Analysis of Business Strategy and External Environment

This assignment requires an in-depth analysis of the effect of business strategy and external environment on management control systems, as well as a study of Malaysian hotels. It also involves exploring digital business strategy, shared leadership, and e-business strategy in supply chain collaboration and cartels as rational business strategy. The assignment aims to provide insights into how business strategy can impact performance and how stakeholders can be managed during financial crises.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Accessing ways in which vision, mission, objectives, core competencies and goals
informs strategic planning......................................................................................................1
1.2 Analysing the factors that needs to be considered while formulating strategic planning.2
1.3 Effectiveness of technique used while developing strategic business plan......................3
TASK 2............................................................................................................................................5
2.1 Strategic positioning of Volkswagen................................................................................5
2.2 Environmental audit of Volkswagen................................................................................6
2.3 Significance of stakeholder analysis while making new strategies..................................8
2.4 New strategy for Volkswagen..........................................................................................9
TASK 3..........................................................................................................................................10
3.1 Alternative marketing strategy to market entry..............................................................10
3.2 Selection of appropriate strategy....................................................................................11
TASK 4..........................................................................................................................................12
4.1 Roles and responsibility of personnels at Volkswagen..................................................12
4.2 Requirement for implementing new strategy.................................................................13
4.3 Contribution of SMART targets in achieving strategy implementation........................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business and its activities are changing throughout the world and in the era of
competitive business organisations needs to make a perfect strategy that could help the
organisation. Making business strategy involves processes like vision, mission, long and short
term goals (Auzair, 2011). Volkswagen is one of the biggest auto mobile makers of the world
and thereby dealing in the business of many kind of auto mobile vehicles like cars, tracts and
buses etc. It was established in the year 1937 by German labour front. Its revenue increased up to
106 billion in the year 2016. It is an employer of approx 626,720 workers in various units
throughout the world. This report provides the idea about the business strategy of the
Volkswagen group and this firm needs to make all these so as to come of its business crisis in
past few years. This report also provides the idea about the ways in which vision, mission and
core competencies helps in formulating business strategy and the ways in which it is important
for the firm to make these. It also focuses light on the factors that affect the decision making
process and strategic business plans. This report also helps to understand the position of
Company in the present market environment.
TASK 1
1.1 Accessing ways in which vision, mission, objectives, core competencies and goals informs
strategic planning.
In order to develop appropriate business strategy that helps firm in growing at a stable
rate and achieving its targets comprehensively, there is a need of defining vision, mission and
goals of an organisation. Business strategy is always develop citing the core competencies of the
company. These all things provides the pathway in which company has to move so as to survive
in the competitive market environments. These factors are like the torch bearers for the company
in their strategic planning.
Mission for any firm is the last destination which firm wants to reach and citing which making of
any business strategy needs to be made. whereas Vision is the idealogical pathway that
contributes the overall development of the firm and its various stakeholders. It is same as the
blue print the company makes while planning a strategy. Vision mission are forever and is
always being considered when any company wants to develop any strategy. On the other hand
goals and objectives are the targets that company wants to achieve in limited time frame and it is
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the framework of results that company wants obtain from its future activities. Core competencies
are like the concretes that will be used for making the strategic plans stronger. They are the base
that provides stability to the business plans.
Mission: Becoming one of the biggest restaurant in the locality in UK that serves hundreds of
consumers in the area by implementing best practices in the industry.
Vision: To become the firm that is one of the best suppliers of quality food where people can
enjoy in ambient environment.
Goals and objectives
 To satisfy customers by serving variety of foods in the single outlet.
 Increasing the quality of services and ambience of restaurant where people can spend
there quality time.
Core competencies
 Restaurant is having highly skilled staffs and especially the chefs in the kitchen that are
expert in making wide range of food.
These all factors will help Leisure restaurants in making its future business strategies. It will
ensure that company do not face any kind of difficulty in its operations.
1.2 Analysing the factors that needs to be considered while formulating strategic planning.
Strategic planning is a process that determines the strategy of the company for coming
years that will help it to make decisions such as ways in which its crucial resources will be used
and what are the ways in which its availability is ensured so that operation smoothness is
maintained. Some of the factors that needs needs to be taken into consideration are as follows:
 Industry: For any firm it is important to understand that what is the situation of the
industry in which the company is operating. In making of business strategy its becomes a
key player. In this also there are several things that needs to be considered while
Evaluating industry such as new entries in the market, size of the market for which they
need to serve, its growth potential. In society eating habits have changed and so is its
taste. People wants to take taste of variety of food throughout the world at the locality. So
the scope of Leisure hotel in terms of its growth is higher.
 Competition: Strategic planning is done so as to grow in the competitive environment
and for this restaurant needs to understand the competitors it has as well as there power to
influence the business of Leisure hotel. There are many small hotels that have come up in
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the locality where already many bigger firms had there outlets. There strength and
weaknesses needs to be considered in the strategy making process.
 Strength and weakness: In the making of strategic plan it is important for the firm to
understand their own strength and weaknesses. This helps in making plans that are more
achievable and within the the limit of the company's potential. Leisure hotel is having
skilled workers who use of modern machineries so as to carry out their business
operations. One of its prime weakness is having less customer handling capacity.
 Management: This company is having an excellent management that follows flat
structure that ensures healthier discussions among the management and lower grade
workers. They also involves other staffs in their discussion making process hence new
innovative ideas comes as a result.
 Resources: Leisure hotel is having limited amount of resources and their proper
utilisation becomes more important. They need to implement strategy that will make cost
cuts that have unnecessarily over burdened the revenue.
1.3 Effectiveness of technique used while developing strategic business plan.
Among several techniques available few techniques that will be helpful in this regards are
as follows. These will ensure the effectiveness of strategic business plan.
BCG growth share matrix: Any organisation bigger or smaller have to face many situations in
its day to day operations. Among these four type situations that is faced by Leisure hotel is being
explained by the BCG matrix. Some of them are as follows:
Stars: It indicates firm's high market share and growth. This suggests that in this situation
restaurant needs huge amount of monetary value so that they can make decisions regarding the
ways in which company can ensure its market growth in a continues manner.
Cash cows: It represents high market share and low growth. It suggests that firm is growing at
lower rates but still it is capturing higher market share using which company can generate
profits.
Dogs: It suggests that company is having lower shares in the market as well as lower growth rate.
In this situation firm needs to make reductions in the unnecessary costings. It also highlights the
fact that company should stop manufacturing those products which is making less profits must
concentrate on producing new products.
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Question mark: This represents that company has higher growth rate but is having lower share
in the market. This is risk situation that can lead to losses.
Another tool for measuring effectiveness of techniques is
Profit impact of market strategy: This strategy helps in making competitive advantages by
analysing firms polices and processes it follows. Hence it helps in proper implementation of
policies and procedures. This strategy considers following facts:
 Nature of business environment.
 Structure that is enforced in production process.
 Allocating budget.
 Conducting activities.
 Competitive positioning of firm's business.
There is one more tool that can be used known as Space analysis.
Space analysis: It is basically analysis of four major issues that balances internal factors i.e.
competitive advantage and financial strength and external factor i.e. attractiveness of industry
and stability of the environment. These factors analyse the general theme of the strategy.
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TASK 2
2.1 Strategic positioning of Volkswagen.
For any company whether small or big, they need to understand its strategic positioning
in the market and so is the case with Volkswagen. It is done by auditing the firm's overall
business activities. Strategic positioning also has the ingredients like ways in which firm serves
its consumers and the ways in which they compete with other enterprises (Bharadwaj and et. al.,
2013). There are certain factors that is used by Volkswagen to find its position:
Strengths:
 One of the biggest strength of the Volkswagen is its processes related to production and
manufacturing. They use best and modern techniques that is present in the industry.
 Cost reductions has been made by the firm by making use of advanced and innovative
technologies which is necessary for leading in price war.
 It has a well established brand name which helps the firm in entering into new markets.
For example it has approx market share of 4% in US and approx 20% in Europe. This
two examples illustrates its market reach. It is amongst the top 20 brand names in the
world according to Forbes 2000.
 It is having hundreds of manufacturing units in an approx 27 countries which helps in
meeting global and local needs of the market. This also helps in maintaining demand and
supply chain. It is a third largest manufacturer in its industry. They have achieved the
global sales figure of approx 10.3 billion in 2016.
 Its highly equipped Research and development lab and there ongoing researches are
magnificent (Bharadwaj and et. al., 2013).
 It has an employee strength of approx 7 million.
Weaknesses:
 Leaders of Volkswagen have been incapable in handling the firm which is illustrated by
various market failures of the company in recent years.
 Firm's performance in regions have reduced considerably like in the south American
countries.
 Productivity of employee has been on the lower side when compared with the
competitors.
 Due to its financial loses cash flow has remained poor.
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Opportunities
 This firm has made several acquisitions at various places in past few years, this will help
Volkswagen in increasing their market reach as well as making ore profits. Firm is
planning for more such activities.
 This company needs to invest in green technology that helps in manufacturing of auto
mobiles which is also the demand of the future.
 Demand of High quality buses have increased throughout the world.
 Hybrid cars demand have increased in market.
 There is a huge growth potential in countries of south Asia.
Threats:
 There have been many new entrants especially firms from Japan who have excellent car
manufacturing technology.
 There had been many local firms that has also came up in the industry who aims to
provides cars for the middle class people at affordable prices.
 There had been instability in the economies throughout the world in past few years which
is prohibiting firms from making long and short term strategies which resulted in
hampered business of Volkswagen in many regions. For example the slow down in
American economy and the European debts have reduced the demand of Volkswagen
products (Boies, Lvina and Martens, 2011).
 Various regulations related to the environmental protection made firm to move towards
green technology that is generally having higher cost and results in reduced profits.
 Increased oil and diesel prices have reduced the sale of cars in many parts of the world.
 Use of illegal software has resulted in scandal which has reduced companies image in the
minds of consumers.
2.2 Environmental audit of Volkswagen.
It is not the case that only internal factors affects the business of firms but even the
external environment has same impact. For understanding this environmental audit is necessary.
It helps in evaluating companies growth potential. Environmental audit is as follows:
 Political: Government and political ideologies have changed in many parts of the world
which has resulted in change of business policies. Volkswagen is operational in and
around 150 countries hence it has to face large number of political situations. Some of the
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political policies that impact this industry is increased car loan rates, fuel taxes, import
and export taxes, laws regarding environment. Cited company needs to make strategies
that that will reduce the negative impact of Brexit.
 Economical: Economy throughout the world is becoming unstable day by day especially
the auto mobile industry is facing many economic crisis. Since this industry contributes
to GDP growth of many developing nations (Chang and Graham, 2012). It also helps the
growth of many other industries like glass and steel. Slow development in this industry is
a result of financial crisis in many countries and increased crude oil prices.
 Social: Globalised society have changed considerably in last few decades. People now a
days are approaching to buy cars at affordable prices. Increased unemployment has made
many sections of the society economically weak. Whereas in many parts of the world
luxury cars have become trend which is an opportunity for Volkwagen.
 Technological: This industry is highly influenced by various advancements as cars are
becoming smarter hence its impact cannot be undermined. Increasing demand of hybrid
cards have made companies to implement new innovative technologies so that cost of
production ca be reduced and can be manufactured at higher rates.
 Legal: There are various legal laws regarding carbon emission, employment and tax
norms which needs to be followed by the firms in this industry. Already this company has
witnessed loses due to use of illegal software.
 Environment: Carbon emission, global warming, waste management are some of those
factors that has impacted this industry. Companies are compelled to work in the field of
green technology.
2.3 Significance of stakeholder analysis while making new strategies.
There are certain people associated with any firm and are involved with operations of the
firm directly or indirectly these group of people are known as Stakeholders (Connor and Lande,
2012). Categories of stakeholders are employees, government, suppliers, customers, investors
etc. Stakeholder analysis helps to understand that which stakeholder is supporting business in
what manner.
Importance of stakeholder analysis is understood by these points:
 Volkswagen must take views from their stakeholders about its methods, products,
policies, processes and working culture.
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 Powerful stakeholders like Investors helps firm at the time of financial crisis.
 Stakeholder analysis helps company to understand their response of stakeholders
regarding the business of firm.
Steps involved in stakeholder analysis is as follows:
 Finding out people who are involved in business operations and effecting it considerably.
 In order to make stake holder's grid, it is important to identify and understand the interest,
influence and power of stake holders (Iacob, Quartel and Jonkers, 2012).
 Design excellent communication and understanding between the important stakeholders
so as to get feedbacks from them on regular basis and also they can extend support when
firm needs it.
Volkswagen stakeholders power interest mapping is as follows:
According to the above fig. lines are denoting influences of stakeholder on each other.
Darker lines are representing heavy influences and arrow shows the influence direction.
 Stakeholders that are associated with legal, financial, web standard, network and security
are having higher powers but their interest is low.
 Auto mobile developers, project managers, change managers, CIO are some those
stakeholders that have higher power as well as higher interest in business operations.
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 Other staffs like outsourced call centre employees, testers and customers are having less
interest as well as less power to influence in decision making process. They generally are
followers of higher officials.
 On the other hand managers of call centres, training managers and legal system advisers
are having higher interest but poses less powers.
2.4 New strategy for Volkswagen.
For company's growth, it is essential to change their strategies as per the requirement of
situation. It may vary from time to time (Ibrahim, 2015). Every firm needs to incorporate new
strategies so as to grow on a longer run. There are several strategies that is used by various firms
which is beneficial as per the situation requirement. One of such strategy that is beneficial for
Volkswagen is new product development.
As in the auto mobile industry people are always looking for the new products hence this
strategy can be highly beneficial. It also helps in having edge over competitors in the present
market situation. The development of new product must always be done citing the target markets
of the society. It is highly beneficial in satisfying wide range of customer as they have wide
range of products from which they can choose. It is effective in capturing larger part of the
market as well as making higher profits (Jocovic and et. al., 2014). This sometimes leads to
entering into the new industries. For this company has make target markets and must be based on
the economic status of that market. People want variations in terms of design, introduction of
new technology in the cars that too on regular basis. There is a demand for making environment
friendly car as it is the future of auto mobile industry.
TASK 3
3.1 Alternative marketing strategy to market entry
It is essential for a business organization to expand its business in order to increase market share
and profitability. In this context, cited firm required to use variety of strategies to intern a new
market. VW operating their business in to UK where large number of auto makers operating its
business which provide a tough competition. Therefore, they need to maintain its position in the
market and for this, there are various emerging market such as India and China can expand its
business in an effective manner. These strategies can be:
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 Market penetration: This is one of the most suitable strategy where a company can
increase its product range in to existing market (Johnson and et. al., 2013). VW required
to launch such product which provide a long term product life cycle and introduced new
product before the maturity of its existing products. In the recent time, they need to
increase its PLC through using marketing strategy and rebranding of its auto mobiles.
 Market expansion: VW one of the leading auto maker which operate its business in to
various countries specially in the Europe market. But, there are already various car maker
such as GM, BMW, Toyota etc. which provide a cut throat competition and reducing VW
market position. In this situation, they can expand its preens in to other parts of the world
especially Asian market. These emerging economies can provide a long term sustainable
growth to the company and they can gain competitive position in the market which is
very crucial in the modern business environment (Business strategy: 7 Principles Every
Leader Should Know. 2017).
This two can be done by two methods:
Merger: In this two similar scale which was previously different combines with each other.
Acquisition: In this larger company takes the ownership of smaller company and have control on
its entire resources.
Apart from these two some other strategies are
 Product expansion: This is another approach where a company can increase its product
rage in to existing market and meet its presence in the market (Köseoglu and et. al.,
2013). VW can have introduced new product line which helps to retrain its position in the
market. For instance, cited company can launch Sedan, SUV, new electric vehicles,
compact car etc. Further, they also having various luxuries car such as Skoda, Bentley,
Audi etc. which concentrate on niche market.
 Limited growth: Volkswagen implements this by using Joint ventures. In this approach
VW need to made strategic alliance with other corporation. In this method two or more
companies joint hand and start their business in an appropriate manner. The advantage of
this tactics is related with the sharing resources of each other which can gain competitive
advantage.
 Substantive growth: Implementation of this strategy is by making use of two schemes
that are integration and diversification. In integration company manufacture its own raw
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materials instead of taking it from others. Distribution channel can also be strengthened
by firm itself. In diversification company can increase its product range.
 Retrenchment: In this strategy company sells some of there property or stop producing
any specific good. It is understood to be remedial action in case of market failure or loses.
3.2 Selection of appropriate strategy.
Evaluating the profile of company it is suggested to use substantive growth strategy since
the company is facing financial loses. Integration can help company in making cost cuts
(Scholes, 2015). It can also benefit company as company can manufacture its own raw materials
this is helpful in reducing the cost of manufacturing. It has another benefit that it increases the
standard of final products. Establishing distribution channel can help company in managing
demand and supply chain and thereby increasing the sale of companies products. Using
diversification policy company can offer large range of products to the customers. Its
appropriateness can be justified by the benefits it has. Substantive growth has following
advantages:
 Exponential growth: It is the strategy which when applied inside the firm then company
achieves exponential growth especially in terms of wealth.
 Competition: It helps in fighting with the competition that is present in the industry. A
business can gain competitive edge over others if this strategy is applied with the help of
all its stakeholders
 Wealth Creation: It helps in creation of the wealth and can become major justification for
the business existence. It not only enriches the employees and owners but also to the
other stakeholders attached with it also.
 Priority: It also helps to set goals in priority that which will be aimed to achieve in which
order. It is a rational process of planning.
TASK 4
4.1 Roles and responsibility of personnels at Volkswagen.
In Volkswagen there are large variety of personnels at each levels of organisational
structure. They all have different set of roles and responsibilities and they must understand them
appropriately.
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 Top management: These personnels have responsibility of making decisions and
implementing them (Slack, 2015). They also govern, evaluate and monitor these. There
prime responsibility is availing raw materials and setting manufacturing units. They
involve in dialogues with government so as to ensure companies smooth growth.
 Middle management: They have the role of setting smart goals. They divide budgets as
per the need of different functional units. They have a role of establishing communication
channels among the different levels of the organisation.
 Human resource management: It is essential for the firm of this scale to manage its
human resource. Selecting, recruiting people as per the demand of various organisational
units. They need to provide proper training to the employees as per the requirement of the
situation.
 Employee: Changes are generally not accepted by employee. Its the role of experienced
personnels to motivate new employee about these changes.
4.2 Requirement for implementing new strategy.
There are various kinds of requirement while implementing new strategy some of them
are as follows:
 Finance: For any strategic decision implementation monetary funds atre required by the
firms as making cost cuts are not enough (Verbeke, 2013). Volkswagen can make use of
their Investors who are large in number so as to arrange money for setting up plant and
buying resources.
 Land: One of the most crucial requirements for substantive growth strategy is arranging
land. For this Volkswagen needs to purchase it from the local people or ask it from
authoritative bodies.
 Technology: Use of modern technological machineries have increased in every field.
Volkswagen also need to make use of these technological advancements so that they
could manufacture high quality products at lower rates (Woerner and Wixom, 2015).
Today's auto mobile industry is highly influenced by this factor.
 Human resource: For the implementation of substantive growth strategy skilled
labourers are required for both integration and diversification purpose. Proper training
needs to be provided to the old staff members by conducting work shops.
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4.3 Contribution of SMART targets in achieving strategy implementation.
SMART targets are necessary for growth of any organisation. It stands for specific,
achievable, realistic, time bound, measurable. This is important as goals must be clear to the
individuals. If goals are not measurable then detecting faults is impossible (Woodcock, Green
and Starkey, 2011). Goals must be time bounded and achievable so as to get maximum benefit
out of it. SMART goals of Volkswagen are as follows:
SMART target of Volkswagen can be understood by the some of the examples which is as
follows:
 Volkswagen aims to increase the sales by 8% in the next 11 months.
 Firm wants to increase its production rate by 5-6% in the next financial year.
 Company wants to increase its efficiency level of production unit by approx 7% in the
coming year.
 Company aims to make more strategic alliances with other firms in the countries of south
Asia and south America.
 Company aims to improve the employee performance by 5% in the next financial year.
CONCLUSION
From the above based report it can be concluded that any company must have strategy for
their business. These strategies helps company in making profits in the coming financial years.
Vision, mission, goals and objectives provides blue print for designing business strategy for the
company. Substantive growth is one such strategy that could be used by Volkswagen to come out
of its financial crisis and increase their market share. It is also important for the firms to
understand the status of their stakeholders as they help company in various situations.
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