Business Strategy and IT-Enabled Transformation

The assignment explores the concept of business strategy and its importance in IT-enabled transformation. It discusses various theoretical frameworks, including resource-based theory and evolutionary theory, which are essential for understanding business strategy. The document also examines the impact of business strategy on organizational performance and provides examples of successful business strategies from various industries. Additionally, it highlights the role of business strategy in shaping digital business models and its influence on project portfolio management.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1, 1.2 & 1.3..........................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Organisational audit..........................................................................................................1
2.2 Environmental audit of Volkswagen................................................................................3
2.3 The importance of the stakeholders in preparing of the strategies...................................4
2.4 New strategies for Volkswagen........................................................................................5
3.1 Alternatives strategy appropriateness...............................................................................5
3.2 Justification for selection of strategy................................................................................6
4.1 Roles & responsibilities of personnel in strategy implementation...................................6
4.2 Resource requirements for implementing the new strategy for VW AG.........................8
4.3 Contribution of SMART targets in business strategy.......................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business is a entity that has been established for providing goods and services to
consumers in return of a certain price or earning profits. It needs a strategy in order to keep its
functioning at par and ensure higher level of productivity. There are many tools and techniques
which are used for analysing factors that have impact on company working capabilities and
profitability. Managers need to develop a business strategy for setting a path that can be followed
by employees to achieve its goals and objectives (Astrachan, 2010). The managers are able to
align all the strategies and activities as to get a consistent or enhanced performance. Basically it
is a tool that is used for gaining competitive advantage over its competitors and maintain that
edge for boosting its profitability. This report is based on Volkswagen which is a global car
manufacturer and seller. It is facing certain issues due to environmental scam that took place in
USA. It needs a business strategy which will aid in repayment of debt and penalties while
maintaining all the resources and capabilities. There are different types of tools and techniques
which are available for company and managers that can be used for enhancing productivity wile
investing minimum resources.
TASK 1
1.1, 1.2 & 1.3
Covered in PPT
TASK 2
2.1 Organisational audit
Any organisation that is offering its products in market and have a global presence needs
to keep on analysing its abilities by conducting organisational audit. It assists in identifying
various variances that are hampering company to serve its consumers in major way. Organisation
audit refers to an activity that is conducted for assisting company in improving its operational
capabilities as it is able to identify its strengths and weakness (Bharadwaj and et. al., 2013). This
aids in achieving all goals and objectives in a very effective and efficient manner. SWOT
analysis will be used as a tool to determine various strengths, weakness, opportunities and
threats. There are certain gap which are leading to inefficiency and lower level of productivity.
There are manufacturing facilities of company in more than 27 countries and it is present in more
than 100 countries which makes it more complicated to handle all the operation's. It is very
1

important for company to analyse its own capabilities against the standards so that it can achieve
its targets.
The SWOT of VW AG is as stated below:
Strengths Volkswagen is a multinational company that have earned the tag of being the
most quality and efficiency oriented company. It has certain strengths which are
mentioned below:
 Massive range of products are available in market which belong to
company.
 One of the biggest recruiter in market. Currently has more than 350,000
employees.
 The company is already engaged in motor sport and hybrid cars
segment.
 Very effective promotional activities.
 Efficient and effective manufacturing
Weakness There are certain issues which needs to be addressed by company:
 There is very tough competition in market that needs to be managed. It
is on constant rise.
 Due to competition company have limited market share and growth rate.
 The environmental scandal has hurt organisation image.
Opportunities There are certain opportunities available in market which are:
 Organisation needs to keep on expanding into new developing market.
 There is requirement to keep on updating features in cars.
 Also organisation has to form ventures or interact with no German
manufacturer for market knowledge.
Threats There are threats that can affect profitability of organisation:
 Competitors are coming up with new features which are very innovative
and attractive.
 Raw material is costly which is increase the over cost of production.
 Environmental treaties are affecting its plans.
 There are different laws which are enacted by host country government
2

to protect local manufacturers and companies.
2.2 Environmental audit of Volkswagen
There are various factors that are there in organisation internal and external environment.
The managers in VW AG has to keep on analysing all the factors that can impact company
productivity and profitability (Campbell, Edgar and Stonehouse, 2011). Environmental auditing
is conducted for analysis and evaluation of all factors that are there in the micro and macro
environment of company. Volkswagen can use PESTLE analysis as a tool to evaluate all the
factors that have direct and indirect impact on company:
PESTLE of Volkswagen: Political: This is a very dynamic factor that has direct impact on company that is working
in multiple regions. VW AG has to keep on analysing the acts and changes in the policies
of different government as to ensure that its operations are not impacted. For example,
there uncertainty in UK due to government change and also Brexit. This is leading to an
environment where business houses are unsure where the whole market will go (positive
or negative). Economic: There are certain economic complications that are there for company. The
penalties forced by US environmental commission has to be managed with a strategic
approach (Casadesus-Masanell and Ricart, 2010). Also the inflation rate, growth of
economy and recession has its own impact. Social: The changes in society are very sudden and threatening to company. With time
their needs and demands are changing also due to migration and globalisation, the culture
and social structures are changing which is leading to a complex diverse society. Technological: Every company is trying to develop or adapt new technology as to
improve efficiency level and boost its image as a innovative manufacturer. Legal: There are various changes that will be taking place once Brexit is complete
(Eccles and Krzus, 2010). Company has to ensure that the labour that is working in UK
but belongs to EU nations do not get threatened in any way.
 Environmental: There are different environmental treaties which are being signed and
enforced. The home country of VW AG that is Germany plans to ban selling of cars
running on fossil fuel by 2030. company has to prepare vehicles that can run on
electricity or other source of energy.
3

2.3 The importance of the stakeholders in preparing of the strategies
VW AG has its operations in more than 100 countries while in 27 it has manufacturing
facilities. It is spread in a substantial field that has to be managed in a strategic manner (Elliot,
2011). There are various stakeholders which are engaged in the operations of organisation. The
company has to utilise the stakeholders matrix analysis which aids in segmenting various parties
as per their level of interest in the operations.
KEEP SATISFIED
(Highly interested, maximum power)
These parties are directly involved in the
decision making process and they have to be
informed with all essential information.
 Shareholders
 Employee's
MANAGE CLOSELY
(Lower interest, more power)
These parties need to be informed as to avoid
any confusion and issues. They do not need to
get bored and for that they have to be provided
with important data.
 Suppliers
 Government
MONITOR
(more interest, less power)
They need to be stated about all strengths and
weakness as well as performance on half
yearly or annual basis.
 Customers
 Financiers
KEEP INFORMED
(less interested, less power)
It important to cater to their needs but constant
interference can lead to disruptions.
 Local Community
Stakeholders analysis is very important and it aids organisation in managing all the
parties in a very effective manner (Hahn, Kolk and Winn, 2010). The importance is stated below:
 Volkswagen will be able to create a balance between its CSR and other developmental
responsibilities in a very effective manner.
 It aids in motivating people associated with organisation.
 Stakeholder analysis informs strategic planning and aids in development of plans
specially for different parties involved.
 It brings in alignment between organisation activities and stakeholders benefits.
All the involved stakeholders are very important and necessary as they provide vital
resources and information which enhances organisation ability to perform and act against threats.
4

2.4 New strategies for Volkswagen
There is need to develop a new strategy for organisation as to assist it in overcoming the
threats and issues such as penalties (Haley, Haley and Tan, 2011). This will also aid in
maintaining VW AG effectiveness and efficiency intact. The organisational audit and
environmental analysis aids in providing all the important and essential data that is necessary to
formulate strategy for company. This plan of action will be used for reducing the gaps that exist
in organisation capability and standards. Volkswagen has requirement of a plan that will assist it
in maintaining and conserving its activities and resources respectively. The company has to pay
up a hefty fine to US authorities which will put burden on its financial condition. The new
strategy will be used for enhancing organisation capabilities while keeping resources
consumption at optimum level.
The company will be adopting limited growth strategy which is a very well known
method to maintain capabilities while growing them at a very lower level of investment.
Volkswagen will be able to expand into new market but at a very lower cost as it will be using
the approach of joint venture for establishing itself in the market. It will require less resources
while keep its capabilities as well as decision making power maintained. Also with ban on
selling of petrol diesel cars, company needs to focus on electric vehicle market as well as hybrid
segment. With a futuristic approach it will be able to adopt and change itself to be a company
that is ready for coming trends.
3.1 Alternatives strategy appropriateness
There are various strategies which can be used by company as to ensure that its
effectiveness and efficiency is maintained and all resources are channelised at optimum rate (Li
and Tan, 2013). To pay up it debt and penalties company need a strategy. There are mainly 3
types of strategy it can adopt: Substantive growth strategy: This is technique that is used by firms which needs a higher
level of growth rate. It is a aggressive method where a company merge or acquire other
organisations as to grow their market share and consumer base at a rapid speed. Basically
these two method are also known to be horizontal and vertical integration. This is not a
recommended strategy for Volkswagen as it requires a lot of resources investment which
is not possible in current scenario.
5

 Limited growth strategy: This is a strategy which states that company should focus on a
consistent growth if it has less resources or issues related to finances. It promotes joint
venture as a method that can be employed for expansion and growth (Melville, 2010). It
is a very efficient method that needs less resources to maintain its capabilities and ensure
better performance. The company has to use this strategy as its prime method till the time
whole situation do not comes under its control. After this situation is solved, it can again
shift to substantive growth strategy.
◦ This is a recommended strategy for Volkswagen as it will enable them in managing
their resources in more effective and efficient manner.
 Retrenchment: this is a strategy that is used at the time when company is going through
issues that can not be managed (Meskendahl, 2010). It has to roll back all its functioning
and other operations as to secure its resources to pay back its debts.
3.2 Justification for selection of strategy
The strategy chosen for sorting issues in a effective manner is Limited growth.
Volkswagen has to pay a huge penalty of 19 billion dollars to US environmental commission and
this will cramp up its operations and operational efficiency. To avoid resource over consumption
company has to find a way which can be used for attaining a higher level of effectiveness. The
very first reason behind choosing a limited growth strategy is a hefty penalty payment. The
second reason is maintenance of current capabilities and keeping up operations where its not
possible to pull back.
The limited growth strategy will aid in lowering down the cost of activities by increasing
efficiency levels and effectiveness. The quality of products and services will also improve as
efficiency will aim at lowering down cost by frugal innovation (Mithas and Lucas, 2010). It is a
concepts that brings down the cost while increasing the productivity. Also company will be
forming joint venture like it did in China. It will require limited amount of money while
organisation will be able to establish itself in market.
4.1 Roles & responsibilities of personnel in strategy implementation
The management levels in organisation state about various roles and responsibilities that
needs to be fulfilled by individual associated with the job. With introduction of changes in
organisation, the roles and responsibilities of people changes. The new strategy will aid
organisation in managing its functions and operations in a very effective manner. It will also
6

smooth up the process of implementation that will ensure that changes are integrated into the
organisation business process in a effective manner (Montgomery, 2011). There are certain roles
and responsibilities which will be mentioned below: Senior authorities: They are the one who advice managers in implementing strategies.
They formulate various plan of actions that are required to overcome future
uncertainties. These senior managers use various tools to manage and control the
activities that are running in organisation. Engineers and research personnel: These individuals are the one who are responsible
for maintaining and running the whole manufacturing plants. They need to be trained for
increasing their abilities and skills to perform (Verbeke, 2013). It is very important to
keep on introducing them with new technology and methods so that they act and adapt
accordingly. The research personnel are the on who keep on analysing and innovating
existing trends and models as to prepare a better mechanism that will boost efficiency
and effectiveness. Expatriates: The company will send these individual from home country to host nation
as to fulfil duties which requires higher level of efficiency and effectiveness. They are
the one who understand company requirements and are ready to work as per
requirements of organisation. Usually they are sent because company wants an
individual who understand its culture or it is not able to find a skilled individual for post
in host country.
 Managers: They are the one of the who overlook at all the activities. They implement
plans and procedures which are required for achieving goals and objectives. The
manager has to communicate essential data to all managerial levels as well as he needs to
delegate authority and work between his sub-ordinates (Scholes, 2015). They are also
directly engaged in decision making process where they provide essential information
regarding trends and other factors. A manager in Volkswagen has to keep on analysing
all the activities and trends as to manage them in a effective manner.
These are the roles and responsibilities of various individual are involved in various
business process.
7

4.2 Resource requirements for implementing the new strategy for VW AG
Any change in policy or procedure requires resource which supports whole process in a
very effective manner. VW AG has to ensure that it is able to integrate all the changes that are
taking place or are being enforced in a effective manner (Spender, 2014). Also various types of
resources are needed to ensure that all plans are executed in a effective manner as to obtain
results that will aid organisation in increasing its productivity and profitability. The resources
required are stated below: People: They are the most important resource which enable company in functioning. If
there are no people element present then it will be impossible for Volkswagen to run any
of its activities. The managers need to ensure that right person is placed on right job as to
get a very higher level productivity and satisfaction. Finances: If there are no finance available then organisation wont be able to work as per
requirement. Every activity has to be supported by sufficient level of monetary resources
so that it keeps on running (Teece, 2010). It aids in running every single programs and
departments. There are various process of buying and selling as well as paying salaries
and wages which needs finances. These resources state about condition of company in
financial terms. Finished and semi-finished raw material: These are the goods which are used by
company as to manufacture final goods in a effective and efficient manner. Managers
needs to look at suppliers who will provide raw material at a very lower cost. This will
increase margin of profits.
 Fixed resources: All the manufacturing and different facilities that are owned by
company act as a fixed or physical evidence that has to be maintained and updated with
new equipments. These facilities are sign of company condition and consumer orientation
that is why it is important to maintain them.
4.3 Contribution of SMART targets in business strategy
Volkswagen has a situation which needs to be managed in a strategic manner. If they do
not reserve resources as per requirements then company will have scarcity that will lead to
retrenchment (Smith, Mills and Dion, 2012). All the action plans and procedures need to be
prepared as to tackle the situation while maintaining current capabilities. The managers need to
keep on evaluating the process and activities as to ensure that they are running as per
8

requirement. They have to formulate plans which are based on the concept of SMART targets, as
this will assist in achieving the goals in more effective manner. It is a very efficient and realistic
concept, specified, measurable, accurate, realistic and time bound is the expanded form of
SMART.
A very simple of SMART target is as follows: if a person is told to work for 120 hours in
a month then he might feel pressurised, but he is told to work for 30 hours a week then he will be
able to do so easily (Woodcock, Green and Starkey, 2011). The SMART objectives for
Volkswagen are as follows:
 Expanding in African market with the aid of joint venture.
 Enhancing efficiency level by 30% in next one year.
 Increasing sales by 20% by next financial year.
 Maintaining current abilities and improving production rate by 2%.
These SMART targets will enable company in setting a path that is very specified and is
oriented towards achievement of long term and short term goals.
CONCLUSION
This report has covered all the aspects which states about the impact that will be there on
Volkswagen. There are various capabilities which are there in company but needs to be updated
as to face the dynamic environment. Business strategy has to be developed for setting a path that
will be followed by all individuals working in an organisation as to attain a level where
efficiency is higher. The environmental scandal has damaged company image and that is why it
has to invest into marketing as to improve it. There is huge requirement of engaging and
interacting with non German car makers as this will provide company an insight about their
capabilities. The managers have to set goals as per SMART target concept as this will enable
employees in achieving specified and measurable objectives. Overall it is very important for
company to keep on improving its efficiency and use limited growth strategy till it pays of all
penalties.
9

REFERENCES
Book and Journals
Astrachan, J. H., 2010. Strategy in family business: Toward a multidimensional research agenda.
Journal of Family Business Strategy. 1(1). pp.6-14.
Bharadwaj and et. al., 2013. Digital business strategy: toward a next generation of insights.
Campbell, D., Edgar, D. and Stonehouse, G., 2011. Business strategy: an introduction. Palgrave
Macmillan.
Casadesus-Masanell, R. and Ricart, J. E., 2010. From strategy to business models and onto
tactics. Long range planning. 43(2). pp.195-215.
Eccles, R.G. and Krzus, M.P., 2010. Integrated reporting for a sustainable strategy: One Report
has the potential to significantly change how companies operate and investors think,
shifting the focus from that of meeting short-term financial goals to developing a long-
term business strategy that not only makes a commitment to corporate social
responsibility, but also to a sustainable society. Financial executive. 26(2). pp.28-33.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly. 35(1). pp.197-
236.
Hahn, T., Kolk, A. and Winn, M., 2010. A new future for business? Rethinking management
theory and business strategy. Business & Society. 49(3). pp.385-401.
Haley, G. T., Haley, U. C. and Tan, C., 2011. The Chinese Tao of business: The logic of
successful business strategy. John Wiley & Sons.
Li, Y. and Tan, C. H., 2013. Matching business strategy and CIO characteristics: The impact on
organizational performance. Journal of Business Research. 66(2). pp.248-259.
Melville, N. P., 2010. Information systems innovation for environmental sustainability. MIS
quarterly. 34(1). pp.1-21.
Meskendahl, S., 2010. The influence of business strategy on project portfolio management and
its success—a conceptual framework. International Journal of Project Management.
28(8). pp.807-817.
Mithas, S. and Lucas, H. C., 2010. What is your digital business strategy?. IT professional.
12(6). pp.4-6.
Montgomery, C. A. ed., 2011. Resource-based and evolutionary theories of the firm: towards a
synthesis. Springer Science & Business Media.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Smith, T. A., Mills, A. M. and Dion, P., 2012. Linking business strategy and knowledge
management capabilities for organizational effectiveness. In Conceptual Models and
Outcomes of Advancing Knowledge Management: New Technologies (pp. 186-207). IGI
Global.
10

Spender, J. C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise. OUP
Oxford.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Wang, J. and Verma, A., 2012. Explaining organizational responsiveness to work‐life balance
issues: The role of business strategy and high‐performance work systems. Human
Resource Management. 51(3). pp.407-432.
Woodcock, N., Green, A. and Starkey, M., 2011. Social CRM as a business strategy. Journal of
Database Marketing & Customer Strategy Management. 18(1). pp.50-64.
Online
Business Strategy, 2017. [Online]. Available Through:
<http://finsburyfoods.co.uk/who-we-are/business-strategy/>. [Accesses On 21st August
2017].
Business Strategy, 2017. [Online]. Available Through:
<http://www.green-alliance.org.uk/business-strategy-for-a-better-world/articles/
sophiaTickell.html>. [Accesses On 21st August 2017].
Business Strategy, 2017. [Online]. Available Through:
<https://www.strategyand.pwc.com/business-strategy>. [Accesses On 21st August
2017].
11