Collins, Business Ethics 3e
SAGE Publishing, 2021
Test Bank
CASE STUDY 5: VOLKSWAGEN’S DIESEL SCANDAL: FAILURE OF THE CODE OF
CONDUCT
Multiple Choice
1. The independent compliance monitor’s initial research concluded that Volkswagen
______.
a. did not have a relevant code of conduct
b. had a corrupt culture
c. did not communicate the code of conduct to employees
d. had recently fired several top executives
2. Why did U.S. attorney general Larry Thompson start the investigation by reviewing
Volkswagen’s code of conduct and Germany’s Association of Engineers’ code of
ethics?
a. to understand why a code of conduct was introduced after illegal actions occurred
b. to ascertain if the codes were in alignment with U.S. policies
c. to explain how the breach of ethics and conduct happened
d. to determine if strengthening the codes would help executives and employees in the
future
3. Which of the following illustrates Volkswagen’s commitment to the environment?
a. Volkswagen was a signatory of the United Nations Global Compact.
b. Anticorruption officer and two ombudsmen were made available to employees.
c. The Board of Management gave a speech asking supervisors to lead by example.
d. Employees’ concerns regarding the environment were kept confidential.
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SAGE Publishing, 2021
4. Even if Volkswagen adhered to emissions testing legally, it is unlikely that their goals
for passenger cars in the U.S. market would be successful because ______.
a. Americans were increasingly buying light trucks
b. the Volkswagen reputation in the United States was very low
c. new car sales were stagnant due to the recession
d. trade restrictions had limited the number of car imports
5. The emission standards for diesel engines are higher than gasoline engines in the
United States because ______.
a. gasoline engines do not emit NOx
b. diesel engines emit higher levels of NOx
c. gasoline engine emissions are negligible
d. diesel engines have only recently been used in cars
6. What was the goal of Strategy 2018?
a. To sell one million cars in the U.S. market in one year.
b. To sell more clean diesel cars than gasoline engine cars.
c. To become the world’s largest automobile manufacturer.
d. To achieve the highest import sales figures in the United States.
Collins, Business Ethics 3e
SAGE Publishing, 2021
7. Although Volkswagen’s governing structure was standard in Germany, it contributed
to the conduct failure by ______.
a. creating conflicts of interest, unclear reporting and a lack of accountability
b. allowing senior executives to serve on multiple boards of oversight
c. not requiring transparent reporting and staged inspections
d. accepting supplier contracts without registering with authorities
8. In 2013, the Dow Jones Sustainability Index took which of the following actions
related to Volkswagen?
a. removed Volkswagen from the sustainability index for a period of 3 years
b. ranked Volkswagen first in the Automobiles & Components industry group
c. changed Volkswagen from honored status to pending status until the investigation
was complete
d. banned Volkswagen from inclusion in the index permanently
9. What is true about the defeat device produced by Bosch?
a. The Bosch device was approved for use in European countries for 3 years prior use
in the United States.
b. Volkswagen modified the Bosch device, as it was never intended for use during
emissions testing.
c. The Bosch device was software that was activated only during emissions tests.
d. Customers could easily install and remove the Bosch device for emissions testing.
Collins, Business Ethics 3e
SAGE Publishing, 2021
10. How did Volkswagen’s success ultimately lead to the uncovering of the Volkswagen
“Clean Diesel” fraud?
a. A service employee at a Volkswagen dealership in the United States found the
device.
b. A whistleblower from a Volkswagen supplier notified the Environmental Protection
Agency.
c. A nonprofit noted the emissions of vehicles sold in the United States were lower than
those sold in Europe.
d. A software glitch in the program caused multiple vehicles to fail emissions tests.
11. Why did Volkswagen eventually reveal the use of the emission’s cheating device in
2015?
a. The EPA required a mandatory recall for all Volkswagen diesel vehicles.
b. Volkswagen products were failing customer emissions at high rates.
c. The EPA threatened to fine them a large amount.
d. Volkswagen faced potentially huge financial losses due to EPA action.
12. Senior supervisors of Volkswagen were charged with violating the Clean Air Act,
wire fraud, and ______.
a. conspiracy to defraud the United States
b. cybercrime
c. endangering the lives of others
d. access device fraud
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13. According to e-mails and other documents provided by the former head of
thermodynamics at Audi, Martin Winterkorn ______.
a. delivered a presentation to the Germany Association of Engineers about
circumventing emissions tests
b. attempted to sell the defeat device to Audi for $30,000,000 (US)
c. knew as early as 2006 that vehicles could not meet U.S. emissions standards
d. was fired from Audi for attempting to persuade Audi engineers to use a defeat device
14. How did the plea agreement help to offset the environmental impact caused by
defeat device installation?
a. It required a signed agreement to commit to change its code of conduct and
disciplinary practices.
b. It required that Volkswagen fund independent climate change research.
c. It required that Volkswagen cease production of “clean diesel” vehicles.
d. It required a multi-billion dollar investment in sustainable technology.
15. If Volkswagen engineers would have followed the Fundamentals of Engineering
Ethics when concerns about the use of the defeat device went unheard, the employee
may have considered ______.
a. filing a complaint with their professional union
b. directly informing the public
c. formally protest in writing to the senior project manager
d. terminating their employment based on the disagreement
Collins, Business Ethics 3e
SAGE Publishing, 2021
16. A code of ethics is a brief description of a company’s ethical ideals or aspirations,
whereas a code of conduct ______.
a. details the disciplinary actions taken should an employee act unethically
b. describes in detail how an employee should behave or respond to specific situations
common to the business
c. is a signed agreement that binds the employee to perform duties as prescribed by the
company
d. provides assurances that the company takes ethical business practices seriously
17. Which is true regarding action taken by the S&P, Moody’s, and Fitch against
Volkswagen as a result of the emission software coming to light?
a. All three agencies noted Volkswagen was less creditworthy than before.
b. All three agencies increased Volkswagen’s creditworthiness.
c. The S&P increased Volkswagen’s credit rating after the scandal.
d. Moody’s and Fitch reaffirmed their rating of Volkswagen twice after the scandal.
18. Why did the attorney general recommend the appointment of an independent
auditor with broad authority and power?
a. to determine the amount of profit made during the period of time the device was
installed
b. to review and approve all governance documents and policies initiated by
Volkswagen
c. to monitor Volkswagen’s compliance with the new code of conduct
d. to oversee distribution of all financial restitution ordered in the plea agreement
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SAGE Publishing, 2021
19. When the evidence clearly supported that a defeat device was installed in emissions
software of its 2.0-liter vehicles, Volkswagen responded by ______.
a. attempting to mislead investigators and regulators
b. opening negotiations with the Environmental Protection Agency
c. directing its legal team draft conditions of a plea bargain
d. instructing Bosch to change the software code
20. It was ultimately determined the catalyst which caused Volkswagen executives to
disregard the code and legal standards by installing the defeat device was the decision
to ______.
a. enter the U.S. market instead of the China market
b. develop a “clean diesel” engine to launch by 2009
c. scrap the plans for electric vehicle development
d. cancel the licensing agreement with Daimler
True/False
1. Volkswagen provided employees with a designated individual or department to raise
ethical or corruption concerns or issues prior to the diesel scandal.
2. The decision to install a defeat device went against Volkswagen’s high rankings in
environmental standards.
Collins, Business Ethics 3e
SAGE Publishing, 2021
3. Volkswagen was the first automobile company to receive ISO 14001 certification by
meeting international standards for effective environmental management.
4. Volkswagen relied on its past success with hybrid vehicles in the U.S. market to help
launch the “clean diesel” vehicles.
5. Although Volkswagen had several legal and ethical lapses prior to the emissions
scandal, this was the first time involving environmental violations related to a defeat
device.
Essay
1. Briefly explain how the Volkswagen leadership contributed to the culture that allowed
the clean diesel scandal to occur. Provide at least two examples to support your
answer.
Collins, Business Ethics 3e
SAGE Publishing, 2021
2. Volkswagen leadership introduced a code of conduct in 2010, while at the same time
participating in illegal and unethical activities. What do you think motivated Volkswagen
to introduce a code of conduct at that time?
3. Briefly describe how Volkswagen engineers failed to uphold the Fundamentals of
Engineering Ethics. Provide at least two examples to support your answer.
4. Name some of the external factors Volkswagen faced. Had you been the CEO of
Volkswagen prior to the scandal, would your interpretation of the external factors facing
Collins, Business Ethics 3e
SAGE Publishing, 2021
the company led you to reconsider using the United States as the market to introduce a
“clean diesel” engine?
5. Imagine you are part of the team the U.S. attorney general Larry Thompson hired to
work with the board and the executives of Volkswagen to construct a strong code of
conduct. How would you begin? How might you include employees in the code
development?