REI Makes Headlines with #OptOutside

Outdoor and sports equipment retailer REI is closing its 143 stores for Black Friday, instead encouraging people to #OptOutside. A CEO message on the company's website says employees will be paid not to work: 

REI is closing on Black Friday.

You read that correctly. On November 27, we'll be closing all 143 of our stores and paying our employees to head outside.

Here's why we're doing it.

For 76 years, our co-op has been dedicated to one thing and one thing only: a life outdoors. We believe that being outside makes our lives better. And Black Friday is the perfect time to remind ourselves of this essential truth.

We're a different kind of company-and while the rest of the world is fighting it out in the aisles, we'll be spending our day a little differently. We're choosing to opt outside, and want you to come with us.

Jerry Stritzke, President, CEO

An NBC article questions whether the strategy will pay off. The move responds to criticism of increasing consumerism and from employees who want the day off, and it's a "gesture" against bigger box retailers who couldn't afford to lose the day's sales. Still, the company suffered some backlash with employees on Reddit complaining about low wages, poor benefits, and pressure to sell memberships. 

Overall, its seems like a good move. After all, REI is an outdoor company-and the weather in New York at least is uncharacteristically warm for this time of year.

Discussion Starters: 

• What's your view of REI's decision? How would the company decide whether the positive publicity is worth the lost sales?  
• How could the CEO have handled the Ask Me Anything (AMA) questions on Reddit? Some say he didn't respond to important employee complaints, such as the pressure to sell memberships.  

Nestle Addresses Worker Abuse

A non-profit organization commissioned by Nestle has exposed worker abuse in the Thailand seafood industry, which includes fish sold by the company. The report is titled, "Recruitment Practices and Migrant Labor Conditions in Nestlé's Thai Shrimp Supply Chain: An Examination of Forced Labor and other Human Rights Risks Endemic to the Thai Seafood Sector."

Business Insider explains the abuse: 

The laborers come from Thailand's much poorer neighbors Myanmar and Cambodia. Brokers illegally charge them fees to get jobs, trapping them into working on fishing vessels and at ports, mills and seafood farms in Thailand to pay back more money than they can ever earn.

"Sometimes, the net is too heavy and workers get pulled into the water and just disappear. When someone dies, he gets thrown into the water," one Burmese worker told the nonprofit organization Verite commissioned by Nestle.

"I have been working on this boat for 10 years. I have no savings. I am barely surviving," said another. "Life is very difficult here."

Nestle has responded by restating its commitment:  

"As we've said consistently, forced labor and human rights abuses have no place in our supply chain. Nestle believes that by working with suppliers we can make a positive difference to the sourcing of ingredients."

In an action plan posted on its website, Nestle reports on "pre-requisites achieved in 2014 - 2015" and identifies objectives for 2015 - 2016 summarized in this infographic: 

Discussion Starters: 

• Assess the infographic against principles in Chapter 10. Which are followed, and how could the graphic be improved? 
• Do the same for the Verite report. Consider the format, design, content choices, organization, writing style, and so on. 

Chipotle Addresses Spread of E. coli

Chipotle's E. coli trouble is spreading to other parts of the United States. Although the outbreak was thought to be limited to Washington and Oregon, new reports show illnesses in California, Ohio, New York, and Minnesota. For the first time since it became an independent company, Chipotle's same-restaurant sales may decline, and the stock has taken a hit.

 On a page on its website under "Food Safety Update," the company explains the situation. 

 The CDC has informed Chipotle that it identified six additional cases in which initial testing matches the E. coli strain involved in the Washington and Oregon incident. Although one of the individuals has no known link to Chipotle, five individuals did report eating at Chipotle, including two in Turlock, CA, one in the Akron, OH area, one in Amherst, NY, and one in Burnsville, MN.

Investigators have suggested that in incidents like this, it is not unusual to see additional cases after the initial incident as the investigation moves forward. The source of the problem appears to have been contained during a period in late October. 42 of the 43 cases linked to Chipotle reported visiting one of the restaurants in question between October 13 and October 30. One person reported having eaten November 6.

Since this issue began, Chipotle conducted deep cleaning at the restaurants that have been linked to this incident, replaced ingredients in those restaurants, changed food preparation procedures, provided all necessary supply chain data to investigators, and surveyed employees to be sure none had E. coli (note: no Chipotle employees in any states have had E. Coli stemming from this incident). Similar actions are immediately being taken in response to these newly reported cases.

Chipotle is also taking significant steps to be sure all of its food is as safe as possible. Specifically, we are expanding testing of key ingredients, examining all of our food-safety procedures to find any opportunity for improvement, and are working with two renowned food safety scientists to assess all of its food safety programs, from the farms that provide our food to our restaurants.

Connections to this incident are limited to seventeen Chipotle restaurants. 

The statement goes on to list the locations and provide a Q&A for concerned customers. 

The company's Twitter page is active. Representatives respond personally to tweets, as shown here. 

Discussion Starters: 

• Analyze the company's statement on its website. What works well, and what could be improved? Particularly consider the last sentence shown above. 
• Does this news affect whether you would visit a Chipotle restaurant? What, if anything, can the company do to assure you that the food is safe? 

Radisson Blu Responds to the Terror Attacks

A terrorist attack at the Radisson Blu in Mali resulted in 27 deaths, and the company is responding to the news. 

Radisson Blu's website features a large message: "Remember our guests and colleagues in Bamako." The message links to a statement and video from Wolfgang Neumann, president and CEO of The Rezidor Hotel Group (on behalf of the Carlson Rezidor Group).  

In his video message, Neumann expresses condolences and appreciation. He also explains support services and provides a telephone line for people needing support and information. 

On the day of the attack, the Rezidor website showed a statement saying the company was "closely following" the situation. Neumann created another video emphasizing safety and security.

Radisson Blu has been active on Twitter, providing peridic updates and links to statements and videos.  

Discussion Starters: 

• Assess Neumann's video statements. As always, we have to empathize with his position during this difficult time. Still, if you were his media advisor, what strengths and suggestions would you identify? 
• How do you assess company communications so far? What are the Radisson Blu and Rezidor doing well?

False Claims from an Obesity Study?

Junk Food Infographic

A Cornell University study concludes, "consumption of fast food, soft drinks, or candy was not positively correlated with measures of BMI," meaning (excluding those very under- and overweight), people consumed these foods at about the same rate. But a Forbes writer criticizes the "false claim" reflected in Cornell's press release (and similarly reported elsewhere): "Candy, soda and fast food are not driving the rising obesity trend in the U.S."

Other headlines, such as, "Is junk food making us fat? Why cutting candy, soda may not be enough," in USA Today have little connection to the findings at all. The study says nothing about restricting certain foods. It merely reports that people of different weights consume similar amounts of these particularly foods.

I also don't think the study distinguished between diet and regular soda. People at the lowest BMIs consumed the most soda.

One of the study's authors, David Just, responded to the Forbes writer's concerns:

"I clarified this with the study's lead author, David Just, a professor of economics at Cornell University, who said his aim was to consider the potential impact of public policies that banned certain foods. 'There's been a lot of diet advice given that narrowly focuses on eliminating soda and fast food and a rash of policies that are targeting these specific foods and promising to address the obesity crisis,' he said. 'I felt these policies were overpromising.'

"He said he did not intend people to leave with the message that sugary sodas and junk food have nothing to do with their weight, or that it's useless to try to lose weight by cutting back on sugar."

An infographic summarizes the study's findings, and Just describes the results in a video.

Discussion Starters:

• How would you explain the Forbes writer's concerns? What are the potential consequences of how the findings are reported?
• What conclusions are safe to draw from the study? How could the results be useful to policymakers and individuals?

McDonald's Video: Nutrition Advice or Infomercial?

McDonald's has created a 19-minute video, "540 Meals: Choices Make the Difference," which the company says is an educational video about nutrition. Others call it an infomercial or, as a Fortune writer put it, "a slickly produced McDocumentary." McDonald's encourages showing the film in schools and provides a Teachers Discussion Guide to help. 

The star of the film is John Cisna, an Iowa teacher who lost 60 pounds on a McDonald's-only diet. (Remember Super Size Me?) Cisna reminds me of Subway's Jared, which didn't work out too well in the end. 

McDonald's is hosting McTeacher's Nights, where teachers, students, and parents serve McDonald's food, and part of the revenue goes to a school fundraising campaign. Since 2013, McDonald's has contributed more than $2.5 million to schools from these nights. 

Educators in a group called Corporate Accountability International call the practice "exploitative." In a letter to McDonald's, organizations and individuals write, in part, 

"It is wrong to enlist teachers to sell kids on a brand like McDonald's whose core products are burgers, fries, and soda. Marketing junk food to children is a harmful practice. We are in the midst of the largest preventable health crisis in the U.S. -- one that is spreading throughout the world, and that increasingly affects children. If this trend is not reversed, many children will be burdened with diet-related diseases like obesity and Type 2 diabetes, affecting their heath for life."

Discussion Starters:

• What's your view of McDonald's video and the McTeacher's Nights? 
• What principles of persuasion does the education group use in its letter to the company? Try to identify examples of pathos, logos, and ethos. 

Debate: Substantive But Boring

Analysts are complimenting the policy-related questions for the fourth Republican Presidential debate, but the result was a less exciting debate. Representatives from Fox Business Network did a better job than CNBC reporters in the last debate by focusing on real issues instead of personality.

Donald Trump played a less dominant role in this debate. Fox News reported, "As for Trump, he was very passive tonight. Statesman Trump is not as fun as reality TV Trump." CNN reported other players winning ground:

"There was no single dominant performance as in the past when candidates such as Carly Fiorina and Marco Rubio wowed audiences -- and swiftly improved their place in the polls. Several candidates, including Rubio and Ted Cruz, were strong on the debate stage on Tuesday. And Jeb Bush, who has struggled in such environments, projected greater confidence, seeming to relish a confrontation with Donald Trump on national security."

Reuters' focus was also on Jeb Bush, who said of his own performance, "I thought the debate went well, and I had a good debate because I got to talk about things with a little substance instead of the cute one-liners." Bush may have bought himself more time to gain a few percentage points in the polls; his campaign has been suffering, and his debate performances until this one certainly haven't helped.

Rubio and Cruz are emerging as the most well spoken, if not the most brilliant or substantive.

Discussion Starters:

• How much do you think appearance and youth count in the election? How will these factors help Rubio and Cruz?
• Who do you think won the fourth debate? How, if at all, will this debate affect your vote?

SeaWorld Changes Its Whale Show

It took since the opening of the movie "Blackfish" in July 2013: after increasing protests and declining park attendance, SeaWorld has finally announced the end of its killer whale show-in some form.

The documentary and other critics accused the theme park of keeping and mistreating orcas in captivity. Although the news reports that shows are ending, they will reopen with a different type of show in 2017. CEO Joel Manby describes a "natural setting, natural environment, and also the natural behaviors of the whale."

This report from the Today Show features Samantha Berg, a former SeaWorld trainer who appeared in "Blackfish." (Sam is also a Cornell graduate and was a guest speaker for my Corporate Communication class last year.)

Critics say the new show plan is a "bait and switch" and perpetuates captivity of the whales.

As the news was hitting media reports, SeaWorld published two major communications-neither mentions the decision to end shows as we know them:

• A video, "This is How SeaWorld is Taking Action to Make a Better World for Animals," describing the organization's rescue efforts and the emotional appeal of its parks
• A post on its website

Discussion Starters:

• What's your view of SeaWorld's PR strategy? Should the organization mention the show changes in its communications, or is it a smart decision to avoid the topic entirely?
• Many news reports focus on ending on the shows, but that's not quite the story we hear from the Today Show clip. Are the news reports short-term, deceiving, or something else?

More Trouble for Volkswagen

Volkswagen is facing a new wave of inquiry since the diesel emissions scandal. According to The Economist, "VW confessed that it overstated claims about the carbon-dioxide (CO₂) emissions and, thus, fuel efficiency of 800,000 cars, including, it seems, some with petrol engines."

The European Commission is asking EU countries to expand their investigation. A spokesperson for the Commission said, "Public trust is at stake. We need all the facts on the table and rigorous enforcement of existing legislation." Since the news about the cheating software, VW's stock lost more than one-third of its value. 

Now that Porsche models have also been implicated, VW's new CEO, Matthias Müller, previously head of the Porsche division, is not looking as good. As The Economist writes, the news "casts a shadow" on his role. 

Communications continue to lag. The U.S. VW site has the same tired video of Michael Horn. 

Discussion Starters:

• Did VW do the right thing by admitting the emissions under-reporting? Another strategy would have been to wait for the news to be discovered as part of the diesel software investigation. 
• What else should VW communicate at this point? Look at the U.S. website and make a few recommendations. 

Metrojet Defends Its Plane and Pilot

A Russian airplane crashed in Egypt, killing 224 people, and the cause still eludes investigators. The airline, Metrojet, has ruled out mechanical failures and pilot error, anxious to rebuild its reputation.

But the head of Russia's Federal Air Transport Agency said, "...it is very premature to talk about the reasons. I would like to call on the aviation community to abstain from premature statements." Russian President Vladi­mir Putin said, "Everything must be done to create an objective picture of what happened so that we know what happened and react accordingly."

Metrojet is still at the center of the investigation. Turns out, the company hasn't paid its employees in two months, and a pilot's wife says her husband complained about poor plane maintenance. Also, the Metrojet plane had suffered a tail strike, and investigators are wondering whether the problem was properly fixed. In a video statement, Metrojet denied mechanical and pilot errors.

Recent reports indicate a flash picked up by a U.S. satellite, which could point to an explosion on board, such as a fuel tank or a bomb.

Meanwhile, ISIS has taken responsibility for the crash. Although officials won't yet rule out terrorism, few seem to believe the organization's claims.

Putin expressed his condolences and investigation plans via video.

Discussion Starters:

• How well is Metrojet handling the news and its defense?
• How does the background information about Metrojet-potentially missing payroll, for example-influence your thinking about the situation?

Messages About Pig Farming

A full-page ad in today's Wall Street Journal tells us why pig farmers use antibiotics. The "We Care" initiative of two pork associations strives to "promote responsible practices in all areas of farming and is a commitment to continuously evaluate and improve our methods." 

The Porkcares.org website highlights healthy practices for pig farming, particularly defending the use of antibiotics. 

The controversy was elevated recently when Subway announced it would serve pork without antibiotics. This organization differs:

"When Subway recently announced-that soon all meat served in its restaurants would be sourced from farms that use no antibiotics at any time-some folks cheered. But, the thing is, all meat sold in the U.S. is inspected by USDA's Food Safety and Inspection Service for consumer safety and must meet the same high standards regardless of production methods. Furthermore, it's not practical to never use antibiotics on a farm." 

On its website, the organization highlights "5 Ways Subway Got It Wrong" and why antibiotics are important for food safety, animal health, humane treatment, sustainability, and consumer pricing. 

Subway's announcement included this graphic: 

The opening paragraph of the press release follows: 

"SUBWAY® Restaurants announced today that it has elevated its current antibiotic-free policy. The brand recently communicated a commitment to transition to only serving chicken raised without antibiotics important to human medicine. Today, the brand confirmed that it is beginning to transition to serving only protein from animals that have never received antibiotics across all of its 27,000+ U.S. restaurants in early 2016."

Discussion Starters: 

• Analyze the organization's argument on its website. Which arguments are most and least convincing? How effective do you find the graphics, fonts, and other visual elements?
• Analyze Subway's infographic. Consider the text, graphics, color, and so on.
• After reading the related messages, what's your view about using antibiotics? 

Amazon Responds to NYT Piece

Two months after The New York Times published a scathing article about Amazon's work environment, the company is responding. Right after the article, Jeff Bezos did send an email to employees, and others wrote their own perspective. But this is an official and attacking review of the article by Jay Carney, former White House press secretary, and now VP of worldwide corporate affairs at Amazon.

Reminiscent of criticism of Rolling Stone's article on rape at the University of Virginia, this piece challenges New York Times reporters' fact checking. Will The New York Times also retract its article?

Carney begins his rebuttal with the quote featured in the Times article: "Nearly every person I worked with, I saw cry at their desk." He writes,

"Olson's words were so key to the narrative the Times wished to construct that they splashed them in large type just below the headline.

"Here's what the story didn't tell you about Mr. Olson: his brief tenure at Amazon ended after an investigation revealed he had attempted to defraud vendors and conceal it by falsifying business records. When confronted with the evidence, he admitted it and resigned immediately."

It will be interesting to see how The New York Times responds to these claims.

UPDATES:

• Dean Baquet, executive editor of The New York Times responded, justifying the article. He said that more than 100 employees were interviewed, and themes emerged clearly (which, he says, have been supported by thousands of comments on the Times' website). Baquet also cites several employees and clarifies their perspective more fully.
• Carney again responded, questioning the Times' fact-checking.

Image source.

Discussion Starters:

• Why did Amazon publish this article two months after The Times piece?
• How do you think The Times will respond? What could the reporter say to substantiate the article?
• UPDATE: Do Banquet's response and/or Carney's response change your opinion of the story or Amazon?

United Announces Acting CEO

United Airlines has selected a new chief while the previously selected CEO is in the hospital. United CEO Jeff Smisek resigned amidst allegations of improprieties including keeping unprofitable flights to suit an executive at the NY/NJ Port Authority. Oscar Munoz, previously COO at CSX, was hired to replace Smisek, and had a strong start, communicating with United customers and employees. 

But Munoz suffered a heart attack just 41 after his appointment and has taken a medical leave. In the interim, the company announced Brett Hart, United's general counsel, as acting CEO. Hart joined United in 2010 from Sara Lee. 

In the press release posted on United's website, the company quoted Hart:

"Oscar's agenda is focused on customer service, teamwork and innovation and I, along with the executive team, will continue to move quickly to implement it. We believe strongly that we can continue to make steady progress on increasing shareholder value by working together to deliver a great product to our customers."

Although this sounds optimistic for Munoz's return, the press release ended this way: 

"The board of directors remains actively engaged in preparing for all potential outcomes regarding the company's leadership structure."

Strangely, a CNN Money article includes this reference to Hart's history at Sara Lee: 

"Hart was at Sara Lee when its CEO, Brenda Barnes, suffered a stroke and resigned in July 2010. Hart announced he was leaving for a position at United three months later."

Image source. 

Discussion Starters: 

• What are United's considerations in addressing Munoz's leave and announcing an acting CEO?
• Assess United's statement about the leadership change. Read between the lines: what do you take away from the announcement? 
• Why would CNN Money include Hart's history at Sara Lee?  

Pope Apologizes for...What?

Pope Francis has issued an apology, but critics want to know what it's for. He asks for forgiveness for "the scandals that have occurred recently both in Rome and at the Vatican."

A Reuters article says the apology is "an apparent reference to two cases of priests and gay sex revealed this month during a major meeting of bishops." The article also indicates, "The pope also appeared to be referring to a scandal exposed in the Italian media last week about an order of priests who run a parish in a well-to-do neighborhood in Rome." 

But for some, the apology isn't clear enough. The outreach director for the organization Survivors Network of those Abused by Priests (SNAP) expressed her frustration:

"Instead of stopping clergy sex scandals, Pope Francis is again asking forgiveness for them. That may be good public relations but it's irresponsible leadership."

This isn't the first broad apology. In 2000, John Paul II made what The Guardian called "a sweeping apology for 2,000 years of violence, persecution and blunders." 

Discussion Starters:

• What's your view of the pope's apology? Is it enough? 
• If the pope were to be more specific, what could he say?

Coastal Commission Bans Whale Breeding

In what could result in the final demise of SeaWorld, the California Coastal Commission announced a ban on breeding whales. Because SeaWorld no longer captures whales from the wild (and hasn't in 35 years, according to the theme park), its source of entertaining orcas must come from breeding within the current supply.

In a press release, SeaWorld says it will "review options." President and CEO Joel Manby said, "Depriving these social animals of the natural and fundamental right to reproduce is inhumane and we do not support this condition."

The Editorial Board of the San Diego Union-Tribune scored a win for SeaWorld by questioning the legality of the Coastal Commission's ban. The article ended with this encouragement: "But SeaWorld has options, the most obvious being a court challenge. We urge it to aggressively pursue that option."

Others support the decision, including the Humane Society and PETA, which has advertised against SeaWorld's orca conditions by comparing their living conditions to a bathtub.

Discussion Starters:

• Assess the persuasive arguments in the Editorial Board's article. Which do you find most and least convincing?
• What actions should SeaWorld take now? Consider legal options and messaging.

Horn Testifies Before House Committee

Michael Horn, President and CEO of Volkswagen Group of America, Inc., addressed the U.S. House Committee on Energy and Commerce Subcommittee on Oversight and Investigations about the company's emissions scandal.

His opening statement to the committee included his own defense. He said he was not aware of the software issue, but he did assure the committee that the company takes full responsibility.

Subcommittee members, such as Diana DeGette of Colorado, pushed Horn for more details about the deception:

"You haven't revealed how the defeat device affects the engine, why it was installed and how it was able to evade emissions tests. You haven't revealed when and how the engines equipped with this defeat device will be fixed. And you haven't told us whether that fix will affect the fuel economy or performance of the vehicles."

Other members questioned whether this was VW's only "dirty little secret" and expressed concern about widespread deception in the auto industry.

Discussion Starters:

• How convincing do you find Horn's opening statement?
• I wish he had coaching to pronounce "vehicle" more clearly. Do you have trouble understanding other words?
• Watch the full hearing. How well does Horn respond to questions? Which do you find particularly persuasive, and where does he fall short?

Planned Parenthood Fights Allegations

A video showing Planned Parenthood officials discussing how they provide fetal tissue for research has caused outrage and a fight from the organization. Abortion opponents use the video as evidence of Planned Parenthood's "selling baby parts," but the organization denies these claims. 

In a statement on its website, Planned Parenthood refers to opponents as "extremists" and calls the videos "highly political" with "at least 42 splices": 

"They are engaged in a fraud, and the claims they've made have been discredited and disproven. If there was any truth to these videos, the footage would be shared with a judge who would take the necessary steps to seize records and conduct an investigation.  Instead, the videos were shared with members of Congress in advance of being released to the public and then used in an effort to defund Planned Parenthood and eliminate access to women's health care."

The Planned Parenthood website has additional statements, and Cecile Richards appeared before Congress to testify. 

Discussion Starters: 

• Analyze the organization's statements on its website. What themes emerge? How would you describe the tone? 
• In what ways do your own views of abortion affect how you read the organization's statements?

GM CEO: "People Died in Our Cars"

In a statement to employees, GM CEO Mary Barra was frank: "People were hurt, and people died in our cars." Her presentation came after the company reached a $900 million settlement agreement with the Department of Justice for failing to recall cars with faulty ignition switches. (See transcript.)

Barra focused on changes at GM: 

"But apologies and accountability don't amount to much if you don't change your behavior.  We have.  And that's what I want to focus on in our time together."

She outlined what she called a "tough agreement" and then reviewed the actions GM has already taken: "We lived our values, and it made a huge difference."

Discussion Starters:

• Who are the primary and secondary audiences for Barra's presentation? Why would the company make this internal communication public?
• Assess Barra's video. What is notable about the content, organization, and delivery compared to her previous presentation to employees?

VW Executive Changes and More Comms

Since the scandal broke, Volkswagen has sprung in action, making executive changes and stepping up communications. No surprise, Martin Winterkorn resigned. However, his statement is unusual (as was his video, considering the likelihood that he would leave the company): 

"I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group. 

"As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part. 

"Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation. 

"I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life. 

"The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis." 

Since the decision on Wednesday, VW has hired a new chief executive, Matthias Müller, previously head of Porsche. A New York Times article title calls him an "insider"-notable because of criticism about the company's centralized control of power.  

Additional communications include the following: 

• Statement by the executive board
• Statement by the CEO of VW car brands
• Statement about further restructuring

Discussion Starters: 

• Analyze the most recent communications. Are you convinced the company is doing all it can to fix the situation and regain customer confidence?
• As far as I know, U.S. VW customers have not received any direct communication (e.g., an email) from the company. What's your view about this? 

Volkswagen Upsets Customers

Volkswagen customers are furious, and the executives have a lot of explaining to do. Chief Executive Martin Winterkorn may be known for his meticulousness, but he missed the boat in ensuring that the company met ethical industry standards. An investigation has revealed that millions of diesel cars don't meet emissions guidelines; worse yet, software to intentionally deceive tests was built into many models.

A New York Times article covers background (drama) between Winterkorn and former Chairman Ferdinand Piëch. Now, Winterkorn seems to be holding the responsibility. Because VW has centralized management practices, he'll have a tough time convincing stakeholders that senior management wasn't involved. 

As you can imagine, VW customers aren't happy about the situation. They bought the "clean diesel" line from the company and "green" award-winning Passats, Golfs, Jettas, Beetles, and Audi A3's that aren't what the company claimed. The fixes are expensive and will cause drops in performance or trunk space. A Wired article also warns that, whether people "dodge the recall or not, your car's resale value is likely to drop as far and fast as VW's stock, which has plunged 20 percent since the feds came down on VW Friday." 

On its website, VW posted two statements relevant to this situation. The first addresses the findings and apologizes (below), and the second-issued two days later-says the company is "working at full speed to clarify irregularities concerning a particular software used in diesel engines." 

In addition to these written statements, Winterkorn created an apology video: 

UPDATE: Today's post, as predicted, included Winterkorn's resignation:

Discussion Starters:

• Analyze the two company statements. In what ways do they rebuild company image, and how do they fall short? 
• What else does the company need to do to gain consumer confidence? What should Winterkorn do? 
• The news was announced on Sept. 20. How many days do you predict it will take him to step down?