Volkswagen AG Business Strategy and SMART Targets

The report provides an in-depth analysis of Volkswagen AG's business strategy, covering its mission and vision, as well as factors such as limited growth, substantive, and retrenchment. Additionally, it explains the role of SMART criteria in framing and applying plans to achieve goals.

BUSINESS STRATEGY

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Organizational audit.........................................................................................................1
2.2 Pestle analysis of Volkswagen.........................................................................................2
2.3 Importance of stakeholder analysis for formulating new strategies of VW AG..............3
2.4 Presenting a new strategy for VW AG.............................................................................4
TASK 3............................................................................................................................................5
3.1 Alternative strategies relating to market entry.................................................................5
3.2 Justification of selection of the strategy...........................................................................6
TASK 4............................................................................................................................................7
4.1 Roles & responsibilities of personnel in strategy implementation...................................7
4.2 Resource requirements for implementing the new strategy for VW AG.........................8
4.3 Contribution of SMART targets in business strategy.......................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategies are the part of the managements. Generally, it is referring to a long term
plan of action framed to achieve a certain objective or goals. The strategies are game plan of
management or organisation which gives strength to performance of enterprise this describes
how a company will run to grab its pre determine objective. Now a day’s big organisation is
using various techniques/ methods through which they formulate plans, implemented and
evaluated them also track their progress. The core reason for using strategy in bushiness is to
grab higher competitive advantages and expend of business with sound profit. The Volkswagen
is the German auto-makers which was founded on nearly my 28,1937 by German labour front
and have headquarter in Wolfs burgs. The company are serving in worldwide with approx.
105.651 billion and deals in Auto-mobiles. This report is concerning with the vision, mission of
the firm along with some factors are also consider which has importance in strategic plan. The
report is come up with all those plans and methods who are taken by organisation which helps
them to expand business also describes the selection and control of it.
TASK 1
Covered in PPT
TASK 2
2.1 Organizational audit.
Every organization which is engaged in the process of dealing with goods and services in
international market in order to attract large number of customers and earn profit. So that, top
management must ensure that conduct organizational audit for maintain business performance.
Furthermore, audit is helpful for reviewing internal strengths and weaknesses. Volkswagen is the
company which is facing a condition where it has to pay huge amount of penalty to United State
environmental commission (Aaltonen, 2011). Cited firm have to conduct organizational audit for
the purpose of improve capabilities of entire form and manage quality accordingly. With the help
of this audit firm can easily evaluate its performance. This is in-depth study through which
company can easily collect information or data about overall performance. Volkswagen is
presently present in around 100 countries as well as it has manufacturing facilities in 27
countries which are present in every continent of earth.
SWOT analysis of Volkswagen-
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Strength The biggest strength of company is that firm having numerous stores in
entire country also having large number of employees which is equal to or
more than 350000.
Efficiently use available resources for the purpose of meet set of target and
objectives.
With the aid of advance technologies company provide training session to
employees in order to enhance their skills, knowledge and work efficiency.
Top management use several innovations which are beneficial for the overall
growth and development firm.
Staff members who are working in premises are responsible to use their
collective efforts in order to meet set of mission and target of entity.
Weaknesses The biggest weakness of company is that both managers and leaders are not
able to motivate employees towards complete work within stipulated time
period. Through this work of employees has been hampered.
Due to increase continuous competition in market company may not able to
frame new policies and procedure in order to deal with them.
Opportunities Company can build relationship among both employers and employees. With
the use of advance technologies, firm provide various growing opportunities
to large number of people.
Threats The biggest threats of the company continuous increase level of competition.
Dynamic changes in rules and regulation related to formation or running
company in effective manner.
2.2 Pestle analysis of Volkswagen
Political- Volkswagen are face various political difficulties in their development and this is
that firm which is not exist in two or more countries but more than in 150 countries. The
major challenge for Volkswagen company is to interpret the various political pressures.
Economical- Volkswagen contribute in country GDP rate in the present scenario. It is the
major reason for developing economies and assist in development and growth in auto-mobile
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industry which is add the extra point for Volkswagen company (Afifi, 2011). This sector will
help in doing development in other industries such as steel, glass etc. these sector is
important for developing because it emerging economy of such countries such as China,
India and cited firm will take benefit for this.
Social- In the auto-mobile sector, society will play an essential role in the development.
Many people who employs in Volkswagen through direct or indirect method in all over the
world.
Technological- Technology also play a crucial role in providing growth and success to
auto-mobile sector. Also they use techniques and methods for manufacturing new cars like
BMW and Mercedes.
Legal- It is essential for automotive sector is to follow all rules and regulations which are
made by government (Arora and Dharwadkar, 2011). Also they required to import and export
the raw material and develop new cars for customers. This is necessary for the company si to
understand the legal laws which are made by authorities and help in smooth running of
business operations and major functions.
Environmental- The automotive sector is directly affect by the external and internal
environmental factors Volkswagen required to take care of natural environment and also they
need to invest amount in research and development department.
2.3 Importance of stakeholder analysis for formulating new strategies of VW AG.
There are various stakeholders are related with business whom have to understand by
business in an appropriate manner. It is important for an organisation to determine all their
stakeholder properly at the time of mapping so that effective and appropriate strategies would be
carried down (Bhasin, 2011). Thus, VWAG have to better know about their stakeholders of a
company so that they can frame action plan by taking them into account. Managers of a company
evaluate various groups whom are define as stakeholders of a company and related with business
directly or indirectly: Customers: One of a major stakeholder of a business is customer of a company whom
have more influence on business activities. Thus, management have to take them in
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account when they are going to encounter a new strategy for a business. Emission scandal
already created negative image on an association working as well as their goodwill
already impacted. Thus, management have to try to resolve this matter of fact through
implementing effective strategies which are concerned with their connected stakeholders
of a company.
 Government and pressure groups: Another major stakeholders of a company whom
impact association performance from external world are government. Business have to
determine all government policies in account so that they can operate in an appropriate
and effective manner. Volkswagen have to take all regulations in consideration properly
through which they become able to accomplish all targets and goals properly as well as
implement their strategies and action plan effectively.
 Employees: Another important concern for a business are their employees whom are
stated as internal stakeholders of a company. Management have to take them in account
at the time of preparing any new strategy for business as well as try to take them in
consideration as well while formulating action plan. This section motivates them and
encourage all people properly so that better and effective working could promote
(Geneletti, 2010). VWAG have to take their employees concern in account so that they
can prepare such vehicles whom have effective quality.
Importance of stakeholder while designing an impressive strategy:- Shareholders are
playing a very eminent role in facilitating organization by providing support through funds in
order to gain maximum benefits. In fact, number of factors are identified which shows that
stakeholders are indispensable for company success are described as follows:-
 Provides sufficient amount of funds to the organization in order to increase their income
level.
 Offers best opportunities for overall development.
 Redesigned strategies as per consumer needs or demands.
 Come up with innovative and creative ideas.
 Control the possibilities of mistakes and errors.
2.4 Presenting a new strategy for VW AG
The Volkswagen AG requires a new strategy to increase its capabilities to serve market in
efficient and effective way. It requires to arrange its abilities with market pace and make sure
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that it has enough resources available to attain goals in effective manner. After numerous
analysis of environment like PESTLE and SWOT analyses and after doing organisational
auditing, it was found that company is facing issues which could impact this firm. These
challenges could affect company in losing their edge over various market forces. Volkswagen
also needs to pay all amounts that are charged by US environmental commission, to operate and
stay in USA market. For this Volkswagen AG requires a new plan of action to enable firm in
gaining good position at market (Harley and et. al., 2010). This plan would also help the
company in maintaining its present strengths and abilities. Company requires to follow limited
growth strategy to help it in limiting its consumption for various sources like labour, money, raw
materials and time. This limited growth approach is useful in achieving low consumption of
resources with maximisation of productivity. Volkswagen AG has another business strategy, in
this step, it could form new joint ventures with African countries to avoid manufacturing its
product at higher cost, as after making join ventures with African countries, company could avail
the parts at cheaper than manufacturing it. This strategy would also become advanced way to
enter into new market.
The strategic strategy has proved its value in the past because it has helped various other
companies to improve the market and become market leader. The company's Chief Executive
Officer has also said that they will reduce the consumption during the efficiency level. During
the cost reduction, they will not stop the big programs, where they can keep growing at high
speeds. That is the reason behind deciding Porter generic approach by managers, this approach is
made after evaluating four different segments. This approach would enable company in
achieving their goals through combining cost leadership strategy with differentiation of their
product. Volkswagen would put efforts to improve its services and manufacturing techniques to
gain competitive advantages over market and earn maximum benefits through selling their
products. All this above strategy should be evaluated once, before launching it. Also allocation
of various costs among various planned activities for growing market share of Volkswagen is
necessary.
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TASK 3
3.1 Alternative strategies relating to market entry
Market entry: This is a process of planned techniques which delivers the goods and
services to a new target area and distribute them to customers. In relation to export and import
goods this has meant as framing and managing the contracts in a foreign nation. Some strategy
that a company may use as:
Substantive growth:
This is a growth strategy cause to keep growing is the prominent aim of every company.
Organisation are using it to win larger market share, it helps in getting more in short period of
time. This planning methods has two integrations as
vertical integration: This can be known as competitive strategy through firm will takes
pure control over one and more stages of production and distribution of the product. Company
adopts it to confirm full control on supply of resources to creating products. Such as if
Volkswagen will opt this strategy they will not only bought resources or anything but directly
they will create possession over main track of the material which gives power to distribution of
product and no one will use their raw material.
Horizontal integration: this also a competitive strategy that may a company use. It is an
acquisition of business activities that are running at same level of chain in similar industries.
Here company will find out the same organisation in which they will Marge and expand their
business.
limited growth:
This is a method in which firm will use least amount of the resources and yet gets sound
growth. It denotes the joint ventures reason behind it is company are seeking its profits as they
come up with the contract by which both the ventures are bond in legal contract and in the end
one powerful company will overtakes other one and expand their business. As generally
Volkswagen does same thing they belief to Marge and grow policy.
Retrenchment:
This strategy is used by companies it helps in reducing the diversity of operations in firm.
It facilitates the organisation to cut down expenses with objective of becoming and remaining
more financial stable in business. This plan is generally including the back steps taken from the
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market by company or discontinuation of selling some products in relation to make sound
turnaround.
Company Volkswagen will choose the Limited growth strategy in order to expand its business.
3.2 Justification of selection of the strategy.
Volkswagen has chosen the strategy of limited growth as to serve market. It is the that are
capable to bring maximum profit with least amount of resources, effort and risk. This strategy is
concertinaing the joint venture like companies will work together in same stream and later on
one least powered organisation will goes under other's possessions it helps in expansion of
business hence Volkswagen does this. This strategy offers some benefits to the company as:
Cost: this is the plus side of this plan that it is not so expansive in fire growth. In order to
give speed to business Volkswagen spent money to hire more skilled staff members, needs to
open new showrooms and should have more inventory hence when company are undertaking
other ventures they will have power to use his all work station and their raw material.
Avoidance of massive Debt: One more benefits that limited strategy will have proposed
to Volkswagen is they will have assistance to ignore massive amount of the debt. The firm are
looking out to expand his business through sound revenue. If they took finance for business
expansion, then this will be harm full for the Volkswagen majorly when the sales of the company
are not in high level.
Investments and growth:
To grow and make money is a main thing for a company. Using of limited strategy
facilitates Volkswagen to save its time and somehow money too. Cause here company will
overtake the other ones hence they have power to use their resources and make innovation in
product with getting worry of loss. It helps in getting goods range of sales and generates profits
through giving advance techniques in arrival products.
This can be said that the strategy of limited growth is beneficial for Volkswagen to have
sustainable growth.
TASK 4
4.1 Roles & responsibilities of personnel in strategy implementation
In Volkswagen, various changes are taking place which need to be managed and adjusted
in a well-defined manner. At present, there are different problems that are existing in
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organisation system. This is why it is essential to make sure that each individual is stated about
the work and make sure that their capabilities are aligned with company requirements. With
changes, there are high chances of shifts in the roles and responsibility of individuals. The new
strategy of limiting resource consumption of organisation requires changes in the job profile of
people as to enable them in tackling with challenges in a more effective way (Hesterly and
Barney, 2010). The new strategy of Volkswagen will have to be implemented with smoothness
so that management can extract maximum output. For this, there is a requirement of changes in
the profile of people. the changed roles and responsibilities of people employed by Volkswagen
are stated below:
Senior level managers: They are the ones who need to make sure that each task and
activity is conducted with full precision. Senior officials set various plans and polices which act
as a basis point for conducting various process and activities within organisation. They are
engaged in making sure that proper planning as well as execution takes place so that Volkswagen
is able to make its process more efficient and effective.
Research individuals: They act as a people who are engaged in innovation and making
existing process more effective as well as efficient. These individuals are stated to be engaged in
analysing and formulating new ways which can be used by company as to boost its overall
effectiveness.
Engineers: They are the one who are engaged in manufacturing as well as various other
type of management task. They ensure that each vehicle is made with standard quality as well as
they are able to develop better approach so that effective results can be obtained. They are
assisted by research department which provides them as well as guides them in adopting new
technology.
Expatriates: These are the individuals who are sent out on expedition/mission to another
country as a part of expanding in that market. These are the people who have a higher skillset
with them and are considered to have better effectiveness. That is why they are sent out of
country and required to work as per the objectives. They are tasked to bring in better level of
alignment in strategy and polices, so that a higher level of boost can be attained in that branch.
Managers: They are the ones who are responsible for execution of various strategies and
policies. The roles and responsibilities keep on changing as per the stated objectives and goals. it
is the manager who has to communicate all the information down the line as to ensure that each
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employee is aware about changes which are taking place within organisation. they are also
involved in decision making with top management (Izumi, and et. al., 2012).
4.2 Resource requirements for implementing the new strategy for VW AG
There are different changes that will be taking place within organisation and its policy
framework. VW AG has to go through the process of integration of changes that are accepted by
top management as to ensure that they are able to pay back penalty of $19 billion to US
environmental agencies. There is various type of resources that are needed by VW AG as to
ensure that it is able to function in a proper manner. All the results will be obtained and judged
on the basis of effectiveness and productivity. The needed resources are mentioned below:
People: They are the one who act as a core of organisation as well as considered to be a
formidable force that needs better level of effectiveness. It is essential for VW AG to direct and
guide their workforce in an effective manner.
Finished, semi-finished and raw material: In the case of VW AG, the manufacturing
process needs different types of products to produce final item. For example, they import steel as
well as small parts of engine, etc. for some company it might be a final good but for VW AG it
will be a raw product.
Fixed resources: These are the facilities and fixtures that won’t move from their place and
needs maintenance. Each and every activity has to be prepared while keeping fixed assets in
mind.
Finances: This is an aspect which is very important for a company. Without money there is
nothing which can be done by an individual. It aids organisation in running different programs as
well as boost company ability to serve market in an effective way.
4.3 Contribution of SMART targets in business strategy
VW AG has to ensure that they are continuing all the task and activities in a desired
manner. Basically, there is requirement of SMART concept so that company is able to attain a
higher level of effectiveness. Action plans and procedures are needed for ensuring that situations
can be tackled in a required manner. the company will be formulating new path as to ensure that
they are able to pay back the penalties in US as well as maintain its capabilities in other
continents while growing with limited speed (Li and et. al., 2011). The company has to use
SMART concept which will ensure that each objective is achieved and completed in a more
effective manner.
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A SMART target example is simple: If an individual is asked to do 50 task in 48 hours then
he might panic but if it is presented in a smart manner then he will be tasked to complete 25 task
each day. This will reduce the level of pressure on individual and ensure that they are able to
attain better level of effectiveness. For VW AG, SMART targets are stated below:
 Expansion of company with joint venture in African market
 Boosting level of efficiency by 20% in next one year.
 Improving level of sales by 10% in one year
 Keeping up the ability to accomplish task and boosting production rate by 3%
These are the SMART targets that will be used by company as to ensure that each task is
achieved. The aim of organisation is to make sure that all the issues are addressed and
capabilities are maintained.
CONCLUSION
From the above report this has been concluded that the business strategy is a set of plans
through company will accomplished its objective. This report has discussion over strategic
planning with mission and vision of the company. There are also some factors which makes
impact in formulation of planning. All those strategies which may be have consideration by
Volkswagen and the best one that will be good for firm as limited growth, substantive and
retrenchment are covered in it. The responsibility of framing and applying the plans along with it
the SMART criteria are explained which provides assistance in order to create goals.
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