Influence of External Forces on Volkswagen

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
P1 Influence of external forces on Volkswagen.........................................................................4
M1 Critical analysis of macro environment on Volkswagen and its operations.........................5
TASK 2............................................................................................................................................6
P2 Analysis of internal business environment of Volkswagen...................................................6
M2 Evaluation of strengths and weaknesses of Volkswagen.....................................................8
TASK 3............................................................................................................................................8
P3 Application of Porter' Five Forces model for understand market of Volkswagen................8
M3 Strategies for improving competitive edge.........................................................................10
TASK 4 .........................................................................................................................................10
P4 Strategic plan of Volkswagen using Ansoff Matrix............................................................10
M4 Volkswagen's tangible and tactical objectives....................................................................12
CONCLUSION..............................................................................................................................12

INTRODUCTION
Business strategy is actions or set of decisions which company take for achieving its
objectives and expected standards. Business strategies provides top levels managers with an
integrated action plans which helps them in exploring and understanding external environment.
Various elements are present in external environment of business which can be beneficial and
harmful for organisation if company do not act upon them. Business strategy helps company to
observe, analysis and evaluate all opportunities and threats which they can explore and make
future plans accordingly. In this assignment, several tool like PESTLE, SWOT, VRIO and
Porter's Five Forces models are used for analysing and understanding all the aspects related to
business and work in relation with them(Peng, 2017). Volkswagen is chosen for analyses of this
report, which is a German automobile manufacturer. Volkswagen was founded in 1937 by a
German Labour Front and a Nazi Labour Union. It is serving and offering its services to
worldwide customers and headquartered in Wolfsburg, Germany. Volkswagen was the third
largest automaker in world and shifted to second biggest by 2016 and its biggest market is in
China where it makes 40% of its sales and profits.
TASK 1
P1 Influence of external forces on Volkswagen
PESTLE analysis is used to know the impact of macro factors on the organisation and
accordingly identify future trends. It has six elements Political, Economical, Social,
Technological, Legal and Environmental these factors enhance the knowledge of company and
make plans in accordance with it. These units of external environment will let company to take
appropriate measures and work in relation to them. Political- These factor refers to governmental intervention in economy and on different
industries existing in that economy. It basically, related to those elements in which
government has some effects either positive or negative. Volkswagen is facing biggest
issues due to current political environment and tensions going on between US and EU
about trade tariff's(Leonidou and et. al, 2017). The second impact UK government has
on Volkswagen is their new policy of stop sales of diesel car by 2040. These issues are
hindering the company's plans and strategies it made for future and now they have to
make amends in their present function to deal with these problems.

 Economical- It determines the performance of economy and factors responsible for it
like growth of economy, inflation rates, employment and unemployment ratio. These are
some factors which directly or indirectly affects the economy and along with it the
businesses of that economy. The biggest economic issues of element which is affecting
Volkswagen operations in negative form is Brexit. Due to this inflation has gone up,
purchasing power of consumers has decreased which ultimately impacted on the
spending of people(Moseley III, 2017). This leads to decline in demand and supply of
cars and specially luxury cars. Social- This dimension of macro factors represents the preference, customs, values,
beliefs and taste of population in which company is doing business. These elements also
change according to the gender, age, income and size of population along with related
barriers in that social atmosphere. The increasing demand of vehicle and specially cars is
proving beneficial for Volkswagen. These increase in demands is due to the regular
growth of cab and taxi services like uber in UK and around the globe. Technological- This element highlights the impacts of new innovative technologies and
new trend of techno friendly nature people are developing and economy is adopting,
technology is something which is now part of day to day lives of people, it is becoming a
need of customers and general public. Therefore, it has huge impacts on buying decsions
of customers and influence them towards particular brands and products. The new trend
in automotive industry is development of self-driven cars, which are designed with
advanced technology like terrain sensors, mapping cameras and radar
technology(Grayson and Hodges, 2017). This is the biggest technological threat
Volkswagen is facing currently and working on it, to survive, grow and satisfy needs of
buyers. Legal- This dimension is somewhat similar to political factors but with more specific
laws, rules and regulation of economy. It is a very influential factor if the company is
operating on global level, they have to be well informed and attentive about international
laws and global trends. Recently, Volkswagen was charged huge fine by government for
criminal penalties for violation of environmental regulations. This is why its important
for Volkswagen to known and understand all the legal aspects of those economies in
which it operated from keeping itself safe from any legal fees or penalties.