Volkswagen ADV370J/PR367 MWF 8-9 Eric Webber Name(s): Paige Kroll UTEID: pk5926 Case: Volkswagen Date: 10/7/15 Problem Statement: Volkswagen hopes to recover their brand reputation after their decision to deliberately install software to cheat emissions tests in order to meet authorities’ standards, which will result in high costs, investigations, criminal charges, media coverage, and loss in stock. Opportunity Statement: As the largest automaker in the world, Volkswagen has a community of loyal consumers, which can be sought out to rebuild trust in the brand and address customer concerns. A new CEO can help recreate a brand image by discarding an untrustworthy executive, and using a new face of the company to create a better culture. Critical Factors: • The software installed in about 11 million cars concealed the fact that Volkswagen’s diesel cars produce about 40 times the legal amount of nitrogen oxide. • Volkswagen’s stock fell more than 17 percent and eventually lost more than a third of its market value after Volkswagen confessed to using the software. • A new CEO, Matthias Mueller, took the place of former CEO of Volkswagen Martin Winterkorn who took responsibility for the scandal but denies any wrongdoing. • Volkswagen prepared to pay 6.5 billion euros ($7.3 billion) to cover recalls and other costs, which may rise when penalties and fines are enforced for their actions. • Volkswagen has a loyal customer base as the world’s largest automaker. • Consumers tend to be less forgiving of a crisis when the action is intentional. (The University of Kansas, 2015) Alternatives: Alternative 1: “Making Strides” and Enhanced Customer Service Volkswagen can create a new customer service model, using social media such as Twitter and Facebook, dedicated to addressing customer concerns and answering questions. They can provide an outlet to get real issues fixed for customers. It is important to let the customers complain and be heard. Volkswagen should not delete comments or tweets that are negative, as it may seem like Volkswagen is trying to cover up additional issues. The customer will feel valued if they get a real response from the customer service team. It is important that they hire a social media team large enough to handle the number of concerns with quick response time. It is also necessary to hire a team with members familiar with each country in which their cars are sold. The team needs to be fluent in the languages of Volkswagen’s customers and understand their cultures. In addition to enhanced customer service, Volkswagen can produce a video series about “Making Strides” toward a better company culture and better product. The new CEO can be the face of the series, guiding consumers through their efforts to fix the emissions issue. This can be seen with footage in a factory, testing cars, and conversations with leaders in the company. Rewards: Customers will see that Volkswagen is dedicated to improving their services, so they will gain more trust and appreciation for the brand. Customer problems can be solved faster with an efficient social media team and new system to get their concerns heard. Using social media to reach customers will yield a quick way to gauge customer response to Volkswagen's efforts. The new CEO is less associated with the crisis, so this provides Volkswagen a clean slate to build trust with a new leader. A video series can bring consumers to their social media channels and create a group of followers interested in their road to improvement. Risks: Customers and non-customers will choose to vent on the social media accounts, so employees must be prepared to address the issues or follow up with positive statements. Creating a larger customer service team will cost more