Volkswagen Business Strategy Analysis

This assignment requires students to critically examine Volkswagen's business strategy. It involves analyzing the company's competitive advantages, considering industry trends and technological advancements, and evaluating potential challenges and opportunities. Students are expected to draw upon relevant literature and real-world examples to support their analysis.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK2.............................................................................................................................................1
2.1) Organisational audit to analyse strategic position...........................................................1
2.2) Organisation's environmental audit.................................................................................3
2.3) Importance of stakeholders at time of strategy making..................................................5
2.4) New strategy for organisation.........................................................................................6
TASK3.............................................................................................................................................6
3.1) Alternative strategy's effectiveness.................................................................................6
3.2)Justifying chosen strategies..............................................................................................7
TASK4.............................................................................................................................................7
4.1) Roles and responsibilities of personnel in implementing strategy..................................7
4.2) Analysing resource estimation for new strategy.............................................................8
4.3) Evaluating SMART target's contribution........................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is an aspect where organisation is able to set several standards through
which it can attain its objectives and goals. Basically it is an action where identification
regarding vision, mission goals and objectives are performed so that plans and required policies
can be made for long term survival of company in market. It plays an essential role in a firm as
because its absence will lead to a situation where improper functioning will start and it become
very difficult in carrying all its activities and functions (Woodcock, Green and Starkey, 2011).
Volkswagen is a leading organisation in auto-mobile industry, which is very well
performing all its actions and its product is listed in top 10 car sellers. Mostly it is famous for
Volkswagen Golf, Volkswagen Beetle and Volkswagen Passat, these are highly sold by it in
market as customers are very much attracted towards this. It is having 626,715 employees as
2016's annual report defines. In this report strategies that company is adapting and environmental
audit will be performed.
TASK1
Covered in PPT
TASK2
2.1) Organisational audit to analyse strategic position.
An organisational audit is a method through which company can be able to assess all
assets and liabilities that are operated with the firm. This process includes various aspects such
as, efficiency of workforce financial position of company, capacity, and infrastructure. These are
the factors which are very helpful for management in planning strategies as to compete in market
(Verreynne and Meyer, 2010). SWOT analysis is a suitable tools through which an organisation
can be able to carry out audit which will assist in attaining effective plan and to get firm's aims
and objectives. Company's internal and external factors can be identifies with its support.
SWOT analysis of VW AG
Strength  It is very well structured in carrying out all its operations and
activities. Product portfolio is very wide and has variety in it along
with this structure which it follows is very smooth and efficient.
 It presence all around the world is very strong and effective. It use to
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expand its business in a regular manner.
 It has established itself in very appropriate manner that a great brand
image has been made. Across the world it is been recognised due to
its services (Verbeke, 2013).
 It performs all its operations in well and managed ways so that
problems can be avoided.
 Research and development session is very effectively performing as
they guide and help several tactics through which it is able to sustain
in market.
Weaknesses  Its weakness is the emission scandal that has taken place which has
broken trust of all its customers and of those who were dealing with
company.
 In competition, company is reducing its prices of all its products
which is affecting it in attaining set margins of profits.
 Its positioning in several places are very weak.
 Parent brand is comparatively weak, it can be strengthened.
 Productivity issue is also a problem, employees are not effectively
operating all those tasks which are allotted to them. Skills and
knowledge are lacking which is affecting business activities as well.
Opportunities  Area where organisation have not positioned in appropriate manner
can be improve that.
 It can invest in updated technologies so that proficiency can be
attained in activities that are performed and also growth options can
be able to attain if proper execution is carried out (Teece, 2010 ).
 As demand of products are very high this is positively influencing
firm and purchasing power is also getting increased.
 Efficiency of fuel is also get increased.
 It can introduce innovative products as well as designs can be
creative will can pull customers towards products and services of
firm.
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Threats  Due to emission scandal brands image has spoiled very badly.
 Entry of new company is giving a tough competition for Volkswagen.
 One of the biggest threat that company is facing is related to laws and
norms that are carried out by different nations where cited firm is
performing all its activities and functions (Scholes, 2015).
 Emission is a problem that is been faced by company.
 Recession that took place in the year 2009 has created a big problem
for company as all its management and financial aspects has been
changed due to this crises.
2.2) Organisation's environmental audit.
Environmental audit is one of the major element that has to be performed by an
organisation so that all those factors that are having direct and indirect influence upon activities
and functions of Volkswagen can be identified. Impact can be both positive as well as negative
which has to be known by management of a company so that according to that effective and
appropriate strategies can be made, if situation are in favour then strategies can be implemented
to more improve them and if not then new tactics are executed to place the firm back on track
(Reinhardt and Stavins, 2010). To understand about environmental audit, PESTLE analysis can
be performed so that properly market condition can be analysed.
PESTLE analysis of WV AG
 Political factors
Political elements are those aspects which are having direct relation with organisation's
operations and activities. Volkswagen is facing many political problems as it is dealing more
than 150 countries in world. Every country is having different political standards and according
to that organisation has to perform all its activities otherwise challenges has to be faced and in
this risk will also changed in very high dimension. It is very essential for an organisation to
prepare effective strategies so that political factors can be meet appropriately. Selling of car can
be increased of decreased if interest rate upon vehicle loans get fluctuated.
 Economical factors
Most effectively growing industry which is contributing in nation's development is auto-
mobile sector (Nordqvist and Melin, 2010). The cited firm is very effectively indulging in GDP
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of a country. Economical aspects are very important to be considered by firm as because
inflation rates, economic growth, labour cost and interest rates, all these has a very direct
connection with organisations activities and can be get influence in both positive and in negative
manner. Hence it is essential for a company to manage each and every thing in appropriate way.
Situation many times occur that customers face problem regarding price of products which is
been offered by firm, though company is offering in low price still many face issue for this
aspect.
 Social factors
This is one of the major factors that has to be focused more effectively by company as
because people of society plays a very important role. Customer's needs and demand has to be
focused by company so that appropriate products can be utilise to them (Montgomery, 2011).
This will help a firm in sustaining in market and to obtain set objectives and goals. Satisfaction
of customers are very much required so as to survive in more effective and desired way.
 Technological factor
At present time technology is changing in very fast mode. It have become very necessary
for a company to accommodate technological changes so that objectives can be able to meet in
proper manner. In large number cars get sold by company so it is essential to use new methods
and techniques so that manufacturing can be done in quick and on time.
 Legal factors
Every nations is run through several rules and regulation in terms of many aspects, hence it is
very important for a company to adapt them as per drawn legislation. Company is dealing in
more than 150 countries so al are not having similar laws, so according to their requirements
company has to perform then only operations can be performed in appropriate manner.
 Environmental factors
This is very vital part as because, cars and other vehicles use fuel as petrol and diesel,
they use to emit gases which can be injurious for health and also for environment (Meskendahl,
2010). As company is manufacturing car so it need steel for its body and it is made of iron, at
time of conversion of iron into steel air and water both get polluted which will become threat for
environment and various problem will get arise. This will create pollution in surrounding
cretaing obstruction in the path of company success.
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2.3) Importance of stakeholders at time of strategy making.
Any person, group and company who has involvement with an organization they are
known as stakeholders. Creditors, employees, shareholders, suppliers, government, union,
directors, and communities are stakeholders. These all play vital role in making planning and
strategy for VWAG. Company manager have to manage them effectively because they impact
business performance (Hamel, 2012). Stakeholder analysis is a method to seek those people who
affect the business activity in various ways.
Importance of Stake holders
 Give important opinions about business activity
 Get support from powerful organization
 Help understanding nature of person regarding organization
 Assist in identifying the perception and reaction of people's
There is some process for stakeholder analysis in VWAG is discussed blow:
Step 1: Firstly manager have to identify people, who are affecting organization performance and
who are engaged with business activity. In VWAG, creditors, directors, suppliers, government,
shareholders and employees are key stakeholders.
Step 2: In this step of stakeholders analysis, manager has to identify every stakeholders powers
and their interest. Regarding to this, cited company has build stakeholder grid, it will aid in
identifying relation of stakeholders with company.
 Stakeholder who have high power and high interest, they will give their best effort in
performance. This will give influence in making strategy.
 Stakeholder who have high power and less interest, they will also give impact on strategy
but they get bored with company (Hsieh and Chen, 2011).
 Stakeholder who have low power and high interest give impact on strategy formulation
because they are helpful for company.
 Stakeholder who have less power and less interest will not give so much impact on
strategy, so company should give minimum efforts on them.
Step 3: In final step of strategy analyses, company's manager has to developing the
understanding between stakeholders and VWAG. This will assist in giving feedback and persons
will provide effective support to business activity.
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2.4) New strategy for organisation.
Organisation can opt a new strategy that is very beneficial for it to survive and to get
back trust and faith of customers that has been loss by emission scandal (Dong-Hun, 2010).
“Volkswagen 2025” is a new approach and plan that is getting implemented by it so as to
develop itself in market. It is planning to improve the products and services for effective
presentation for future purpose. It is being more concern and innovative in its services and also it
is considering to sustain more effectively so that customers can be able to get satisfaction. New
strategy can be found in which efficient, productive and profitable are aspects. E- mobility will
be the special feature that can be seen and also they are introducing vehicles which is of 30
power battery. By 2025 it is expected that 20-25% between 2-3 million units can be the total
sales.
TASK3
3.1) Alternative strategy's effectiveness.
There are three different situation which a company have to face, for them organisation have to
make effective strategy. There are certain types of strategies which are as follows:
 Making entry
 Substantive growth
 Retrenchment
Marketing entry strategy
If any entrepreneur have to take new entry in market, so he have to make new strategy for
his company (Cooke and Saini, 2010). There is some risk which a business person should take,
this can be reduced by analyzing market and making strategy accordingly. For making entry in
market there are four methods these are organic growth, merger, acquisition, licensing,
franchising and strategic alliance. VWAG should merge with other company or they can acquire
any small or loss making organization. New market entry strategy will be prepared according to
market analysis, this will aid in surviving and getting growth in market.
Substantive growth strategy
In this strategy, an organization has been established but for making effective growth,
they have to make essential strategy. This will support in managing performance effectively. For
substantive there are some strategy these are related diversification, unrelated diversification,
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horizontal integration or vertical integration (Cinquini and Tenucci, 2010). VWAG will use
Related diversification for their product line and vertical integration or they can use market
development and product development. These will assist in getting growth in product line. This
will aid in developing an organization.
Retrenchment
In this company will cut all extra expenses which are not essential. Basically it is a
situation where company image get impacted. For this VWAG can use turnaround strategy,
liquidation and divestment. This strategy is used for repay the loan amount, credit amount and
loss amount in market. They should use liquidation for future benefits.
3.2)Justifying chosen strategies.
Volkswagen company is in a stage where it has been facing problems due to emission
scandal so it is very necessary for it to implement new strategy so that it can get a proper support
to sustain and to compete with its competitors. Selected strategy is effective as because-
 Feasible- New strategy is very feasible to imply as it will lead in growing and to enhance
in market.
 Acceptable- As it is feasible so, it can be accepted by all. Customer's satisfaction is must
and plan basically customers oriented then surely they will also acknowledge this.
 Sustainable- As effectiveness is present therefore organisation will be able to get
sustained in market and can healthily compete with others.
TASK4
4.1) Roles and responsibilities of personnel in implementing strategy.
Role and responsibilities that are related to several personnel in an organisation are as follows- Top level management- The most important role that need to be done by this department
is creating a blueprint which is having a detail of strategies that Volkswagen is pleased to
implement in market (Campbell, Edgar and Stonehouse, 2011). It is having a description
of all coordinating and controlling acts that has to be carried out by a firm. Responsibility
of communicating these to others lies with this department. Middle level- These are people who act as a middle person of top and lower level of an
organisation. They have responsibility to convey information to lower level that top level
management has planned to be get attained. Target and standards are get set by them so
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that they can be able to make their subordinate do tasks and work (Bharadwaj and et.al,
2013).
 Employees/ workers- Main and very important role that lies of employees are to perform
tasks that has been guided by top and middle level management of a firm. They have to
execute all those tasks that are allotted by their superiors as what they perform will reflect
actual performance of organisation.
4.2) Analysing resource estimation for new strategy.
Resources are very important aspect for a business to carry out all its operations and
functions, several resources are required by firm to implement a new strategy. They are as
below-
 Human resources- As Volkswagen want to implement appropriate strategy, it is very
necessary for it to consider about manpower. They are vital element of a company as they
carry out all plans in actual performances. As to execute strategy well qualified and
knowledgable things is needed by it to perform all work properly (Burlton, 2010).
 Time and raw materials- Time is one of the biggest factor that has to be considered most
as because every aspect has to be performed on correct time unless later it will become of
no use. As company is planning to introduce 30 power battery vehicle it is very necessary
for it to have raw materials that will be leading it to work appropriately.
 Financial resources- Fund is also an essential aspect as because with out it no activity
can be done so, availability of financial resources are very must.
4.3) Evaluating SMART target's contribution.
1. Specific(s)- This target of an organisation is very much clear to understand as it is
defined in proper and very straight manner. This is also very helpful in communicating in
better way among firm and all those people who are connected with it. Firm is targeting
all non buyers and unsatisfied people of market.
2. Measurable(m)- These are targets through which cited firm will be able to measure all
those set standards and goals. This step will take place as implementation of aims is
performed (Astrachan, 2010).
3. Attainable(a)- Aims and goals can be obtained only when standards will get met.
Customers who were targeted will purchase then only company will able to achieve its
targets.
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4. Relevant(r)- Targets if are imaginary then it become very difficult and it will be next to
impossible for firm to attain them as it can not be able to perform in real era.
5. Tine(t)- It is very important as to schedule entire plan, time is very essential that has to be
met while carrying out operations related to new strategies.
CONCLUSION
This assignment helped in understanding concept of business strategy, and its importance
in an organisation. Volkswagen is the firm whose internal and external audit has been performed
to plan out strategies so that more effective operations can be performed by it. Main focus of
organisation is to introduce itself in market with a new strategy so that it can be able to attain
customer's value and trust that got affected by a scandal of emission, that took place which
entirely influenced operations and work of each and every department of it.
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REFERENCES
Books and Journals
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Online
Volkswagen’s 2025 strategy targets digitalisation and mobility. 2017. [Online]. Available
through: <https://www.sbdautomotive.com/en/volkswagen-2025-strategy>. [Accessed on 27th
June 2017].
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SWOT analysis of Volkswagen. 2016. [Online]. Available through:
<http://www.marketing91.com/swot-analysis-of-volkswagen/>. [Accessed on 27th June 2017].
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