Analyze Volkswagen's Business Model & Strategy

This assignment requires you to analyze the business model and strategic approach of Volkswagen AG (VWAG) using given academic sources and a PESTLE analysis. You'll need to evaluate VWAG's corporate strategy, competitive environment, digital business strategy, responsible business strategy, and business process management. Additionally, you'll assess how these aspects align with VWAG's sustainability initiatives and innovation strategies.

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK -1 ..........................................................................................................................................1
1.1 Mission,Objective,goals and core competencies of new business:PPT ...............................1
1.2 Factors to be considered while formulating strategic plan:PPT............................................1
1.3 The key techniques available for the business :PPT.............................................................1
TASK -2 ..........................................................................................................................................1
2.1 The strategic positioning of VWAG.....................................................................................1
2.2 The environment audit for VWAG.......................................................................................3
2.3 The significance of stakeholder while making new strategy for the company.....................6
2.4 A new strategy for VWAG...................................................................................................7
TASK – 3.........................................................................................................................................7
3.1 The alternative strategy related to market entry, substantial growth for VWAG.................7
3.2 The selection strategy for VWAG.........................................................................................8
TASK-4............................................................................................................................................8
4.1 The roles and responsibilities of personnel at VWAG..........................................................8
4.2 The resource requirement for implementing new strategy...................................................9
4.3 The contribution of SMART targets in implementing this new strategy..............................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Business strategies are made by companies in order to achieve long term objectives. A lot
of competition is faced by companies in the market so to make their product and services more
innovative and expand their market these strategies of business are made (Veit and Spann,
2014.). When business strategies are mdse all factors such international and external factors are
considered while formulation these strategies. These business strategies will help the company to
achieve its business goals.
VWAG is a company in UK that manufactures and sells cars to passengers. It is well-
known company in UK (VW AG, 2017). In around 153 countries this company operates and
customers are greatly satisfied with services and products that are provided by this company. In
this report the business plan for a new company will be made in which the goals, mission, vision
etc of that company will be explained. The strategic positioning of VW AG will be analysed by
conducting an audit and an environment audit for VWAG will also be done in this report. This
report will present the alternative strategies for growth for VWAG. The requirement of resources
for implementing anew strategy for VWAG will be also be analysed in this report. The
contribution of SMART targets in achieving the new strategy for this company will also be
evaluated.
TASK -1
1.1Mission,Objective,goals and core competencies of new business:PPT
1.2 Factors to be considered while formulating strategic plan:PPT
1.3 The key techniques available for the business :PPT
TASK -2
2.1 The strategic positioning of VWAG
By using SWOT an organization audit can be conducted .The internal strength and weaknesses
of the company can be identifies with help of SOT analysis. The opportunities and threats are
external to the company but by suing SWOT analysis of the company this can also be analysed.
The strategic positioning of the company can be figured out with this.
Strength – The strength of VW AG is that it has very well-structured. The high engineered super
cars and also passengers cars as well as business are produced by this company. In the portfolio
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of VW AG there are endless product. The structure of the company is smooth and efficient. For
its own branding and success each business is responsible (Mithas,Tafti and Mitchell, 2013).
Across the globe presence is strong – It has a deep pockets this is one of the advantage of their
company. So, due to this able to expand its business at a quicker pace. In the globe it is the oldest
car manufactures so the customer trust is more over its products..And against Honda, Toyota it
has well-established itself. There are about 71 production plants and in about in 150 countries
across globe.
Excellent brand recognition – On any given day this company produces about 23,000 motor
vehicles. If they demand is bot so high one cannot produce such quantity of vehicles. In the UK
and across other countries such as Europe and USA the VWAG brand is very strong. All cross
the globe its strength is also growing. In the world in 2016 it is ranked at 57th tank position.
Well-managed operations – On VWAG in UK the whole town is demanded on this company for
employment. In terms of operations the company is huge. There are about 26000 cars products
along with logistics and other operations is handled by the company (Drnevich and Croson,
2013).. It is not easy task to handle these things in a day. The management of operation of this
company is also excellent.
Research and development - There is a high technology is in built increases of their company
and customer trust this company in terms of its performance. The products beyond expectation
are given by research and development. In the portfolio this company have recently ventured into
hybrid cars and motorcycles.
Weaknesses
The emissions' scandal – The main umbrellas was effected due to hi scandal. In the organization
more than 5 million cars were returned .From the top management of the company as wrong
software was installed.
The margins are being eaten away by rivals- The market has been penetrating by the many
competitors brand and there competition in the price is tremendous. The customer are being
benefited from this competition. The brands are affected by this adversely.
There is need to strengthen parent brand - A lot of advertising in dollars is done by the
company in order to strengthen its brand for Audi, Porsche and other brands. The company need
to send more in order to crate a more brand quality for parent brand – Volkswagen. The cars like
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Paast are some hand selected cars that are hit under the Volkswagen brand. Much noise for these
models is not created by this company which is the need of the market.
Opportunities
The power of purchasing is increasing – Years on year there have been increase in the purchase
of auto mobiles. The auto mobiles today are seen as necessity due to launch of schemes on
various auto mobiles. Many options of loans and finance are available for customers as a result
they are more and more purchasing this auto mobiles.
Worldwide expansion possible- With rising GDP demand and increasing need of the product
demand will only rise. More and more countries' comes into the category of emerging. It is
possible for the company to expand its market by taping into these emerging countries. The
company need to learn how to localize its products and as e per the requirement of local it needs
to alert them (Mithas,Tafti and Mitchell, 2013).
Increasing fuel efficiency – A huge hit in the emission scandal is taken by this brand so it is
essential that it need to come back strong and the company can manufacture cars and product
with fuel-efficient products.
Modern and innovative designs- When it comes to automobile the designs are always crowd
puller. A new design need to be launched to keep brand alive and attract more number of
customer towards this brand.
Threats
Reputation of brand – Due to emission scandals one of the major threat is there for VW AG. The
cars such as Audi's , SEAT etc have been returned due to this scandal. A lot of money need to be
spend by the company in order to gain its brand strength.
Ever increasing competition – There is an ever increasing competition in this market which is
not going to stop.
Emission issues - The company will be hurt due to changing emission laws .As any change in
laws will affect the business.
2.2 The environment audit for VWAG
To carry out environmental audit of VWAG , pestle analysis is been done .
Political – Many political complexities can be faced by this company as it has its business
located in about 150 countries. There is a close relationship between car companies and policies
that is made by government of that particular company. In the sales of cars also banking industry
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and financial sector will also play an essential role. The loans on vehicles is provided by them
and according to policies of government the interest rates on these loans are decided. It is
difficult for this company to understand different political pressures. As in different countries
there will be different polices that need to be followed by this company. If any change in the
policy is there than the company need to also modify their policy. This is sometimes difficult for
the company (Rosemann and vom Brocke, 2015.).
Economic industry- In the development of any country the contribution of automobile country is
play an essential role as it contributes towards the national income of the nation .In the GDP of
the countries Volkswagen also contributes. In the development of other industries such as
steel,glass etc also automotive industry also helps. Any recession in the country will have an
impact on the demand of this car. For an instance there is a recession in UK due to which
customers are not purchasing car so it has lead to decrease in the sales of these cars. Also the
European debt crisis is another big issue that is faced by car manufacturing companies as the
people who wants to buy a car do not have much money (Pestle analysis of VWAG , 2017) .So,
due to this the sales of company Volkswagen have been reduced. A range of brands that are of
higher segments as well as lower segments are there with this company on order to deal with this
type of economic situation. If thee economic situation in which this company operates in not so
good then it focus on cars that is under lower segments (Purce, 2014.). The sale of cars is also
affected due to cost of fuel. In order to deal with such type of things the company can shift it
attention to diesel and petrol.
Social factors – In the development of auto mobile industry society plays an essential role. The
society is affected by auto mobile in duty in which it works. For this company society is large
and it is distinct from place to place. The employment to the people is given by this
company .There are more than 5,00,000 employees that are working in this country. All over the
world thousands of people have got employment in this company directly and indirectly. The
level of society is enhanced by car manufacturing company and the life that people live is also
changed by this industry. The social issues such as some religious faith need to be handled by car
manufacturing company. The number of road accidents are also taking place as the cars with
high speed. The negative sense in the society is been created by high sped cars as a lot of
accidents is caused from them. For many societies' maintenance and space required for a car is
also an issue. All these social problems need to be taken care by this company (Pisano, 2015. ).
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Technological factors – In the success of car manufacturing company and Volkswagen
technology plays and essential role. The best technology of car manufacturing is used by
Volkswagen and in both the segment that is classical and sporty this company operates. The high
technology is sued in brands such as Audi, Bentley etc. In car manufacturing Toyota, Mercedes
is the world leaders .This is because the technology that is used in manufacturing of these cars.
For the production of string cars such as Mercedes, or BMW a better technology is essential .The
good technology is used in this company. In the production of cars technology also helps. All
over the globe each week a million of car are made. So, without technology it is not possible to
products such as large volume of cars .The techniques of production such as 'just in time ' are
used by this company .With help of technology Volkswagen has made its after sales better .BY
use of technology any issue in the car can be easily detected by the technician .
Environmental factors
The big impact is there on the environment which is caused by car manufacturing industry. The
air in the environment get pollutant as the car used diesel or petrol in the car. The environment
of the society is also affected due to raw material used. The air and water is polluted by the steel
production companies as steel is made from iron and there is a need to transform iron to steel.
This company have many plants in various countries due to which there is an emission of smoke
in the air and a in the water waste is thrown. The natural environment of the plants need to be
taken care by this company. The investments in research and development need to be done by
this company so that it can produce more cares locally and the natural environment can be
protected (Patel and Chrisman, 2014.).
Legal factors
The legal requirements of the nation is also needed to be followed by this industry. This
is a big issues for this company as in many countries it operates and it is not an easy job to
follow up the legal requirements of different countries. The competition law, consumer
protection law, intellectual property law, taxation law etc need to be focused by this company.
The raw materials' need to be imported and exported by this company and in many countries'
cars need to be produced. The taxation requirement of government need to be take care by
importing and exporting raw materials. The labour laws also need to be understand by the
workers that are in the plants of this company.
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2.3 The significance of stakeholder while making new strategy for the company
Stakeholders are the people, group, who are involved in the business. In order to
recognize the people who support the activities of business the stakeholder analysis technique
can be used (Mithas,Tafti and Mitchell, 2013). While formulation of new strategy the
importance of stakeholder analysis are as follows-:
 From the stakeholder more essential options can be received.
 From the powerful stakeholder the support can be gained
 By making communication their nature can be understand
 The reaction of people can be estimated about their business
The give below are the steps that need to be followed for analysing stakeholder for VW AG
In the step 1 – The involvement of people are figured out in this step and the business operation
that is affected by it also discovered in it.
Step 2 – In this step the power, interests,influence of stakeholder is identified. The company can
build a grid of stakeholders for this.
Power Interest Stakeholder grid
High Power High Interest Keep satisfied
High Power Low Interest Manage closely
Low Power High Interest Keep informed
Low Power Low Interest Effort is minimum
 The greatest effort to satisfy ,influence strategies and enhance products is made by high
power and highly interested stakeholders.
 The strategies are influences by high power low interested stakeholders but at an early
stage they become bored with the company.
 The stakeholders are very helpful for the company when they have low power and high
interested. Over the organization the influence is more when the power is lo and interested of
stakeholders in the company is also less. The efforts that need to be made by company in
order to monitor them should also be minimum (Klettner, Clarke and Boersma, 2014. ).
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Step 3- : In this last step a good understanding is developed of the essential stakeholders for the
company
2.4 A new strategy for VWAG
The principle strategy for this company is to create a value and pay attention on the needs
of customers so that satisfaction among customers can be created. A new strategy that is adopted
by this company is the new product development. The various needs and demands of customers
will be met with this strategy for the company. And it will offer customer with innovate and new
car product (Drnevich and Croson, 2013). More revenue will be generated by the company from
this strategy and opportunities for expansion of business will also be created. The car that will be
created will be an automatic car as per the need of today's customer. This company will also
expand its business in the new emerging countries and this innovation that is done in cars will be
provided to customers that are residing over there.
TASK – 3
3.1 The alternative strategy related to market entry, substantial growth for VWAG
Strategies for market entry
Organic growth – When the development over its own organization is gained in the similar way
it has been done in the starting then it is known as organic growth (DaSilva and Trkman, 2014. )
.Merger- In this to many organizations will merge together and will act as single entity.
Acquisition – In order to achieve the objective of business two or more than businesses share
their assets .This is termed as strategic alliance.
Licensing – In the exchange of particular fees the parent company gives other company the
permission to use its trademark. The parent company is known as license and the other company
is known as licensee (Klettner, Clarke and Boersma, 2014. ).
Franchising – In this the parent company not only gives the trademark to other company but also
provides facilitates such as maintenance cost, strategy etc.
Substantive growth
Related Diversification – The company is related to product line when it makes diversification.
This is known as related diversification.
Unrelated diversification- The company is called unrelated diversification when it makes a
diversification that is not same from the existing one.
Limited growth
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Market penetration – The market share of executing product will increase .This can be done by
the company by promoting its product online or by using social platforms such as Facebook,
websites etc.
Market development – In a different marketplace the company will offer the existing product or
services (Cavusgil and Rose, 2014).
Product development -In this keeping in mind the needs and requirement of customer the new
products will be made by the company. This will be done in order to attract more number of
customers and providing them with products as per their desire (Boons and Lüdeke-Freund,
2013.).
Retrenchment
Turnaround – In order to make the company profitable this strategy can be sued by company. It
will transform underdeveloped company to performing company. In order to solve financial
crisis it is applied on distressed company. It will also enhance the financial performance of the
company.
Liquidation – When the company reaches to the final stage of its life style this strategy is sued by
the company. The business can be closed down by using it and all the valuable assets are sold .
3.2 The selection strategy for VW
The main objective of VW is to regain its position in the market as a strong brand in car
manufacturing .The market development strategy will be used by company in order to
accomplish its objective (Blackburn,Hart and Wainwright, 2013). With this strategy VW can
commence its business activities in the emerging countries and provided its products to the
people over there. This strategy will help VW to increase its car and sales and earn more
revenue form it. Once it has entered into the new emergent countries it can adopt product
development strategy to compete with rivals. The company VW will be able to expand its market
and will earn profit .
TASK-4
4.1 The roles and responsibilities of personnel at VWAG
The implementation of strategy at this company will require a person who can handle all
other personnel and among the employees work can be dived as per their role in the
organization. Some roles and responsibilities must be given to employees of the company who
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have been hired to implement this strategy. The roles and responsibilities of personnel need to be
defined clearly in order to implement this strategy successfully. The CEO of this company must
be able to communicate strategy to other employees .For an instance the strategies for new car
manufacturing will only be proceed further if and only if the strategy is been accepted by the
CEO of the company. The marketing manager will make strategies regarding promotion of
products in the market and will make sure that whether the team is doing their work properly or
not. The roles of employees is to work sincerely towards the goals of business and also listen to
their manager and employers. The strategic planning need to be guided by him. The person who
have been charge for strategic planning should need to maintain records .For strategic planning it
is very essential and this will also reduce the chances of legal responsibility..In order to
implement strategic successful monitoring and controlling (Bharadwaj and Venkatraman, 2013).
4.2 The resource requirement for implementing new strategy
` In the implementation of new strategy there are three types of resources that area needed
and they are as follows-:
Human resources – This company need to consider human resources in order to implement
successful strategy. As much of the performance of the company will demand upon the human
resources and it also plays an essential role in implementation of this strategy. The HR of this
company need to have technical understanding about cars in order to implements this strategy.
Financial resources - This can be done in two ways .They are debt or equity. The more
preferred one that can be sued by company is equity as there is no need to pay interest on it.
Time and material resource - There is a specific limit of time for any strategy and for
implementing that project some materials are required. The company need to sue high qualified
technology in order to manufacture cars (Bansal and DesJardine, 2014.).
Physical resources – This will help the organization to do the work more efficiently and
quickly. The talented and skilled employees are needed employers, managers are the requirement
of human resources. The company need to hire and recruit talented candidates that they can take
their business to a next level.
4.3 The contribution of SMART targets in implementing this new strategy
SMART targets
 To increase the sales in the coming year
 To expand its business to emergent countries
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Specific The company will increase its sales in the emergent countries
in the coming next 2 years by 40% and will develop high
speed cars (Bentley, Omer and Sharp, 2013.).
Measurable It is mensurable as by number of customers that are visiting it
stores. The company will be able to expand its ales if the
number of customers will increase so the chances are high.
Attainable By making use of online advertisements and social groups
etc. By using promotional site such as Facebook, twitter etc
it can be promoted and campaigns can be organized.
Realistic As per the real world this target is realistic and can be
achieved. It is achievable target for the company as it has
clear image in the market and is a popular company.
Time This target will be achieved in next 2 years.
CONCLUSION
Thus summing up the above report it can be concluded that for the growth of
business, business strategy is essential. The strength of VW AG is that it is a well-
known car brand and customer satisfaction is more than it one of the oldest car
manufacture in the globe. There are opportunities for this company to expand its
market in emergence countries and also to make of fuel efficient technology. The
company need to sue high-technology in order to manufacture its car and all labour
laws need to be followed. The strategic plans that is made for the company is that
it will try toe expand it business and will manufacture high speed car .This will
help the company to earn more income .The resources such as human resource,
financial resource and material resources etc will be used by the company. This
materials are essential in order to develop the product and the time period will be
there within that period the product need to be manufactured.
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REFERENCES
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Bharadwaj, A. and Venkatraman, N.V., 2013. Digital business strategy: toward a next generation
of insights.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
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Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-
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Cavusgil, S.T., and Rose, E.L., 2014. International business. Pearson Australia.
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Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review. 93(6). pp.44-
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Purce, J., 2014. The impact of corporate strategy on human resource management. New
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Rosemann, M. and vom Brocke, J., 2015. The six core elements of business process
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Online
VW AG. 2017. [Online] Available through: <http://www.volkswagen.co.uk/>.
Pestle analysis of VWAG . 2017. [Online] Available through:
<https://www.strategicmanagementinsight.com/swot-analyses/volkswagen-swot-analysis.html>.
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