretive scholarship and sense-making (Frey, 2009). I chose this perspective for this analysis because of the interpretive nature and means to understand symbol use by a large company, which is made up of several groups that work through shifting boundaries and on multiple teams to create a relationship with several audiences. In particular, the S-I perspective allows for study of how groups use symbols, called symbolic management focus (Frey & Sunwolf, 2004). Symbolic management refers to the usage and control of symbols put forth by groups and group members. Henceforth, I will be analyzing symbolic management practices by Volkswagen, as well as the practices, processes, and products that are a result of or influenced by their symbolic management.

 

Corporate Social, Historical Responsibility & Greenwashing

            Before starting with the analysis of Volkswagen’s symbol use, some terms that will be used need to be defined. Corporate social responsibility (CSR), corporate historical responsibility (CHR), and greenwashing are major components of any Volkswagen company profile for reasons that will be revealed later on. CSR and CHR are closely linked because CHR is grounded in CSR.

            CSR focuses on the corporation’s relationship with society, rather than just the employee (May, Fyke, & Miller, 2019). CSR is “a way for companies to align their practices with what society wants” (May, Fyke, & Miller, 2019, p. 62). Corporations use CSR to legitimize themselves with stakeholders and the public. To do this, corporations engage in CSR communication which includes reports on steps towards sustainability as well as announcements of ethical practices and partnerships (May, Fyke, & Miller, 2019). Sustainability is closely tied to CSR because sustainable practices are seen as “win-win” solutions for corporations and the environment; a win for corporations to meet current needs without compromising the needs of future generations, and a win for the environment because of the green approach of sustainable practices (Ihlen & Roper, 2011 in May, Fyke, & Miller, 2019).

            CSR communication is full of symbols and symbolic management. Since CSR is typically a response to stakeholder wants, the communication is influenced by external and internal factors (May, Fyke, & Miller, 2019). Externally, corporations are influenced by the surrounding society that is calling for change, and internally, the corporation is influenced by team/groups’ and members’ goals and ambitions. Corporations symbolically represent their commitment to change by announcing a partnership with an initiative that answers the call for change, or by announcing programs that support what the stakeholders are asking for (Siano, Vollero, Conte, & Amabile, 2017). However, if the corporation’s actions (their steps towards sustainability and tangible results) do not match up with their communicative symbols, the corporation is participating in a form of deceptive communication known as “greenwashing” (Siano et al., 2017).

Greenwashing is also defined as, “a range of communications that mislead people into adopting overly positive beliefs about an organization’s environmental performance, practices, or products” (Lyon & Montgomery, 2015, p. 225). Exposure of greenwashing can lead to a multitude of negative effects, and not just on the corporation’s image. The act of greenwashing itself hurts the environment because of the lack of follow-through on sustainable practices (Lyon & Montgomery, 2015). Societal calls for change put the pressure on corporations to enact sustainable practices, but some corporations simply fail to do so.

            CHR is another response to societal calls for change, but instead of asking for sustainable practices, society is asking for a recognition and reconciliation of past wrongdoings (Janssen, 2013). Like CSR, CHR assumes corporations have obligations beyond legal and economic ones; corporations have moral obligations within their social obligations and must be accountable for their actions (Janssen, 2013). Janssen (2013) presents CHR as a reconciliatory communication approach to restoring relationships and participating in discourse with those that were harmed by the corporation’s historical injustices. For corporations with unsavory pasts, CHR is an approach towards engagement about the past and an attempt to reconcile injustices in an ethical way (Janssen, 2013). CHR assumes that the quality of present corporate citizenship is reflected by the way corporations either address or ignore their pasts (Spiliotis, 2006 in Janssen, 2013).

 

Volkswagen – A Short History

            Volkswagen was founded by the German Labour Front, a Nazi organization, in 1937 (Rieger, 2013). Volkswagen translates to “people’s car” and that was the intention of the company - to produce a low-cost passenger car for the people of Germany (Rieger, 2013). After World War II, ownership of Volkswagen was transferred to the West German government and the state of Lower Saxony. Despite its ties to the Nazi party, Volkswagen was a success by the 1950s, except in the United States. Volkswagen attempted a risky marketing campaign to tap into the United States market, and they were successful, thus becoming one of the best-selling passenger vehicle manufacturers for years to come (Boches, 2015).

Their most famous ad simply calls the 1961 Beetle a “lemon” (Boches, 2015). The tactic, while absurd at the time, is known as counter-advertising. Volkswagen used the method to draw attention to their advertisement, and then the fine print of the advertisement read, “This Volkswagen missed the boat. The chrome strip on the glove compartment is blemished and must be replaced. Chances are you wouldn't have noticed it; inspector Kurt Kroner did.” (Boches, 2015). The message within the served as a symbol of Volkswagen’s 1961 commitment to excellence. A sequence of marketing campaigns released by Volkswagen promotes similar messages of promises of excellence and dedication to the people. After 55 years of successful advertising, news broke of the fact that Volkswagen’s communication to the consumer was not matching their actions in their factories (Boches, 2015).

 

Volkswagen, Greenwashing, and CSR

Volkswagen is the marque brand of the Volkswagen Group, also known as Volkswagen AG, which owns a wide range of other automotive companies world-wide, such as Audi, Porsche, Bugatti, Ducati, Škoda, and Bentley. As the marque brand, Volkswagen often represents Volkswagen Group as a whole unlike the other companies, which operate with their own management boards and leadership. Volkswagen is a traditionally hierarchical-structure company with centralized decision making held by the Volkswagen AG Board of Management (Volkswagen, 2017). Volkswagen has made an effort to have a more decentralized structure, with control over different regions of the world spread out among the companies under Volkswagen Group rather than being led solely by Volkswagen (Volkswagen, 2017). The restructuring of the responsibilities of the different companies, which are all smaller groups operating within a larger group, produces a cultural change within the corporation.

The 2019 opinion barometer for Volkswagen Group employee teams, including mangers, shows an increase among the positive mood of employees. Compared to last year, responses were significantly more positive on questions about leadership, cooperation, integrity, and the public perception of the company (Volkswagen, 2019e). In 2018, employees rated the public perception of the company as 54.9 index points, and this year that rose to 61.3 index points. Team member’s find Volkswagen an attractive company to work for, and Volkswagen’s successful global sales support their role as a leading company in the automotive industry (Volkswagen, 2019e). However, this was not the case in 2015, when the company was exposed for lying to the United States Environmental Protection Agency (EPA) about carbon dioxide emissions released from their diesel engine vehicles.

In September of 2015, a scandal dubbed “Dieselgate” (Jung, Chilton, & Valero, 2017) put Volkswagen in every U.S. and German headline. U.S. researchers found “defeat devices” in approximately 590,000 of Volkswagen diesel engine vehicles that violates the U.S. Clean Air Act (EPA, 2017). The devices detected when an emissions test was being run and would reduce the amount of emissions released for the duration of the test. The researchers traced these devices all the way back to 2009 (Jung, Chilton, & Valero, 2017). During the years the device-equipped vehicles were being released into the U.S., the Volkswagen Group published sustainability reports to showcase their commitment to reducing CO2 emissions with Strategy 2018 – a campaign that was to make Volkswagen the “most sustainable automaker in the world” (Volkswagen, 2012). The reports were a symbol of the company’s CSR, yet their actions were not matching their communication, making this a case of greenwashing. Volkswagen immediately turned to crisis management to reduce negative public opinion and gain back trust. They did so by symbolic management.

Siano and colleagues’ (2016) content analysis on the practice of greenwashing in Volkswagen reveals that the company participated in a type of “deceptive manipulation” greenwashing that allowed them to circumvent the United States Environmental Protection Agency’s anti-smog standards, thus setting the stage for Dieselgate to happen. Internal communication, like newsletters, constantly reiterated the corporation’s approach to sustainability (Siano et al., 2016). Managers interviewed by Siano et al. (2016) noted that employees participated in CSR activities and tried to include CSR policies and practices into all of their work. The climate and culture of Volkswagen is a symbolic process, and the implementation of CSR policies in all employee activities by the employees’ own volition is a symbol product of the communication of the corporation.

Because the managers and employees held upper management’s communication about CSR and sustainability approaches to a high regard, the communication influenced the symbolic processes and products (Frey & Sunwolf, 2004; Siano et al., 2016). After the emissions scandal broke headlines, employees, who have a group identity as Volkswagen team members, reaffirmed their identity with the group through a media campaign on YouTube and Twitter called “#WirsindVW” (We are Volkswagen) (IG Metall Wolfsburg, 2015 as cited in Opitz, Chaudhri, & Wang, 2017). The group’s symbolic practices, along with the symbolic processes and products that took place before the scandal, influenced their decision to stay with the group instead of distance themselves. Since 2015, Volkswagen has taken numerous steps to symbolically distance themselves from the scandal and retain their employees.

Volkswagen’s approach to decouple from the scandal involved a renewed commitment to sustainable practices, investments in climate protection projects, and pushing forward research on their electronic mobility (e-mobility) unit. Through symbolic management, like the announcement of an emission decreasing battery formation (Volkswagen, 2019e), Volkswagen is gaining back social legitimacy. Volkswagen is using an increased amount of communication about their commitment to green practices as well as changing the names of different groups within the organization to promote their commitment to the reduction of CO2 emissions (Volkswagen, 2019b).

On September 19, 2019, Volkswagen sent out a press release to announce investments in climate protection projects, with special interest in funding forest conservation and projects that are “Verified Carbon Standard” certified (Volkswagene, 2019). One project Volkswagen is already funding is a forest protection project in Borneo, called Kantingan Mentaya. The press release from Volkswagen says this investment “compensates for the currently still unavoidable CO2 emissions from the supply chain, production and delivery of the new Volkswagen e-vehicle ID.3, as well as emissions from other areas” (Volkswagene, 2019, p.1). Actively seeking ways to reduce the corporation’s carbon footprint as they head forward with new, possibly greener modes of mobility is a CSR strategy.

Volkswagen announced on September 24, 2019 that Volkswagen Group Research, the research team for Volkswagen Group, is now Volkswagen Group Innovation. This is a symbolic message that results in a new group orientation. In an explanation for the re-naming, and re-alignment of the team, Dr. Axel Heinrich, Head of Volkswagen Group Innovation, said:

“With the comprehensive realignment as Volkswagen Group Innovation with our Centers in Europe, Asia and the U.S. we are adapting and bundling our innovation activities within the company. This enhances our traditional research focus and means we can identify global as well as regional key technologies and disruptions more easily and anticipate the demands of today’s and tomorrow’s customers even faster” (Volkswagen 2019c).

The permeable nature of groups is shown in the statement because the international teams will work together across geographical borders to participate in symbolic processes and products. Volkswagen is symbolically uniting their international units under a new name in an effort to communicate their commitment to sustainable innovations and future technologies. Additionally, Volkswagen Group Innovation is contributing to the future corporate strategy TOGETHER 2025+: “Shaping mobility – for generations to come” (Volkswagen, 2019c), a clear CSR message.

 Volkswagen’s CSR communication about shaping the future “for generations to come” is a symbolic product from the leadership that took over post-Dieselgate. Not only did these leaders realign their groups under new names, they broke down the hierarchical nature of corporate communication to decentralize idea generation, according to 2017 annual report (Volkswagen, 2017).

Now that the scandal has been aired, and reparations are being made, Volkswagen must think of their CHR. The corporation is not unfamiliar with CHR, since Volkswagen itself pointed out that corporations have a “historic responsibilities” to reconcile wrongdoings (Janssen, 2013). Janssen (2013) stated that CHR can be used “[a]s an alternative means of (re-)legitimation,” and that “corporations create social value and strengthen their corporate citizenship by addressing their past responsibly” (p. 69). Volkswagen, who already has experience with CHR due to their Nazi-party ties and forced labor during WWII, is already adhering to the four principles of CHR in response to Dieselgate. While CHR is applied a little differently here than with cases of forced labor, it still applies. The four principles (all sourced from Janssen, 2013, p. 70) and examples of Volkswagen’s CHR symbols are as follows:

1.     “CHR demands respect for victims’ and their descendants’ memories and identities.” The victims of Volkswagen’s greenwashing are consumers and countries that bought the defeat-device equipped vehicles. Volkswagen offered the consumers a “goodwill package of $500 cash, $500 Volkswagen dealer credit, and free 24-hour roadside assistance for three years” (Hirsh & Masunaga, 2015, as cited in Jung, Chilton, & Valero, 2017).

2.     “CHR requires an attitude of remorse.” Volkswagen publicly apologized via video on September 23, 2015 and CEO Martin Winkerton resigned immediately afterwards (Jung, Chilton, & Valero, 2017).

3.     “CHR demands responsibility for corporate history.” Volkswagen reached $14.7 billion settlement to compensate consumers and for environmental damages (Bartlett, Naranjo, & Plungis, 2017). 

4.     “CHR demands corporate commitments to justice in the present and future so that similar injustices cannot occur again.” Volkswagen’s symbolic partnerships with sustainable programs and group communication re-alignment, explored above, are evidence of their commitment to reduce the chances of another scandal happening again.

Whilst Volkswagen is promoting their commitment to cleaner cars and re-aligning their CSR communication, their advertising and media presence presents conflicting symbols in regard to future mobility. In the summer of 2019, Volkswagen’s media presence promoted their 2019 Jetta GLI in a commercial that showcased it as a manual transmission, or stick-shift, vehicle. The driver and the passenger exit the vehicle at their destination, and the driver does not lock the doors. The passenger questions why he did not lock it, and the driver simply says, “It’s a stick.” The commercial ended by naming the Jetta a “‘self’ – driving car,” (iSpot.TV, 2019), a message to the audience that literal this vehicle must be driven by the human self. Volkswagen claims stick shift vehicles are “anti-theft” because it is an uncommon transmission today.

Stick-shift vehicles are rarely offered as the standard model outside of fleet and commercial vehicles. More than 90% of passenger vehicles sold in the U.S. in 2019 were an automatic transmission, and 80% of those vehicles did not offer a manual transmission option (Montoya, 2019). Volkswagen maintains manual transmission options for their passenger vehicles, and the 2019 Jetta commercial is showcasing this fact. The commercial is poking a bit of fun at people who do not know how to drive a stick shift. Additionally, the “self”- driving tagline is against the current trend of promoting automatic and almost-autonomous vehicles.

The commercial is a symbol to the audience that Volkswagen is rejecting autonomous technology, that they are still the “people’s car” because they are committed to keeping the human (the people) behind the wheel and in charge of the vehicle’s drive power. Volkswagen is tying their current vehicle models to their history, giving a nod towards their stick-shift, diesel-powered past in their newer, fuel-efficient models.

However, a look into Volkswagen’s September 2019 press releases reveal that Volkswagen is in fact in the process of creating a self-driving vehicle through a joint effort with Ford and a partnership with Argo AI (Volkswagen, 2019a). As of October 2019, the 2019 Jetta commercials with the “’self’-driving” taglines have been removed from Volkswagen’s YouTube channel. The only commercials available for the model are those that promote its hybrid engine that gets more miles per gallon in fuel than other models, another symbolic product of Volkswagen’s CSR strategy.

The conflicting messages are sending mixed symbols for the audience. On one hand, owning or driving a Volkswagen means the driver is proudly pushing aside norms of automatic transmissions and rejecting autonomous technology in favor of an eco-conscious alternative. On the other hand, the owner/driver is (possibly unknowingly) supporting the company as they make efforts to take the human “self” out of self-driving vehicles with their claim of “testing fully automated driving up to level 4 in real conditions in Hamburg today” (Volkswagen, 2019c), which is an exact opposite of the Jetta commercial’s message.

Volkswagen has continued to change their communication and goals since 2015 in an effort to remain a leading global automotive manufacturer. The corporation’s symbolic practices, especially those concerned with CSR, have united their employees under a group identity to the point that they defended the corporation throughout the emissions scandal (Opitz, Chaudhri, & Wang, 2017). The group’s underneath the corporation of Volkswagen Group are being re-aligned as a symbolic process, and each group will bring in their own symbolic predispositions as they begin to work together in this new alignment.

There is near-limitless information available to analyze and deduce the practices through which Volkswagen, and groups within the corporation, interact and react to one another. Like any major company, Volkswagen has changed their communication strategies in order to appease stakeholders and remain relevant in a changing society. This has led them to adopt new forms of CSR, participate in CHR, and avoid greenwashing. The symbolic practices, processes, and products of the corporation’s groups have helped them remain a top competitor in the automotive industries despite the major setback from the emissions scandal.

 

 

S.W.O.T. Analysis & Suggestions

Strengths:

-Volkswagen is strong in their employee satisfaction – this has created a strong allegiance to the corporation.

-Volkswagen is already established as a global corporation with many international brands incorporated into the Volkswagen Group.

-Volkswagen keeps their manual transmissions options available for U.S. consumers; manual transmissions have better fuel economy and the majority of U.S. vehicles are automatic transmission equipped.

Weaknesses:

-The lingering effects of the 2015 greenwashing/emissions scandal affects Volkswagen’s U.S. sales.

-Volkswagen holds the highest recall rate in the U.S. market to date.

-Distrust because of the scandal, and general distrust of large automotive corporations held by consumers concerned with climate change.

Opportunities:

-Volkswagen has the opportunity to continue their passenger sales growth now that they have partnered with Ford and Argo AI, since the implementation of autonomous technology is on the rise.

-Volkswagen can focus on creating a better battery that causes less environmental damage in the making and disposal of it.

-Focus on digital connectivity between consumers and the brand as well as between drivers and vehicles (with autonomous intelligence assistance) is on the rise and Volkswagen now has the investments made (i.e., Argo AI) to continue this work.

Threats:

-Automotive manufacturers have far outpaced Volkswagen in jumping on the autonomous vehicle train.

-Stricter emissions standards must continuously be passed, especially in the U.S.

-Surprise factory investigations by the EPA are expected to continue as a result of the scandal.

-Basically, anything dealing with the selling of Volkswagen vehicles in the U.S. is a threat because of the loss of trust.

 

Suggestions: Volkswagen is already changing their communication strategy to increase public trust and has a high employee satisfaction rating on their leadership and communication styles. As the Volkswagen Group Research team re-aligns as Volkswagen Group Innovation and three international teams are united under this name, I suggest that the team leaders take time to identify the symbolic predispositions that each team will have; these are expected to vary based on geographic location. Moving forward into symbolic practices, the groups will most likely meet digitally, thus the leaders should encourage team members to connect often via internet in order to build on fantasy-making. This way, the teams will have a stronger connection when they meet face-to-face.

 

References

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Lora Kirmer