Business Strategy: Theory and Application

The assignment delves into the concept of business strategy, examining theoretical frameworks such as SWOT analysis and Porter's Five Forces. Students are tasked with analyzing how various factors influence strategic decision-making in businesses. The provided text explores the relationship between business strategy and project portfolio management, sustainability, and digital transformation. It also highlights the importance of considering environmental uncertainty and social responsibility in shaping effective strategies.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Organisational audit of Volkswagen.....................................................................................1
2.2 Environmental audit of Volkswagen.....................................................................................2
2.3 Significance of stakeholder analysis.....................................................................................3
2.4 New strategy for Volkswagen AG........................................................................................3
TASK 3............................................................................................................................................4
3.1 Alternative strategies relating to market entry, substantial growth and limited growth ....4
3.2 Selection of a strategy...........................................................................................................5
TASK 4............................................................................................................................................5
4.1 Roles and responsibilities of personnel in charge of strategy implementation....................5
4.2 Estimated resource requirements for implementing a new strategy....................................6
4.3 Contribution of SMART targets to the achievement of strategy implementation...............6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategies are understood to be the source by which an organisation decides to
achieve their objectives. It is an important part of a long-term business plan, covering about a
period of nearly three to five years. Business strategies are mainly related with the issues of
resources, their allocation and scope of business activities. This report will be focusing on
understanding the process of Volkswagen Group's strategic planning. Volkswagen is a German
automotive company headquartered in Wolfsburg. This report will also deal with their abilities
towards the formulation of a new marketing strategy. Various approaches of evaluation of
strategies are also assessed in a major part of this project. This project will also highlight the
process of marketing strategies' implementation within VW AG.
TASK 1
Covered in PPT
TASK 2
2.1 Organisational audit of Volkswagen
There are certain factors in the internal environment, that affects the performance of
Volkswagen (Oltra and Luisa Flor, 2010).
Capabilities Assessment
Global presence Operating in 153 countries and the biggest auto manufacturer of 2012. with
a diverse portfolio, selling 13 brands like Audi, and Bentley and catered
amongst various types of customers for their needs.
Departmental
strength
VW AG has their main strength in their research and development
department along with the engineering section which produces the most
efficient automation engines to multiple automotive brands, to keep their
capabilities to keep their production grow with the need of the speeding
demand in the market.
Market Shares Having their strongest market share in china, VW AG has captured approx
20% of the shares in market with its Audi and other Volkswagen brands.
The brand is currently valued at 5.5 billion GBP.
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Scopes There are open relationships available that VW AG can make with non-
German car manufacturers. They are also researching on innovations they
could bring automotive industry to make difference from its competitors in
the market. The increasing purchasing power of the people may also be an
opportunity for VW AG.
2.2 Environmental audit of Volkswagen
The factors from the external environment can also influence the performance of VW
AG, such as the political, economic, social and technological factors (Nordqvist and Melin,
2010).
Capabilities Assessment
Political As the company operates in more than 150 companies, they have to manage
their operations and legal strategies according to the legislative factors in
each of those nations. Thus they have to develop their strategic plans
separately in each countries as the political environment in each country and
their constitution differs.
Economic Automotive industry plays a very important role in boosting the national
income of any nation. VW AG contributes in Gross Domestic Product in the
counties in which they operates. This is a plus point for the company as they
encourage auto-mobile industry's development for their own national
economic benefits.
Social The social environment in VW AG exists in various nation also have some
influence on the company and their operations. The educational and literal
values of a society helps in building a more capable workforce in that
particular location. VW AG is a great employer and have more than
5,02,000 employees around the globe.
Technological As VW AG has a level of success as being a car manufacturing company
and the firm is involved in two types of cars: classic and sporty. Audi,
Bentley and Skoda are brands with high maintenance. Technology deciding
the torque and production of automotive products are constantly emerging
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and they have to stay updated with it to cope up with competitors.
2.3 Significance of stakeholder analysis
Stakeholders of VW AG are also essential components and obviously, the strategic plans
of the organisation will be a part of their decisional factors too. Stakeholders analysis helps in
bringing out a review with considerations of stakeholders influencing their business. Nowadays,
it is seen that non-shareholder entities such as customers, employees, communities and partners
in business, have been rather impacting the success of business (Montgomery, 2011).
Companies need to understand the interests and preferences of each of their stakeholders and
have to strategize their business according to it.
 Marketing Strategies: Customers are an important section of the stakeholders and they
have to be given consideration by being honest and fair in communication and
interaction, would be their usual expectation. Market research is a tool to realise what the
customers are expecting from the company and will help in deciding the target customers
in market and their needs that are to be satisfied by VW AG (Meskendahl, 2010).
 Motivating Employees: Employees are another important part of stakeholders and
without them VW AG can do nothing. They are the key to customers satisfaction and
production. Their interest and needs are to be satisfied to get the ultimate productivity for
the organisation. The turnover and morale at the workplace is a subject to motivation.
2.4 New strategy for Volkswagen AG
As Volkswagen was not able to cope up with the CO2 emission regulations of
government and has been blamed for cheating the emission tests by manipulating their software.
And now they are asked to recall over than 4,00,000 cars of VW and Audi. The company has
being facing a fall in their goodwill and brand value. This is the possible strategies that will help
them regain their brand image in market:
 Meeting the legal aspects: VW AG has to be aware of the rules and regulations that are
are made applicable by US Environmental Protection Agency regarding CO2 emissions
and have to follow them accordingly. It can be their CSR strategy to be environment
friendly.
 Innovation and nature friendly technology: Volkswagen has to adapt new and
innovative technologies that would reduce their CO2 emission to meet the regulatory
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standards of governmental bodies. The research and development department has to focus
on coming up with such technologies.
 Effective Promotion: After the R&D section brings up new technologies and the
company meet the CO2 emission standards as per the EPA of US without any cheating
through their manipulated software, they have to make sure that their cars are
environment friendly and efficient (Klettner, Clarke and Boersma, 2014). They
have to promote their cars after all those processes and make sure that they create a
positive impact on the stakeholders, especially the customers in the market.
TASK 3
3.1 Alternative strategies relating to market entry, substantial growth and limited growth
Now, as Volkswagen is facing crisis in major countries they can also make strategic plans
to enter a new market in a foreign country. And these are the best ways to make it happen:
 Direct Exporting: The best way to make entry to a new market is direct exporting. Many
companies after their establishing of a sales program depends on agents and distributors
or representing them in particular markets. They are supposed to work relatively with
VW in the representation of interests.
 Licensing: This can also be made possible, where VW ca transfer their rights to the used
of their products and services to another firm. This specific strategy can be successful if
the purchaser of the rights have a comparatively big market share in the market VW is
planning enter.
These can be considered as appropriate strategies for limited growth:
 Market Penetration: This implies that Volkswagen shall penetrate the automotive
market by giving comparable worth against the worth of their competitors (Hamel,
2012).
 Market Development: This can be implemented as VW AG creates an evolution in the
market and sets out to expand their enterprise geographically as to get back to their
costumers.
Following can be considered if they are planning to strategize through substantial growth:
 Horizontal Integration: According to this, VW can gain more facilities and get
affiliated to diversify their firm on the same level.
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 Vertical Integration: To make this strategy happen, Volkswagen AG has to connect
with their service providers such as transporters and assemblers. They are asked to
provide additional services which would make the customers more satisfied.
3.2 Selection of a strategy
As Volkswagen is in a major crisis, now they need to increase their brand image through
strategies after they have faced fall in their reputation. The best strategy as for the situation here
is market penetration (Haley, Haley and Tan, 2011). VW AG can penetrate their target
market by various methods: adjustment of prices, increasing modes of promotion, establishing
distribution channels, improving the features of their products and increased usage of products.
There are certain advantages Volkswagen would have in developing their business in a
way they predicted. Price adjustment will guarantee growth on the basis of customers and more
sales will lead to higher profits. It will also help VW to come over the competitors to increase
their profitability by stealing their customers.
TASK 4
4.1 Roles and responsibilities of personnel in charge of strategy
implementation
As the implementation process has the capability to influence the
duties and responsibilities of each and every employee working in
Volkswagen and they have to be aware of their roles in making it happen:
 Strategic Implementation: Implementing a strategy consists of
planning and execution of those strategies and related tactics to
process the changes which are a part of its influence. The entire
organisation on macro level and each individual employee at micro
level should be a subject to effective communication (Connor and
Lande, 2012).
 Impact of Job: There is not just an individual employee involved in
the process of strategic implementation. For the strategy to be
successful, it is necessary to make sure that the change is to be
understood by each of them and they should know the influence it will
make on their job duties and responsibilities.
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 Considerations: A leader or manager is appointed to supervise the
process of implementation and security of the process changes in the
working environment. They set examples for the employees and help
them solve their problems and issues while the implementation
process.
4.2 Estimated resource requirements for implementing a new strategy
For any organisation, there are resources involved in their processes
to implement new strategies (Campbell, Edgar and Stonehouse, 2011).
Volkswagen used the following resources to make the implementation of
their strategic plan successful. Human Resources: The most important and useful resources of any
organisation. Without human resources, all other resources are
useless. Human resources consists of skills and talents, and without
them finance and technologies may go idle. VW needs them to adapt
the changes needed for the implementation to their regular duties as
to make it happen. Finance: This is most needed resource as to invest in anything,
human resources and technologies will be available to a firm only if
they have the financial ability to serve and purchase them respectively
(Bharadwaj and et. al., 2013). VW have to utilise their finance very
carefully as they are already in crisis.
 Technology: Technological resources play a crucial role in the
automotive industry and they need to be constantly adaptive to latest
technologies related to torque as they deal with both classic and
sporty vehicles, inclusive of almost a dozen brands under VW AG.
4.3 Contribution of SMART targets to the achievement of strategy
implementation
The strategic implementation within Volkswagen AG has to be
successful and therefore it needs to be SMART. SMART is the abbreviated
form of Specific Measurable Attainable Relevant Time-based.
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 Specific: It refers that the strategy needs to be specific that for what
purpose it is made applicable, as in this case, Volkswagen wants to
attain 7% of market share by increasing 5% of their profitability, as to
step by step overcome their crisis due to the scandal.
 Measurable: It ensures that there are numeric figures included in
the objectives so that their achievements and success can be
measured. Volkswagen has decided to capture 7% market within 6
months of the strategic application.
 Attainable: The strategy have to be eithin the capacity of the
company to attain. VW AG has to capture the market share in 6
months and they realise that it can be made possible, instead of 3 or
4 months (Astrachan, 2010).
 Relevant: Relevancy of objectives of the strategy to the industry
Volkwagen is dealing with is also necessary. They have to be aware
why they are implementing this strategy.
 Time-based: VW has to go according to the strategic plan and stick
with it. They should not make any delay in their time regime of 6
months and if done, shall be considered as failure.
CONCLUSION
The report has dealt with the business strategy that can possibly be
adapted by Volkswagen to build their brand image as they have been facing
crisis due to the emission scandal. The report has discussed about business
mission, vision and goals of Volkswagen AG and their process of formulating
strategies. The report also includes the factors considered by the company
in the formulation of strategic plans and the techniques used in its
development. The project has also dealt with the roles and responsibilities
of employees , managers and interests of stakeholders.
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REFERENCES
Books & 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, A. 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.
Connor, J.M. and Lande, R.H., 2012. Cartels as rational business strategy: crime pays.
Haley, G.T., Haley, U.C. and Tan, C., 2011. The Chinese Tao of business: The logic of
successful business strategy. John Wiley & Sons.
Hamel, G., 2012. What matters now. Strategic Direction, 28(9).
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
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.
Montgomery, C.A. ed., 2011. Resource-based and evolutionary theories of the firm: towards a
synthesis. Springer Science & Business Media.
Nordqvist, M. and Melin, L., 2010. The promise of the strategy as practice perspective for family
business strategy research. Journal of Family Business Strategy. 1(1). pp.15-25.
Oltra, M.J. and Luisa Flor, M., 2010. The moderating effect of business strategy on the
relationship between operations strategy and firms' results. International Journal of
Operations & Production Management. 30(6). pp.612-638.
Pagani, M., 2013. Digital business strategy and value creation: Framing the dynamic cycle of
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Parnell, J.A. and et. al., 2012. How environmental uncertainty affects the link between business
strategy and performance in SMEs: Evidence from China, Turkey, and the USA.
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Woodcock, N., Green, A. and Starkey, M., 2011. Social CRM as a business strategy. Journal of
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