Strategic Planning for VW AG: A Comprehensive Analysis

The study aims to develop a strategic plan for Volkswagen AG (VW AG), considering various factors such as stakeholder analysis, environmental audit, and justification for strategy selection. The researcher evaluates the effectiveness of techniques used to develop strategic plans and presents a new strategy for VW AG, taking into account the estimated requirements of resources and contribution of SMART objectives for achieving strategy implementation.

BUSINESS STRATEGY
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Table of Content
Introduction......................................................................................................................................3
Company overview of Volkswagen (VW)......................................................................................4
Task 1...............................................................................................................................................4
LO1 Strategic planning process.......................................................................................................4
AC 1.1 Assessment of way in which business visions, missions, goals and objectives help in
informing the strategic planning while formulating the strategic plans..........................................4
AC 1.2 Analysing the factors to be considered in forming strategic plans.....................................5
AC 1.3 Evaluating effectiveness of the techniques that are used to develop plans for strategic
business............................................................................................................................................6
Task 2...............................................................................................................................................8
LO2 Formulation of new strategy of VW AG.................................................................................8
AC 2.1 Analysing strategic positioning of the VW AG through organisational audit....................8
AC 2.2 Carrying out environmental audit for the VW AG.............................................................8
AC 2.3 Assessing significance of the stakeholder analysis while formulating new strategies for
the VW AG......................................................................................................................................9
AC 2.4 Presenting new strategy for VW AG..................................................................................9
LO3 Approaches to the strategic evaluation..................................................................................11
AC 3.1 Analysing appropriateness of the alternative strategies related to the market entry, limited
growth, substantive growth or retrenchment of the VW AG.........................................................11
AC 3.2 Justification of the selection of strategies.........................................................................12
LO4 Implementation of chosen strategy........................................................................................12
AC 4.1 Assessment of responsibilities and roles of the personnel charged with implementation of
the strategies..................................................................................................................................12
AC 4.2 Analysing estimated requirements of resources for implementation of new strategies for
VW AG..........................................................................................................................................12
AC 4.3 Evaluation of the contribution of SMART objectives towards achieving strategy
implementation within VW AG.....................................................................................................13
Conclusion.....................................................................................................................................13
Reference List................................................................................................................................14
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Introduction
Business strategy is the process or procedure adopted by organisations for setting desired
objectives and tries to achieve it. It could also be described as long-term business plan. A
business strategy would cover a period of about few years. Business strategies also focus on
issues related to the resource. In this study, the researcher would assess the ways in which
mission, vision, goals, objectives and core competencies of business inform about strategic
planning while formulating the strategic plans. The researcher would also analyse the factors to
be considered while formulating the strategic plan. Evaluation of the effectiveness of the
techniques that are used in developing strategic plans for business would be done in this study.
An analysis would be done on the strategic positioning of the VW AG through an organisational
audit. An environmental audit would also be done on VW AG in this study. The researcher
would assess the significance of the stakeholder analysis while formulating new strategies for
VW AG. A new strategy would be presented for the VW AG. An analysis of the appropriateness
of alternate strategies related to substantive growth, retrenchment, limited growth or market entry
for VW AG would be done in this study. The researcher would also provide a justification for the
strategy selection. The role, as well as responsibilities of the personnel who are responsible for
the implementation of strategies, would be assessed in this study. An analysis would be done on
the resource requirements while implementing a new strategy in this study. At the end of the
study, an evaluation of the contribution of the SMART targets in achieving strategy
implementation would be done.
Company overview of Volkswagen (VW)
Volkswagen is one of the best public sector automobile manufacturing organisations. The
organisation serves to cater the requirements and necessities of the million car lovers across the
world. The organisation has been founded in 1937 by German labour front and is headquartered
in Berlin, which is said to be the heart of Germany. VW produces more than 6 million cars every
year on an average and based on the business policies as well as programs. The organisation
consists of more than 6 million employees in various locations of VW and earns revenue income
of approximately $105 billion and an annual profit of about $1.8 billion (Volkswagen.co.uk.
2017).
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Figure 1: Volkswagen LOGO
(Source: Volkswagen.co.uk. 2017)
Task 1
LO1 Strategic planning process
AC 1.1 Assessment of way in which business visions, missions, goals and
objectives help in informing the strategic planning while formulating the
strategic plans
Vision:
The vision of VW for formulating strategies is focused mainly on the ideal condition for carrying
out a business after considering certain issues as well as concepts of business. The vision
statement of an organisation needs to be broad and allows to focus on objectives set for
performing the business activities for generating inspiration for the advancement of the business
conditions and as a result advancement of business procedures as well as perspectives.
Mission:
The mission statement of the organisation gives the overall purpose of the business activities
through which an organisation tends to serves as well as provides the requirements of
shareholders and stakeholders. As stated by Ahearne et al. (2014, p.80), the mission statement
describes the current capabilities of the organisation and the areas through which the
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organisation could be differentiated from other organisations. This statement helps in
determining the goals as well as objectives of an organisation.
Objectives: Objectives are the realisation of the business goals and the main purpose of the
organisational activities for achieving the desired success. The objectives are short-term plans
made by the organisation.
Goals: Goals are same as objectives, but are long-term plans and achieving the goals determines
the end of the tasks (Ayuso et al. 2014, p.420).
Core competencies: Core competencies refer to the well defined as well as proven expertise that
an organisation possesses for differentiating the success from other organisation within the same
industry.
Strategic planning refers to the process of finding out the resources and objectives of the
organisation that are to be achieved in the near future with the help of existing resources within
the organisation. An organisation aiming at planning effectively as well as strategically should
keep regular information about the business environment.
AC 1.2 Analysing the factors to be considered in forming strategic plans
Factors for forming strategic plan
Identifying current and future competitors: Preparing a target for the products or
commodities helps in judging reasons and criterions as well as determining the number of loyal
customers to the organisation is considered as the main factors that are responsible for forming
strategic plans and procedures.
Identifying market share: In order to develop a strategic plan for the organisation, it is very
important to determine the market share or market distribution of the organisation in the market,
which would help in determining strategic plans for the organisation (Bryman and Bell, 2015,
p.39).
Planning strategies as well as building portfolio: The basic step of strategic planning is
developing a strategic plan; the strategies are to be framed and planned according to the
organisational policies and create a portfolio based on the protocols as well as process-based
programs of the organisation. These strategies are then implemented in the strategic planning
process.
Ansoff Matrix
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Market development: Developing the market based on the competitive market characteristics is
considered as an important criterion of the business activities.
Market penetration: VW has the ability to apply market entry strategies and enters into a new
market within the automobile industry.
Product development: The organisation tends to develop its products, which is considered as an
important feature of the business activities of VW.
Product diversification: The organisation tries to diversify their products in terms of texture,
quality, shape, colour and size of the products, which is also considered as important criteria for
the business activities of VW.
Figure 2: Ansoff matrix
(Source: Shapiro and Varian, 2013, p.21)
AC 1.3 Evaluating effectiveness of the techniques that are used to develop
plans for strategic business
Volkswagen’s BCG matrix
Market share
Question marks
Lower market share as well as high growth
of market
VW has not witnessed so far lower market
share. However, has experienced higher
Stars
Higher market share as well as high growth
in market
VW has been able to satisfy the criteria of
higher growth of market share since many
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market growth in the car market area. years and has also experienced an increase in
the market growth with the pace of time.
Dogs
Lower market share as well as lower
market share
VW has not satisfied the criteria due to the
growth due to the mature progress of the
organisation that it has witnessed till date.
Cash cows
Higher market share as well as lower
market growth
The Higher market share has been considered
as the vital criteria for VW, but the
organisation does not witness lower market
share.
Figure 3: BCG matrix
(Source: Wild et al. 2014, p.28)
Directional policy matrix
Directional matrix refers to the comparison or trade between attractiveness and capabilities. It
could be categorised into three categories namely, average, weak as well as strong capability as
well as unattractiveness, totally attractive and average attractive. It has been observed that VW is
much stronger in process of cash generation in comparison to the other automobile organisations
globally. Moreover, the organisation is considered as a leader in epic growth and tries to develop
their business having a maximum intensity as well as never considers withdrawing its activities
from the business as the best solution, rather tends to face the challenges and threats that occur in
business activities.
Task 2
LO2 Formulation of new strategy of VW AG
AC 2.1 Analysing strategic positioning of the VW AG through organisational
audit
SWOT analysis
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Strengths: The main strength of Volkswagen is it huge market area based on its distribution and
size. The organisation also possesses a huge market share within the automobile industry. This
shows that the organisation is superior to other organisations within the same industry due to its
dominance power and strength.
Weaknesses: The weakness of VW is said to be the prevailing flaws within the employment
retrenchment as well as legal policies of the organisation. These weaknesses encourage red tapes
with every sector of the automobile industry.
Opportunities: Volkswagen possesses many opportunities for expanding its business in the
automobile industry due to the better benefits enjoyed by the organisation in accessing the
market to resources and inventories of the business as well as competitive behaviour within the
competitive market with splendour and superiority.
Threats: Outside threats due to a new market entry of organisations along with other barriers
forces the organisation to stick to the monopoly rule in carrying out the business activities within
the automobile industry are several limitations faced by the organisation.
AC 2.2 Carrying out environmental audit for the VW AG
PESTEL analysis
Political: The political analysis shows that VW is responsible for following the rules and
regulations set by the government while the manufacturing of the cars. This factor affects the
manufacturing of the cars as well as the infrastructure of the organisation in gross as well as net
income of the organisation.
Economical: According to the economic analysis, it could be observed that the automobile
organisation is affected by the economic realm as well as nominal variables of the organisation
such as interest rate and costs of the raw materials required for production.
Social: According to this analysis, the ethical and cultural aspects of the society affect the
organisational activities of VW in building strategies.
Technological: The advancement in the technologies also has a large impact on the business
activities of VW.
Environmental: According to this analysis, the ecological factors also hurt the ambience of the
automobile organisation.
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Legal: From this analysis, it has been observed that legal issues, as well as laws, affect the
productivity of the organisation as these laws pose mandatory guidelines to the organisations that
are to be followed.
AC 2.3 Assessing significance of the stakeholder analysis while formulating
new strategies for the VW AG
Stakeholders are individuals associated with organisational activities. They are considered as a
vital part of the establishment of the organisation according to which the business procedures
have been designed considering the expectations as well as interests of the stakeholders.
Stakeholders of Volkswagen are shareholders, employees, customers, suppliers, governmental
agencies, directors and unions. As stated by Slack (2015, p.34), stakeholder analysis is
considered to be important for identifying the potential stakeholders of the business and
determining their expectations from the organisational outcomes. The stakeholder analysis is
considered to be significant while developing plans as well as strategies for the business, as this
analysis helps to determine the general perceptions regarding the business (Teeratansirikool et al.
2013, p.180). The results of the analysis would help the organisation to achieve the opinion and
feedback of the stakeholders on the older business strategies, determine their future expectations
and determine what are not wanted by them in the future strategies. This analysis is important for
obtaining the support of the powerful stakeholders, consider the requirements of the customers,
and implement the governmental policies within the new strategies as well as estimating the
reactions of the people regarding the existing models of business. Since the interests of the
customers are important for the decision-making process, the management of VW should add
efforts on the stakeholder analysis.
AC 2.4 Presenting new strategy for VW AG
While gaining initial position in the market as well dominance within the automobile industry,
VW AG is required to consider newer ways of approach. The organisation is required to consider
new business strategies for giving competition to various car manufacturers within the industry
that has advanced technologies as well as electronic systems. The strategy of differentiation
focus, as well as strategy of employable for the management of VW, would be beneficial due to
the pollution scam that it has faced previously. The differentiation focus strategy is considered as
a part of porter's generic strategies of competition and would help the management to deal with
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the highly competitive environment. According to the differentiation strategy, the organisation is
able to remain unique in certain areas within the industry for gaining dominance (Rosemann and
Brocke, 2015, p.110). Due to the focus strategy, the organisation is able to focus on specific
target market in order to receive better possibilities of business as well as increased sales. Since
the organisation has been facing problems in a reduction in the customer base due to the scam, it
has been facing challenges to give something new to the customers that are of high value are able
to attract the customers. With the help of the differentiation strategy, the organisation would be
able to target the influential customers who might still trust the customers.
Figure: Competitive Strategies
(Source: Lim et al. 2013, p.50)
LO3 Approaches to the strategic evaluation
AC 3.1 Analysing appropriateness of the alternative strategies related to the
market entry, limited growth, substantive growth or retrenchment of the VW
AG
Market entry: Market entry has been facilitated through acquiring in which VW AG could buy
100% of the stakes of other organisations. In this manner, the organisation could enter a new
market by creating subsidiary organisation. Another strategy could be licensing in which the
organisation allows the other subsidiary company or provides them with a license for using the
trademarks for a specific period of paying off fixed fees (Morris et al. 2015, p.30).
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Substantive growth: Strategies of substantive growth involve vertical integration, horizontal
integration, unrelated diversification and related diversification. Horizontal integration refers to
the integration of various companies that are involved in similar business activities within the
same industry that increases the market share and leads to substantive growth (Missonier and
Loufrani-Fedida, 2014, p.1110). Vertical integration includes organisations having various stages
of production merging together within the same industry. Related diversification refers to the
diversified steps that are taken with respect to the existing products, whereas, unrelated
diversification refers to the diversification process that is completely different and is not related
to the older business models.
Limited growth: Limited growth could be determined through the market strategies including
market development, market penetration as well as product development. Market penetration
refers to penetrating into existing market for gaining increased number of customers and market
share. Market development refers to entering the new market with a same range of products. In
addition to this, product development refers to creating new products according to the demands
of the customers.
Retrenchment: The strategy of retrenchment includes decision-making in crucial times for
protecting the business interests as well as the stakeholder benefits. It involves some strategies
such as liquidation, turnaround and divestment strategies. As stated by Gabrielsson and
Gabrielsson (2013, p.1360), the turnaround strategy is used to transform an underperforming
organisation and make it a profitable organisation. Liquidation involves shutting down
organisational business establishments. Divestment strategy has been used for selling off
organisational activities to other organisation in case of huge loss.
AC 3.2 Justification of the selection of strategies
VW AG should implement market-entry strategy within its organisational activities as building a
market base for the organisation has become very important for the organisation due to the
impact of the governmental interventions and actions that had affected the organisation largely.
Due to the scam, the organisation has lost huge market share as well its huge customer base. The
sales, as well as profit margin, decreased. With the help of the strategies in a market entry like
licensing, franchising, merger, etc., the organisation is also able to act with the other potential car
manufacturers for retaining their lost position. VW AG has faced a huge loss and entering the
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new market or redesigning its products would require large investments. Therefore, the
organisation could enter the market with mergers having a high market share as well as profit
margin.
LO4 Implementation of chosen strategy
AC 4.1 Assessment of responsibilities and roles of the personnel charged with
implementation of the strategies
In order to implement the strategy, efficient individuals are required having appropriate
capabilities for viewing beyond others. The professional who has been given the responsibility of
implementing the strategies should understand the organisational requirements along with the
desired outcomes that come as a consequence of the strategy after its implementation by keeping
the employees involved in the business objectives (Dau, 2013, p.240). The market entry strategy
would require employees in VW AG who are able to understand the position of the market along
with customer preferences. The best individual for the implementation of the strategy would be
the Strategic business managers of VW AG, as they acquire experience and knowledge required
for developing profitable techniques for the business and entering into a new partnership.
AC 4.2 Analysing estimated requirements of resources for implementation of
new strategies for VW AG
The process of implementation would need detailed planning as well as analysis done by the
organisation for ascertaining required resources. For market entry, resources such as financial
and human resources are required. According to DaSilva and Trkman (2014, p.380), human
resources would be required for building a team of employees that would conduct market
assessments for finding potential organisations for the purpose of market entry. The financial
resources are needed for business mergers and acquisitions. In case the organisation finds other
organisations for offering a franchise, VW AG would require setting aside the substantial
amount.
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AC 4.3 Evaluation of the contribution of SMART objectives towards
achieving strategy implementation within VW AG
SMART targets, as well as goals, provide defined structure for the process of strategic
implementation. The targets are specific as well as measurable and help in making the strategy
integrated with the various flaws and possibilities of failures. In case, VW AG has set a target,
which is comparatively tough to be achieved, then it would be no use of setting such objectives
or targets. Non-realistic goals could never be achieved. Therefore, it is very important for the
organisation to set such target or goals that are realistic and could be achieved easily. The targets
that are time specific ensure that the implementation process has not been taking longer time and
provide quick as well as an effective result.
Conclusion
In this study, the researcher has tried to explore the business strategic planning that is used by an
organisation to achieve organisational objectives. An assessment of the ways mission, vision, etc
of an organisation help in formulating strategic business plans has been done in this study. The
researcher has also analysed various factors that should be considered in formulating the
strategic plans. An evaluation of the effectiveness of the techniques that are used to develop
strategic plans has been done in the study. The strategic positioning of VW AG has been carried
out in this research paper. The researcher has also carried out an environmental audit for the VW
AG. The significance of the stakeholder analysis has been assessed along with a presentation of
the new strategy has been done in this study. The researcher has also provided a justification for
the strategy selection. An assessment of the roles as well as responsibilities of the personnel
responsible for the implementation of strategies has been done in this study. At the end of the
research, the researcher has also analysed the estimated requirements of resources for
implementation of the new strategies for VW AG along with an evaluation of the contribution of
the SMART objectives for achieving strategy implementation.
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