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CBE6186 Developing Business Processes & Operations

   

Added on  2020-05-04

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Running head: DEVELOPING BUSINESS PROCESSES AND OPERATIONSDeveloping Business Processes and OperationsName of the studentName of the universityAuthor note

1DEVELOPING BUSINESS PROCESSES AND OPERATIONSExecutive SummaryThis report is highlighting the current operational issues in Volkswagen, a German automobileand identifying the possible solution. Volkswagen commenced on May 28th 1938, and Germanlabour Front operated it. The organisation has its headquarters in Wolfsburg, and initially, theprimary objective of the firm was mass production of fast and affordable vehicles. A companynamed Ferdinand Porsches initially designed the cars and Hitler supported the design. The casestudy has presented the current situation and possible changes in issues. The emission scandalhas caused the organization go through liquidity issues. Thus, due to this cash crunch, theorganization had to restructure the operational processes to improve their operating margin. Theorganization needed to improve their profit margin to compensate for the heavy losses they haveincurred due to exposure of this scandal. The conclusion drawn from the study is that operationmanagement is an essential component for maintaining the sustainability of every organization.However, different firms operate in different environments and so the operational plans will varydepending on the type of issue a particular organization is facing. Thus, this case study has beenable to portray the operational issues and their solutions in an effective manner.

2DEVELOPING BUSINESS PROCESSES AND OPERATIONSTable of ContentsIntroduction......................................................................................................................................3Current situation..............................................................................................................................4Possible solutions.............................................................................................................................9Proposal of new procedure............................................................................................................10Description of new situation..........................................................................................................14Justification of change...................................................................................................................19Implementation plan......................................................................................................................19Recommendation...........................................................................................................................23Conclusion.....................................................................................................................................23Reference.......................................................................................................................................25Bibliography..................................................................................................................................26

3DEVELOPING BUSINESS PROCESSES AND OPERATIONSIntroductionThis report will highlight the current operational issues in Volkswagen, a Germanautomobile and identify the possible solution. Volkswagen commenced on may 28th 1938, andGerman labour Front operated it (History.com 2018). The organisation has its headquarters inWolfsburg, and initially, the primary objective of the firm was mass production of fast andaffordable vehicles. A company named Ferdinand Porsches initially designed the cars and Hitlersupported the design. However, during the Second World War, the production of the vehiclesstopped, and after the war, British army took over the firm to start the manufacturing process.British army returned the control of Volkswagen to Germany and organisation started gearing upin 1950-1960. The cars made by Volkswagen had become outdated, and organisation startedexpanded their product line in the early 70’s to 90’s of the 19th century (History.com 2018). The company launched various new models during that period such as Golf, Coupe, Jettaand Cabriolet (Volkswagenag.com 2018). Since then the firm had multiple models andconsidered as one of the global giants in the worldwide automobile industry. Volkswagenfocused on operational management and implemented change management to improve theiroperational efficiency. The organisation had expanded their business to all parts of the world andestablished their factories (Volkswagenag.com 2018). Innovation and technology arecomponents used by the firm to improve the efficiency of their cars, and the organisationexperienced highest global sales for a couple of years. The emission scandal in 2015 reducedtheir operating margin and they are still trying to recover from the effect. Toyota is the marketleader in this segment having an operating margin of 9-10 % (Rhodes 2016). The operatingmargin of Volkswagen is 6% that is quite low when compared to its competitors.

4DEVELOPING BUSINESS PROCESSES AND OPERATIONSCurrent situation Volkswagen being a well-reputed organisation globally has been one of the primarychoices of the consumers in the premium segment. The company had exported millions of carsall over the world. However, the company admitted to being involved in an emission scandal inthe fiscal year of 2015 (Atiyeh 2017). Volkswagen installed a defeat device, which would reduceemission during testing of the cars. However, the emission from the cars was way above thestandard and benchmark of the industry. The statistics suggest that 482,000 diesel cars sold withdifferent models in the United States had the cheat device installed in it (Atiyeh 2017).Moreover, 11 million vehicles sold worldwide contained this software and the consumers losttheirs over a reputed brand (Forbes.com 2016). Volkswagen was fined billions of dollars;criminal investigations were conducted, class action suits and degradation of reputation theyhave generated. The consumers lost their trust in the organisation, and it was evident that itwould be difficult to maintain long-term sustainability if they were unable to change theiroperational policies and overall structure of the company. Volkswagen started restructuring of their processes as a measure of damage control. Themarket share of the organisation was decreasing even before the scandal was exposed. Thismeant that there were operational issues in the company yet before they were exposed. There hasbeen a steady decrease in organizational sales and it went down even further after exposure ofthe scandal. Thus, restructuring of the corporate processes was essential for improving thechances of sustainability in the global environment. Even before the scandal, stock prices of the

5DEVELOPING BUSINESS PROCESSES AND OPERATIONSorganisation fell below 13% in 2015 and Volkswagen was unable to acquire high profits duringthe first and second quarter of the fiscal year in 2015 (Forbes.com 2016). The operating margin of the organisation has remained a problem, and the operating margin ofthe organisation is just over 6% on due to the luxury brands that are more profitable. However, itis still much lower when compared to other competitors such as Toyota, which has been rangingbetween 9-10%, Porsche industry is the leader with 15.75 and Audi is at 9.7% are responsible forelevating their profitability (Forbes.com 2016). The operating margin of the original brand is2.6%, which is dragging down the overall profitability of the whole organisation (Forbes.com2016). Volkswagen brand was experiencing a lower amount of sales, and it affected the overallprofitability as 60% of the total sales volumes were contributed by this brand. Moreover, theorganisation had been investing in innovation, and research and development, which is affectingthe profitability of the firm even further. Thus, after the exposure of the emission scandal, the organization aimed at increasing theirprofit margin by increasing the production of electric vehicles and reducing the overall cost ofproduction. Cost cutting had been the biggest plan but the organization would face issues fromtheir workforce as labour has a powerful in the organization ((Painter and Martins 2017). Thus,even though decreasing cost had been the prime objective of the organization, they would haveto face many constraints to apply this measure. Moreover, operating margin of Volkswagenbrand is low and other methods are required to improve the profit margin of the organisation.million201620152016201520162015Sales revenue217,267213,292166,016163,93631,25129,357Cost of sales−176,270−179,382−150,860−155,553−25,410−23,829Gross profit40,99733,91135,15628,3825,8415,528

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