The analysis of the internal environment will elaborate on the culture and how knowledge is managed. Further it will be elaborated how the company tries to change these parts of the organizational internal environment currently, by applying organizational learning and to what extent innovation is fostered.

Culture
Generally, Germany is a republic that considers family businesses, such as Volkswagen, as the key factor of success. These companies are often led by patriarchs, who do not accept failure. As mentioned in the introduction, Volkswagen was established by Adolf Hitler in the Third Reich. Ever since, Volkswagen has always had one person dictating the company’s culture. Lastly Martin Winterkorn continued a culture of fear with being a ruler, rather than manager [ ].
The emission scandal revealed Volkswagen’s true culture, a culture of arrogance. It was the pride of the top management team to belief that U.S government officials would not detect misleading emission tests. The arrogance is also visible in selecting practices. Selecting only German, male engineers for leadership positions shows the lack of understanding for diversification. Further, it is not possible to argue with your superior and problems are rather hidden than openly communicated. Additionally, top management is supported by the state of lower Saxony, discussed more extensively in the External Environment, which gives chief executives are free hand regarding decisions and fosters overconfidence[ ].