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Strategic Analysis of Volkswagen Group
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Added on 2019-12-03
Strategic Analysis of Volkswagen Group
Added on 2019-12-03
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Business case studyVolkswagen Group’s diesel emission scandal 1
TABLE OF CONTENTSIntroduction .....................................................................................................................................3Introduction of Volkswagen Group’s diesel emission scandal .......................................................3Strategic Analysis of Volkswagen Group........................................................................................4Value chain Analysis ......................................................................................................................6Financial Analysis of Volkswagen Group.......................................................................................8Conclusion ....................................................................................................................................13REFERENCES .............................................................................................................................15Appendix .......................................................................................................................................17PORTER'S five force analysis ......................................................................................................172
INTRODUCTION Volkswagen Company is the leading German automotive manufacturing organization. Inthe present era, Volkswagen is seen as the second-largest car manufacturer all around the globe.In addition the company is the largest automotive maker in UK, Europe. The entity has capturedaround 12.9% market share in overall world’s passenger car market. In the year 2015, there wasa scandal namely Volkswagen Group’s diesel emission scandal that has influenced theoperational and financial performance of company (Shing, 2015). This scandal was associatedwith emitting more CO2 as prescribed by Volkswagen. Germany confirms that VW vehicleswith software installed to cheat emissions tests were sold across Europe.The report herewithdeals with identifying the effects of Volkswagen Group’s diesel emission scandal to the currentcondition of the company. Hence, this case study purposes at evaluating the effects ofVolkswagen Group’s diesel emission scandal on its automotive division’s current condition.Furthermore, consequences of the current affairs of Volkswagen Group’s automotive division onits brand image, finances, operational activities and the supply chain are going to be analysed.INTRODUCTION OF VOLKSWAGEN GROUP’S DIESEL EMISSIONSCANDAL In 2015, there was a scandal arose that was linked to excess diesel emissions thanprescribed by Volkswagen (VW). Recently, this leading European car builder has admittedmanipulating emissions testing to a wider scale. This criminal scheme was gradually beingrevealed that has influenced the corporate image of the mentioned entity. What has happened?In September 2015, US Environmental Protection Agency (EPA) has sent a notice ofviolation of the Clean Air Act to leading luxury car manufacturer and retailer namelyVolkswagen Group. According to the investigation of MacLennan (2015) The main issue wasthat number of VW diesel engines were having software which has enabled cars to enhanceemissions performance. This issue was with the cars that produced during 2009 and 2015. In theinvestigation made through generalist, Volkswagen has fixed the emissions cheating software inmanufactured diesel cars from the duration between 2009 and 2015 (Annual report Volkswagen,3
2014). The company has admitted that 11 million cars were affected with such software. Thiswas a historical fraud that has cost €6.5 billion to company. Implications for VW scandal with strongly supportive evidenceWithin two days of scandal VW has lose 35% of market capitalisation because the markethas struggled to specify the cost of recalls and potential fines. According to the investigation ofMacLennan (2015) this scandal has longer term impact on Volkswagen brand. Furthermore, theorganization has to pay monetary cost of possible class action lawsuits and to pay cost forincreasing research & development so as to meet emission requirements. There were potentialreputation-al impact on brand. The use of illegal software has shown the poor performance interms of corporate governance within the company. It has been witnessed that the fraud was notorganised by a “small group” of development engineers and technicians but the 30 managers ofdifferent regions were complicit in the fraud.This software was installed so that the cars will become able to evade nitrogen oxideemissions tests thus; it could be seen cleaner as compared to described diesel emissions. It hasbeen witnessed that more than 11 million cars are affected on global set-up while also includesVW cars i.e Audi, Skoda and Seat cars and commercial vehicles of Volkswagen group. Inaddition to that 800,000 cars had been found with "inconsistencies" that is relating to carbondioxide emissions (Morgan, 2015).STRATEGIC ANALYSIS OF VOLKSWAGEN GROUPSWOT Analysis Strength: The biggest strength of Volkswagen is the global presence of this German automanufacturing and selling company. Being a world's second largest auto manufacturer theorganization is known for dealing in quality cars. In addition, the research and development teamof well qualified engineers has kept this company as a competitive global brand (Chambolle andChiron, 2000) Weaknesses: The major weaknesses of this mentioned entity is its limited presence inemerging market as well as less transactions in US passenger car market. Furthermore, many of4
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