Strategies for Volkswagen to Increase Market Share

The assignment is based on the business strategies that Volkswagen can employ to increase its market share in India and Kenya. It involves carrying out a PESTLE and SWOT analysis to identify the strengths and weaknesses of the company, as well as the political, social, legal, environmental, technological, and economic factors that affect it in each country. The assignment also evaluates the contribution of SMART targets to achieving Volkswagen's strategy for increasing its market share.

Business Strategy

INTRODUCTION
To set goal of firm or to achieve the business objective every company need a
business plan which would help the company to do so. Basically, the business strategy
is a long-term planning of the enterprise in achieving the long-term business
objectives. The present report is based on the strategic plan and the implementation of
the plan in Volkswagen (VW) AG, the worlds the largest automotive manufacturing
company. This report will address the importance of the stakeholders' analysis while
hypothesize new strategy for VW AG and also presenting the strategy. Also, assessing
the roles and responsibilities of the personnel at VW AG who implement the strategic
planning. The report will also present the business mission, visions, objectives, goals
and core competencies which hep while formulating plans. How the techniques used
while developing business plan are effective for the business to grow and sustain in
the market.
TASK 1
Enclosed in ppt
TASK 2
2.1 Analysing the strategic positioning of Volkswagen AG by carrying out an
organisational audit.
All worlds the best passenger cars namely Bentley, Bugatti, Lamborghini, Audi
Porsche, SEAT, Skoda and Volkswagen marques are a part of Volkswagen AG which
is the worlds largest automotive manufacturing company. By SWOT
analysis, one can understand the strengths, weakness, opportunities and the threats of
the company. This will be helpful for the company to generate more profits out of
selling the car in the markets (Klettner, Clarke and Boersma, 2014). As Volkswagen is
the second largest auto mobile manufacturing company of the global after Toyota and
trio of its cars are in top 10 list of the best-selling cars of all time according to Wall
street 24/7. For carrying out of the organisational audit and analysing the strategic
aligning, SWOT analysis is very important means to determine the strengths,
weaknesses, opportunities and threats of Volkswagen.
Bowman's Strategy Clock-
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With the help of the Bowman's Strategy Clock Volkwagen can also analysis the
marketing positioning of its comapny with the comparision with other competetors
like Toyota. In this method Volkswagen can considere competitive advantages in
relationship with to cost advantage and differentiation advantages.
Value or price Low price Medium price High price
High added value This is hybrid with
low cost and
reinvestment in low
price and
differentiation
This is differentiation
with perceived added
value, yielding
market share benefits
or allowing price
This focus on
differentiating with
perceived added value
to a segment
Medium added
value
This is cost leader (Here the clock is
made )
Raise price to get
higher profit margin
in market
Low added value This is segment
specific
This is increasing price and low value where
risk of losing the market share is more and
company is in monopoly positioning.
SWOT analysis of Volkswagen
 Strengths- as Volkswagen is the world’s leading automotive manufacturing
company and most profitable in the automotive industry (SWOT analysis of
Volkswagen, 2017). The main strength of the company is its presence all over
the world operating in about 153 countries and is also expanding very fast.
Volkswagen has the largest factory in Germany, China and Brazil producing
the most of the auto mobiles and exporting them to rest of the world. It is also
the worlds the oldest car manufacturing company so the brand values are more
than the others like Honda, Hyundai and Toyota. Volkswagen is manufacturing
about 26,000+ motor vehicles in the world on any given day (Pisano, 2015.).
The demand of the cars manufactured by Volkswagen is very strong in Europe
and in USA and growing with a pace around the world. But because of the
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emission scandal in the year 2015 there was a solid drop from 18th rank to 57th
rank in the worlds the highest ranked brand as in 2016 with the brand value of
about 19 billion dollars. Volkswagen is having numerous skilled employee
working in all the factories with approximately 6lakhs workers in about 11
countries in Asia, 20 European countries and in USA and Africa. The
operations are well managed in all these factories as manufacturing about
26000+ motor vehicles in a day is not an easy task to be done by any car
manufacturing company. The cars manufactured in Volkswagen are certainly
known for its high technology, new innovations and inbuilt trust for their
performance. It is having a strong base for the research and development
operative soundly on the open demand, plan and the technical inventions of
automobile. The R&D of Volkswagen cost it about 3.8% each year and in year
2015 after the emission scandal R&D cost about €11.9 billion. Moreover,
company is said to have increased in the allocation of the funds in the R&D
department which will help in growing stronger day by day. Volkswagen has
been performing very good in the car market in China from almost four
decades. It has covered about 20% shares in China's car market and is having
13 factories in China at present (Smith, 2013). Volkswagen also have a
strongly diversified portfolio owing 15 brands under it including Bentley,
Bugatti, Lamborghini, Audi Porsche, SEAT, Skoda and Volkswagen marques.
Volkswagen is the top most revenue contributor in USA against top brands of
world and also top gross contributor in Germany and European nations.
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(Source: SWOT analysis of Volkswagen, 2017)
 Weaknesses- besides a good deal of strength as a brand in the car manufacture
company Volkswagen has a number of weaknesses and the main is the
emission scandal of 2015. This scandal affected the whole brand image and the
reputation of the company close to 5 million cars from across the world were
returned to the organisation. As the most cars were not environment friendly
the carbon-die-oxide harms the ecosystem and three of the most active brands
were emitting the excessive carbon-die-oxide. If the government took any
strong actions against it the company would have harmed with a very drastic
image failure. Volkswagen is also having very weak market positioning in
Indian car market. It has only 3% market share in a big country like India and
having 3 factories here. Volkswagen is not able to penetrate against Maruti and
Hyundai in the Indian Market (Alsudiri, Al-Karaghouli and Eldabi, 2013).
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Illustration 1: SWOT analysis

Beside India Volkswagen is having a weak market position in USA too with
about 4.8% car market share in 2014. Volkswagen is spending a lot of dollars
in the advertising of brands like Audi, Bentley and Porsche neglecting the
parent brand Volkswagen itself. It needs to develop and strengthened the parent
brand first then the others.
Volkswagen has the brand image in the market of car manufacturing company and the
brand image was spoiled only because of the emission scandal of 2015. Rather, this
the company is very well settled in the auto mobile industry and is one of the highest
earning company of the world.
2.2 Carrying out environment audit for Volkswagen AG.
Environment audit is means the evaluations based on to identify environmental
compliance of a company and management system to implement those gaps along
with corrective actions. The environment audit is carried out by the PESTLE analysis
of Volkswagen to know all the outer or the external factors which affect the company.
To identify the future trends on the political, economic, social, legal and the
environmental factors may impact Volkswagen. In this environment audit the
Volkswagen can also do its customer analysis and competitors analysis by which the
company can make out its positioning in the market.
Customer analysis-
In this Volkswagen will do the segmentation of its whole worlds market and
see who are the potential buyers of its which model of automotive and who are not.
This will enable Volkswagen to determine the demand and supply in the market and
thus generate the revenues for the set demand.
Competitors analysis-
This also help Volkswagen in critically analysing who all are its competition in
world market. Like in India its main competition is with Toyota and Maruti. By this
competitors analysis Volkswagen will certaily come to know with whom it has to
fight in the market.
 Political Factor: Volkswagen is having its presence in not just a couple of
countries but in about 150 countries of the world which shows that has to face
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many political difficulties. The political conditions of all the countries are not
the same as to one another and the difficulties faced by the company are also
very differentiating. The political strategies made by Volkswagen will be
different in Europe than that of Asia and Africa. As many banking and
financial sectors of countries are providing the vehicles loans at the set interest
rates as decide by the government policies so they have a big role in the sale of
cars.
 Economic Factors: Automotive industry plays an essential function in the
economic growth of many nation by contributing in the national income of
nation. Volkswagen also contribute in the GDP of many countries like in China
about 20% share of car market in with Volkswagen which is contributing in
China's GDP (Leonidou, et.nl, 2015). This is main reason why many
developing economies of the world are helping in the development of
Volkswagen as well. The automotive industries also help in development of
other industries like steel and glass ultimately developing nation.
 Social Factors- Society play a crucial role in the alteration of the automotive
manufacture it affects the society in which it is operating. Volkswagen is
giving employment to a large section of society all over the world more than
6lakhs workers. These workers affecting a larger part of society directly or
indirectly and Volkswagen changing the living standard of the people
associated with it. While Volkswagen also need to handle the social and the
religious faith issues like increasing accidents on the roads.
 Technological Factors: Volkswagen is among those companies who is having
the best and the most innovative car manufacturing technology in the world. It
is manufacturing both the classical and sporty brands of car under one parent
company. Cars are the most complex products of all time so the techniques
used to make one should be unique of its kind. Other than Volkswagen Toyota,
Mercedes and BMW are world leaders in the car manufacturing industries as
the technology they use are the latest one.
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 Environmental Factor: in most of the plants of Volkswagen in world smoke
is emitted in the air the waste material is thrown in water thus polluting the
environment (Mellat-Parast, et.nl, 2015). The car uses petrol and diesel as fuel
to run them due to this the environment gets polluted and this should be
avoided by Volkswagen. Today in many countries of the world pollution is the
main problem which stops them in easily allowing the government to set up or
launching any car manufacturing unit.
 Legal Factors: the legal requirements are also the one of major macro
environment factor affecting the company to set up. Volkswagen as is
operating in more than 150 countries of the world so it has to follow about 150
differentiating laws of all the countries. The laws relating to user protection
law, intellectual property law, labour law, emission law and the taxation laws
are of main concern to Volkswagen and that too of 150 countries. Like the
many labours working in all the plants of Volkswagen are required to
understand labour law of different countries.
2.3 Assessing the significance of the stakeholder analysis while formulating new
strategies for Volkswagen AG.
The different stakeholders of the Volkswagen AG are its customers, different
governments, shareholders, management, employee's and its suppliers of raw
materials or the parts (Stakeholder analysis of Volkswagen. 2017). For Volkswagen it
is necessary to analysis all the stakeholder of the company by systematically gathering
and identifying qualitative information to determine that who will be interests be taken
to develop the plan or any policy of company. Volkswagen need to analysis first that
who all are the stakeholder of the company who must be considered before making
any policy of the organisation.
(Source: Stakeholder analysis of Volkswagen. 2017)
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 Customers- they are the main stakeholder of any company or organisation
with the support of which the company is working in the market. Volkswagen
first need to identify its potential customer as it is manufacturing low ranged
cars (Volkswagen Polo) for middle-class families, high ranged cars
(Volkswagen Beetle) for the upper-class families and expensive cars
(Volkswagen Nardo W12 Coupe) for the higher-class families. Volkswagen
need to identify these types of customers in every country it is operating and
then form the strategies for the company.
 Different Governments- As Volkswagen is selling the cars manufactured in
about 150 countries of the world so all governments of these countries are the
stakeholders of it. Volkswagen need to follow various rules, laws, regulations
and policies of all the countries without any loopholes or otherwise it need to
pay the damages. Every government of the country are having their own laws
regarding the imports or the exports and the taxation policies also differ. While
making the new strategies of Volkswagen it need to follow the rules laid down
the government of that particular country.
 Shareholders- Shareholder have their importance in implementation of the
strategies of any company (Eaton and Kilby, 2015). Shareholders include all
the institutions and individuals who are allocating their funds in Volkswagen
to help it grow and develop. As they are the one who invest their money in the
company so they can get the returns from their money and thus helping the
company to grow in all aspect. Volkswagen is very big company and having
the plants in 150 countries of the world so the shareholders are also in large
number they must keep their interest also in mind while formation of the
strategies.
 Employees- There are about 6lakhs workers working in the company in about
150 countries so keeping their interest while making the plan is also of
importance for Volkswagen. As the employee working in the company to
develop it and make it better than others in the market. They are the real
essence of the company who work day and night in any company's growth.
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 Suppliers- all the raw materials and the parts of cars are being supplied by the
suppliers of the Volkswagen and they are also playing the essential role in the
strategies making of company. Their interest is to be kept in mind while policy
making by company. In all the countries of in which Volkswagen is operating
suppliers are different from each other, hence their own rules and laws must
also be different.
2.4 Presenting a new strategy for Volkswagen.
As after the emission scandal of 2015 Volkswagen certainly needs to develop
or change its present strategy with regards to the environment (Hanks, 2015).
Volkswagen is not having any strategy or policy related to environment safety and the
governments of all countries where it is having its plants has ordered it to make
accordingly. Environmental policy must be including all the environmental action
plans like the energy, water, air, waste management, biodiversity and education for the
sustainability. Now there are also growing demand of the environmental strategies all
around- from the customers whose interest are increasing in low emission and
environmentally friendly vehicles, investors expecting to judge the resulting risks and
government who are making regulations regarding the environment. Volkswagen AG
now want to became a role model in all things related to environment and set the
future plan “TOGETHER – Strategy 2025”. The target is to reduce the carbon
footprints, harmful emission and the resource consumption as well to save the
environment and the natural resources for the future consumption too. Volkswagen
has also drawn up several guidelines related to environment like addressing the global
challenges of climate reducing the carbon-die-oxide emission from plants,
conservation of natural resources like water, soil and maintaining air quality. Making
new innovations or developing the existing one so that they are more environment
friendly and researching the environment of all economies of world. The global
principles relating to environmental protection activities in Volkswagen AG have been
expanded and improved every year according to need (Švárová and Vrchota, 2014).
Volkswagen has also well informed, qualified and dedicated workforce who know
how to implement the set strategies relating to environment of any nation.
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Volkswagen neet to follow a tough environmental strategies so that the same
problem could not be raised again in the future. It should follow the environmental
policy of all the countries so that it could not face the problem. Environment policy
and strategies should include the new and refreashed innovation and researce &
development. And it should also focus on the “TOGETHER – Strategy 2025” which is
a strategic tool to gain the marekt positioning in all the countries in which it is
operating but not performing good.
TASK 3
3.1 Analysing the appropriateness of alternative strategies relating to market entry,
substantive growth, limited growth or retrenchment for Volkswagen AG.
Market Entry
The Volkswagen AG is already working in about 150+ country of the world
but still it need to expand its operations all around the world and the parts where it has
not reached yet. And where it has reached but not growing at a good and sustainable
pace. Volkswagen is having its operations in about 150 countries with 100 plants in 27
countries and now it need new strategies regarding to market entry, substantive
growth and limited growth in some already operating country. Market entry strategies
depend upon the type of country Volkswagen wants to enter into for entering in China
the policy will be different from that of Kenya. Volkswagen recently inaugurated the
vehicles' production plant in Kenya near Nairobi as the organisation wants to develop
their position in the fast-growing African market. This plant in Kenya will be the third
production plant in Africa after in South Africa and in Nigeria. The new market
strategy of Volkswagen group is to directly set up the plant of manufacturing in Kenya
rather than by joint venture or any merger and acquisition (Vaidyanathan and
Aggarwal, 2015.). As Kenya is an opportunity in the market of Africa and the nation
has an outstanding standing within the region of East Africa also the most strong
economy of East Africa.
Growth
Volkswagen also need to make new strategies to grow its market in India and
USA where it is having a weak market position. In the Indian car market Volkswagen
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is operating since 2007 it has been 10 years from then but still it is struggling to settle
in the Indian market. In India, there is overall slowdown in the passenger vehicle
sales, lower penetration in the market and very stiff competition with big brands like
Maruti and Hyundai. It entered into India with the aim to grab 20% of market share in
India by 2018 but not succeeded yet as per the plan. India been the 7th largest
passenger car market in the year 2015 but the market share remains with Maruti and
Hyundai only about 70%. So, it need to grow in the Indian market to increase the
market share (only 5%) in the Indian market as Skoda is the only car of Volkswagen
which is performing good in car market of India (Pitelis, 2015). Volkswagen will be
investing about $250 million in India through decade to increase the production and
sales and also to introduce new models in the market.
Limited growth and Retrenchment
Volkswagen need to increase its growth in Europe where it is continuously
lagging behind in sales. This German car maker company in rapidly decreasing its
sales by 3.8% in this year's first quarter. As because of the financial crisis of many
European nations but now it is increasing the car sales with recovery in the market
after the downtime. Volkswagen need to improve its sales of car in the European
market to increase the profit and growth of it. Volkswagen is also experiencing a
limited growth in USA car market over the last 2 years and has to make a new strategy
regarding the growth of the car market in USA and in Europe. Volkswagen also need
to lower down or cut down the cost of manufacturing the car for the lower in the price
structure so that customers can afford them to purchase the car easily.
3.2 Justification of the selection strategy.
The strategies selected by Volkswagen will help them to increase the sales and
rising the profit margin of the car in every market that of Kenya, India, USA and of
Europe too. They certainly need to make differentiating strategies for all the nations of
its operations as because of various forms of policy in all countries of world. The
policy made for India will not work in Kenya or neither in USA (Brush, Edelman and
Manolova, 2015). The set strategies have to differ form each other according to the
economic conditions of various other countries. The market entry strategies, growth,
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retrenchment and the limited growth strategies have to be different form each other as
to be applied in diverse countries.
All the strategies which Volkswagen need to follow in all other countries like
that of Kenya or in India or in USA should be different form each other. As in Kenya
Volkswagen is ready to start its new manufacture plant and in India and in USA it
need to increase its market share. So in Kenya Volkswagen must make a whole new
plan and marketing strategies and in India or USA the existing plan need to be
improved. These differentiating strategies used in various other countries will be
helping Volkswagen to grow and sustain in the market and grab greater market share.
The strategy must carry the SAF analysis to see how suitable, acceptable and
feasible the strategies are. The plan must be suitable in the perticular country only as
all the countries in which Volkswagen is operating are different from each other
having their own market and economic conditions. The set plan must be acceptable by
the management, employee's, customers and most importanly the goverment of that
perticular country. And lastly the plan must be feasible i.e. It must be practical and
possible to do. The plan must be perfectly easy and convenient to Volkswagen in tjhat
perticular country.
TASK 4
4.1 Assessing the roles and responsibilities of personal in charged with strategies
implementation in Volkswagen.
Once the strategies have been formed it is the responsibility of the organisation
to help them in the implementation of those strategies of Volkswagen. The strategic
implementation requires the work and attention of the employee and management at
all levels within Volkswagen. These changes need to be implemented on both micro
and macro level for the desired changes in the organisation inside and outside. But
first the strategies must be communicated to the employee's and the management team
so that they can understand to policy and help to implement them.
 Management role- is to see that the execution is going according to the plan or
not and it is their responsibility to measure Volkswagen performance according
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to the strategies (Angeloska-Dichovska and Mirchevska, 2017). Volkswagen
leadership should identify what implementation are and then create an
implementation team which consists of representation from each group. The
directors or the senior management of Volkswagen must also play a crucial role
in the implementation of the set plan and business strategies. As they are the
people who are directing the staff how to do and what to do to gain the markert
share. Thier role is to see that the plan is understood by all the employees at
all ;levels of Volkswagen/.
 Employee role- The employee should understand all the policy and help in the
implementation of the set strategies. They are the one who actually help the
company to implement the strategy and need to grow Volkswagen in the
correct pace. In the employee strategic consultants and project planners are also
included who play the role in implementation of the business strategies of
Volkswagen. They see how suitable, acceptable and feasible the strategies are
to implement them easily. If the plan is not possible in the long run of
Volkswagen then the project planners should not implement it or should do
necessary changes. Their role is see how well the plan is and how it can be
useful to the company cost vise and revenue vise as well.
4.2 Analysing the resources requirements for the implementation of new strategies for
Volkswagen.
For the execution of the strategies made by Volkswagen whether related to new
market entry or the growth in existing market it requires the resources like land,
labour and capital. For the successful implementation of the strategic planning of
Volkswagen it should have the available resources to meet out the objectives in every
part of the world. The resource include the financial, human and physical resources
which will help Volkswagen in achiveing the business objectives.
Financial resource- Volkswagen should raise funds form the public of the countries
and the government to help them in implementation of strategies in India, Kenya and
USA. In India for growing the market share in the car industry Volkswagen would be
investing about $250 million in this decade. In USA market, also it need a huge
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amount of fund to expand its growth and launch new models of Volkswagen in the
American car market.
Human resource- There will also be requirement of qualified personal to choose
wisely as to how allocate this huge fund in Volkswagen. As it started a new plant in
Kenya there Volkswagen need to employ land, labour and capital to grow in the
Kenyan market (Apenko, 2017). The labour or the employees would be getting form
Kenya only but it need to raise the fund to increase the sales and profitability.
Physical resources- this include the land to set up Volkswagen plant in Kenya which
company will be getting and owing the land or taking it at lease ir rent. Technical
know how also include in physical resource.
4.3 Evaluating the contribution of SMART targets to the achievements of strategy for
Volkswagen.
SMART targets are known as specific, measurable, achievable, relevant and
time bound. As Volkswagen is experiencing a slowdown of its market share in India
and when it came in 2007 its aim was to grab about 20% of India's car market share
till 2018. But unfortunately, till 2015 it was only 5% so it changed the aim to 8% form
20% till 2018.
 Specific- Volkswagen targets in Indian car market is specific to achieve 8% of
the car market share.
 Measurable- This target is measurable as the company needs to attain 7-8%
from the India market share and can achieve with the given resources and the
set objective.
 Achievable- In 2015 it was 5% and till 2018 it need to grow by 2% and make it
8% which is achievable from the before target of 20%. So it should set such
target which is achievable not those which the organisation can't achieve in the
set time period or with the given resources.
 Realistic- The set objectives should be based on the realistic grounds and not
on any assumptions for setting it should be appropriate and on the agreed
terms.
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 Time-bound- As the company was to achieve this target of 8% till the year
2018 so all the targets set by the company should be time bound only.
CONCLUSION
From above report on business strategies it is concluded that for the strategies
to be implemented by organisational, mission, vision, goals, objectives and the core
competencies are very important. Volkswagen been world’s 2nd largest automotive
manufacturing company is having many competitors in the car industry with whom it
has to compete. After the emission scandal of 2015 by Volkswagen its brand image
and reputation was very affected in the world market from which it is still recovering.
Each and every stakeholder of the company forms an important role in new strategies.
By carrying out the PESTLE and SWOT analysis the company can find out the inbuilt
strengths and the weaknesses and can also synthesis who political, social, legal,
environmental, technological and economical factor of each country affect
Volkswagen. It is also important to estimate the resource requirements for
implementation of a new strategy for Volkswagen.
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