Effectiveness in Business

This document discusses the nature, background and history of Volkswagen, role of PESTEL in helping business meet objectives, ways in which globalization impact Volkswagen, impact of technology on Volkswagen, targeted customers business tailor to, workforce of Volkswagen, role of ethics in Volkswagen, ways Volkswagen combat carbon emission and reduce CO2.

Running head: MANAGEMENT
Effectiveness in Business
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Table of Contents
Question 1 a: Brief Description of the Nature, Background and History of Volkswagen..............2
Question 1b: Role of PESTEL in Helping Business Meet Objectives............................................3
Question 2 a. Ways in Which Globalization Impact Volkswagen..................................................4
Question 2 b: Impact of Technology on Volkswagen.....................................................................5
Question 3a: Briefly Identify Targeted Customers Business Tailor To. Importance for
Understanding Customers................................................................................................................6
Question 3b: Workforce of Volkswagen. Treatment of Workforce and Their Impact On
Company’s Success.........................................................................................................................6
Question 4a: Role of Ethics in Volkswagen....................................................................................7
Question 4b: Ways Volkswagen Combat Carbon Emission and Reduce CO2...............................7
References:......................................................................................................................................8

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Question 1 a: Brief Description of the Nature, Background and History of Volkswagen
Volkswagen Group also known as Volkswagen AG has been a renowned German
manufacturer of automobiles introduced by German government in the year 1937 for the mass
production of the low priced car for the people. The company had its headquarters in Wolfsburg,
Germany (volkswagenag.com, 2019).
The company had originally been operated by German Labor Front, which had been a
Nazi organization (volkswagenag.com 2019). The car was originally designed by an Austrian
automotive engineer Ferdinand Porsche in the year 1934. Although ground have been broken for
new factory in 1938 but the outbreak of the World War II in the year 1939 repurposed the
factory into making military vehicles and equipment before the beginning of the mass
production. The military involvement of Volkswagen saw the factory in ruins as it became the
target of the allied bombers. The factory has been rebuilt under the British supervision with
mass production beginning in the year 1946. However, the control of the company has been
transferred to West German government and state of Lower Saxony.
Production of Volkswagen expanded in the year 1950s. The Transporter Van was
introduced by the company in 1950 while Karmann Ghia coupe has been introduced in the year
1955. The company experienced strong sales in most of the countries except United States
where the sales have mostly been sluggish. Slower sales have primarily been due to the small
size of the car, uniquely rounded appearance and the historical connection to the Nazi Germany.
The car gained acceptance in the year 1950 with the establishment of Volkswagen America in
the year 1955(volkswagenag.com 2019). In 1959, advertising agency of America had been hired
in popularizing the car as Beetle thereby promoting its size and the unconventional design as the

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advantage to consumers. Although the company developed the rear engine models with
improved engineering and modern styling but none matched up to design of Beetle.
Nevertheless, competition from smaller cars with modern designs along with the rising troubled
finance of the company dictated change in the corporate philosophy towards the development of
the sportier and the contemporary car models. Hence, Volkswagen replaced the rear engine
models with the front wheel and front engine drive designs. The new car models have been short
lived. The most prominent one has been Golf, also known as Rabbit, introduced in the year 1974.
In the process, Golf replaced Beetle in terms of sales and became the best selling model of
Volkswagen. In 2015, Volkswagen became one of the largest manufacturers of cards in the
world in terms of volume. Finally, in the year 2019, Volkswagen ended the production of the
Beetle that underwent innumerable redesigns over a period of eight decades.
Question 1b: Role of PESTEL in Helping Business Meet Objectives
The aims and objectives of the Volkswagen Group lies in increasing the profitability and
the unit sales for long term with the intention of becoming successful, sustainable and fascinating
automobile manufacture of Germany(volkswagenag.com 2019).
Economic Factors: Economic factors not only have direct impact on the business by
impacting demand. Fluctuations in economic environment or decline in the economic activity led
to decreased loss and demand. The demand for the vehicles remains affected during the decline
of the economic activity that affect the sales and revenue of the Volkswagen brand. Recession
saw a decline in the employment level across globe resulting in reduction of the purchasing
power of consumers and lower demand of vehicles. Although revenue and sales grew after the
return of the economic activity but the fluctuations in the currency had a huge impact on the

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profits. Volkswagen survived the blow of diesel scandal that surged the sales of the company
again. The higher sales and profits of the company have been determined by the economic
activity. This implied direct relationship between economic forces and survival of the large
international business including the automobile industry.
Technological Factors: Technology plays a vital role in automobile industry. In fact the
success of the automobile brand depends on the advancement in technology. From Artificial
Intelligence (AI) to the automated driving, automotive brands like Volkswagen are in the race of
remaining ahead of others by investing in research and development. The company acquired
stake in the German Research Centre for acquiring in Artificial Intelligence. At the Audi
Business centre for innovation the focus remains on the development of the ideas for the urban
mobility of future. Besides, the brand invests in the innovation for higher level of customer
satisfaction. Further, it is investing in technology for bringing in safer and eco friendly cars. The
company also invested in more efficient technology for manufacturing and distribution.
Question 2 a. Ways in Which Globalization Impact Volkswagen.
Globalization has strengthened the world market orientation for automobiles thereby
impacting the countries like Germany that were meant for serving the local markets (Timmer et
al. 2015). For example, in Brazil, automobile productions that have been restricted to serving the
local markets have changed their strategies to more liberalized import policies.
Globalization has initiated foreign direct investment by the multinationals like
Volkswagen that have led to the emergence of new exporters and producers for automobiles in
the lower incomes countries (Pavlínek 2015). For example, the lower income countries have

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hosted half of the FDI stocks held by Volkswagen, one of the prominent German automobile
industries.
Globalization also enhanced the competitive pressure of the lower income countries on
the traditional automobile producing country including Germany as lower income countries
became the relevant suppliers of the automotive inputs for automobile industries of Japan,
Germany and United States. For example, countries such as Spain, Mexico and Czech Republic
emerged as the competitive suppliers of the finished automotive and the automobile parts.
Question 2 b: Impact of Technology on Volkswagen
Production of Goods or Logistics: Technology has allowed Volkswagen to undertake
innovation virtually thereby helping in product development. Technology has allowed
Volkswagen to maintain consistent standards in terms of product plants, concepts, production
process and operational equipment. For example, Technology has not only helped in the
production of Volkswagen Passenger Cars, Porsche, Skoda and Audi brands. Technology has
also allowed Volkswagen to introduce the multicolored paintwork with contrasting roofs. The
boon of technology has also allowed Volkswagen in aiming towards environment friendly
battery powered vehicles by the year 2025.
Communication with Clients: Technology has enabled Volkswagen to integrate the
database of the vehicle with Customer Relationship Management (mySAP CRM) for adding
additional dimension to quality of information regarding each of the customers (reply.com 2019).
Whenever, a customer puts across an order, the vehicle information along with the customer
details is entered in mySAP CRM which is then evaluated via the customer service team. The

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qualified leads remains forwarded to the dealer’s system. Technology allows integration of lead
management functionality of mySAP CRM with the dealer management system of Volkswagen.
In other words, Volkswagen uses the customer management solution for enriching the dialogues
with the customers thereby allowing inbound communication.
Question 3a: Briefly Identify Targeted Customers Business Tailor To. Importance for
Understanding Customers
Volkswagen targets the younger generation between 18 to 34 years of age and the baby
boomers (Hummel 2019). It is however vital to note that potential buyers of Volkswagen shares
common characteristics like individualism, confidence and being centre of attention.
It is important for Volkswagen to understand the customers since it helps them in
visualizing the opportunities from the point of view of the customers. It would also help the
company in building advocacy and loyalty. Besides, understanding the customers would enable
the car maker to provide the required guidance and help. It also helps in gathering valuable
insight which might be channeled into the marketing efforts and the development of the newer
vehicles.
Question 3b: Workforce of Volkswagen. Treatment of Workforce and Their Impact On
Company’s Success
Volkswagen stresses on temporary employment as a means of providing the individuals
with a chance of becoming a part of the permanent workforce (volkswagenag.com 2019). The
company applies the principle of equal pay for all the employees. The pay for the temporary
external employees however develops with qualification and experience. The highest number of

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employees remains employed in the passenger car division. Employees usually identify with the
course of Volkswagen thereby safeguarding the economic success.
The car maker also pays 4750 euros ($5400 each) to close to 100,000 employees thereby
paving the way for the employees in becoming the targeted customers.
Question 4a: Role of Ethics in Volkswagen
Business ethics acts as the guiding principle in helping employees make a better choice.
It also helps employees in increasing productivity and the overall morale of the employee
(Davies 2016). It is to be noted that when the employee’s works in a manner based on the
honesty and the integrity then it becomes beneficial for the entire organization.
In this context, it can be said that Volkswagen did not have higher ethical standard that
led to its scandal where the engineers programmed the computers of diesel car for detection of
the emission test (Blackwelde et al. 2016). While performing the test, the vehicles would enable
alternation of the engine operations for meeting the legal standards for emission when in reality
the emissions released by the car in the air have been forty times higher than legal limit.
Question 4b: Ways Volkswagen Combat Carbon Emission and Reduce CO2
To combat the carbon emission and reduce the CO2, Volkswagen adopted the following
steps (volkswagenag.com 2019):
 It introduced an electricity based production model which reduced the annual emissions
of CO2 by about 3.6 ton for each individual vehicle.
 It also adopted natural gas engine that have acted environment friendly alternative to the
car. This helped in reducing the emissions of CO2 by about 15 percent

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 It also resorted to generation of fuel from the wastewater. This is a renewable fuel that
helps in reducing the emission of carbon and CO2
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annualreport2017.volkswagenag.com , 2019. [online]. Available at
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enhancement/employees.html[accessed 15Jul, 2019]
Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J.S. and Wozniak, D., 2016. The
Volkswagen Scandal.
Davies, P.W., 2016. Current issues in business ethics. Routledge.
Hummel, T, 2019. Volkswagen customer plans to take diesel case to Germany's highest court.
[online]. Available at
https://www.reuters.com/article/us-volkswagen-emissions-court/volkswagen-customer-plans-to-
take-diesel-case-to-germanys-highest-court-idUSKCN1Q8119[accessed 15Jul, 2019]
Pavlínek, P., 2015. The impact of the 2008–2009 crisis on the automotive industry: global trends
and firm-level effects in Central Europe. European Urban and Regional Studies, 22(1), pp.20-
40.
reply.com, 2019. Volkswagen. [online]. Available at
https://www.reply.com/Documents/6995_img_SYSK06_Volkswagen_CRM_SAPtemp_ENG.pd
f[accessed 15Jul, 2019]

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Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R. and De Vries, G.J., 2015. An illustrated
user guide to the world input–output database: the case of global automotive production. Review
of International Economics, 23(3), pp.575-605.
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