Volkswagen Group: Control Mechanisms and Strategies

This assignment analyzes the control mechanisms and strategies employed by the multinational corporation Volkswagen Group. It examines how the company utilizes performance measurement, reporting systems, and strategic planning to achieve its objectives in a competitive global environment. The focus includes adapting to market trends, globalization, localization, and the importance of building credibility after past challenges.

Managing cross the border – Volkswagen Group 1
MANAGING CROSS THE BORDER – VOLKSWAGEN GROUP
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Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................2
Structure of Volkswagen Group..................................................................................................................2
Control and coordination mechanism of Volkswagen Group......................................................................3
Five stages of evolution for Volkswagen Group........................................................................................4
Exporting with local dealers....................................................................................................................4
Create sales and marketing supporting host country..............................................................................5
Production base shifted to host country.................................................................................................5
More functions moved to host................................................................................................................6
Some essential functions moved back to center.....................................................................................7
Ways of designing an organizational structure............................................................................................8
Design problem.......................................................................................................................................8
Determining types of structure that fits business needs.........................................................................9
Defining executive and management teams...........................................................................................9
Establishing performance metrics and compensation.............................................................................9
Strategies and factors that warrant a structural change in an MNC..........................................................10
Control Mechanisms for Global Firms.......................................................................................................11
Conclusion.................................................................................................................................................12
List of References......................................................................................................................................13

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Executive summary
The aim of this research paper focuses on addressing the issues that comprise of
management of an organization across the border, in particular, Volkswagen Group. The paper
describes the structure of the company as well as control and coordination mechanism of
Volkswagen Group. The issues addressed in the article are the five different stages of evolution
for the multinational company and four ways of designing the structure of an organization, that
operates in the global marketplace. It also describes the strategies along with factors that warrant
the structural change in the Volkswagen Group as an example of the multinational company. The
ideas in this presentation explain how different managers in international business can be able to
adapt to appropriate organization structure based upon the strategy of the operations of the
company.
Introduction
Structure of Volkswagen Group
Volkswagen Group is a renowned German multinational automotive manufacturing
corporation with its headquarters in Wolfsburg, Lower Saxony. Volkswagen Group remains to
be one of the top multi-brand units within the automotive sector. The Group deals with actions of
developing vehicles as well as components of the Group brands. The company also involves in
the activities of production and selling of cars especially passenger vehicles together with light
commercial cars, and vehicles brands for Volkswagen Commercial. Besides, business activities
of the company comprise of the Automotive along with Financial Service sections that include
activities of leasing and management of fleet (Volkswagen Group | Announces further

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investments in innovation, technology 2013, p. 11). Business actions of several components of
the organizations within Volkswagen Group concentrates on creation, production and promoting
cars for passenger, trucks, light business vehicles, together with buses. The proportion of
products produced by the Volkswagen Group extends from motorbikes to fuel-economical small
cars along with luxury cars. The Multinational Company (MNC) focuses on the activities that aid
it in coordinating its operations in a strategy that leads to massive revenue in every financial
year. Therefore, the objective of this research article is to address factors involved in the
managing across the border within Volkswagen Group.
Control and coordination mechanism of Volkswagen Group
The ideas of control, as well as coordination of overseas subsidiaries, remains as the
permanent task for operations of Volkswagen Group just like other multinational companies. The
strategy to monitor and coordinate every activity by a company is a permanent work regardless
whether its operations base in Europe, the United States, Asia, or elsewhere in the global
marketplace (Abdullah 2016, p. 1). Volkswagen Group follows the mechanism as the mean of
achieving common organizational objectives and international management control (IMC). The
monitoring and coordination mechanism of the Volkswagen Group allows it to find the best
blend between federal together with decentralized process of making decision while it employs
several mechanisms. In the attempt by Volkswagen Group to solve effects brought about by the
globalization of the market, it has focused on a move towards the kind of loosely coupled
network of organizing its operations.

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Five stages of evolution for Volkswagen Group
Volkswagen Group remains consistent in the process of developing its vision of mobility
as other companies that deal with the production and sales of automotive. The company
undergoes development during the stages of its evolution by achieving its goal of becoming the
number one in satisfying its loyal and targeted customers while offering quality products and
services. The development of Volkswagen Group focuses on increasing its environmental
standards in the manufacturing of quality automobiles that conserves fuel and are of lightweights
(Volkswagen Group | Announces further investments in innovation, technology 2013, p. 11).
Therefore, five stages of evolution of Volkswagen Group include the exploration of its activities
with local dealers, the creation of sales and marketing supporting host nation, development of
production base that shift to host nation, moving more functions to host country, and moving to
various essential functions of its operations to its headquarters. All these stages in the
internationalization of Volkswagen Group lead to changes in nature of tasks as well as
relationships with customers and other firms in the global markets. The changes that result from
the five stages in internalization of Volkswagen Group include authority changes, shuffling of
responsibilities, the formation of different lines of communications, and development of
geographic dispersal of units of its operations.
Exporting with local dealers
Dealing with local dealers in exporting the company’s products in competitive market
forms an essential factor that boosts operations of any multinational company. Volkswagen
Group deals with JEVIC that remains to be the approved dealer program in the exportation of its
products. JEVIC as trusted dealer provides the best platform where the buyers of Volkswagen
Groups products can check and contact used-vehicle dealers (Zuniga & Crespi 2013, p. 16). The

Managing cross the border – Volkswagen Group 6
use of exporting with local dealers is a key element in the operations of Volkswagen Group, as it
came from the genuine need within the automotive market to offer the best methods to reduce
fraudulent activities from other conmen. Besides, operations of Volkswagen Group involve the
use of online car auction or buying cars from best car dealers as a manner of exporting with local
dealers.
Create sales and marketing supporting host country
Creation of sales along with marketing support for host country by Volkswagen Group
forms the fundamental issue during the launching of its future operations. The strategy is not the
work of external consultations, but it involves ideas shared within the company. The plan ensures
that the company operates as the leading provider of sustainable mobility of its operations within
the host nation. Besides, ideas of creating sales and marketing strategies that support host nation
enable the company to provide tailor-made mobility solutions to its targeted clients in the market
(Douma 2015, p. 56). Therefore, Volkswagen Group works by focusing on activities that serve
the diverse needs of local customers in the host nation by providing a strong portfolio of
automobile brands. The drivers in the creation of sales and marketing support lead to the
sharpening of the position of the company’s brand while increasing partnership of the company
in the economic sector.
Production base shifted to host country
Most multinational corporations such as Volkswagen Group are at the heart of the
international political economy. The need for the management of the Volkswagen Group to
understand the patterns of their strategies as well as governance remains to be a crucial task
when the company focuses on shifting their production base to host nation. The administration of

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the Volkswagen Group is essential to the management of every activity within the manufacture
of cars. Production support of the Volkswagen Group aims at shifting to host country to focus on
getting high revenues while attracting foreign direct investments into their economies spread
across the market (Volkswagen Group | Announces further investments in innovation,
technology 2013, p. 11). The process of changing production base into Host County focuses on
improving exportation of Volkswagen Group products with local dealers. The activity remains to
be the best approach of doing background research for cars by asking sensible queries that relate
to client’s doubt.
More functions moved to host
Volkswagen Group as a multinational corporation has different facilities and assets in at
least one nation other than its home country German. It also embraces the function of developing
offices and factories in various nations and usually has the centralized head office where they
can coordinate global management. Besides, the company has huge budgets that exceed those of
different small countries (Berghel 2013, p. 98). The function moved to the country by
Volkswagen Group involve the ideas of creating and enhancing proficiencies in excel for finance
management. One of the significant challenges that the Volkswagen Group faces is the need to
harmonize the opposing forces of standardizing its operations and localization. The adoption of
headquarter practices is essential in regulating activities of Volkswagen Group. Therefore,
regulating processes towards host country or global best practices remains to be the key factor to
the success of MNC like Volkswagen Group particular drawn strategic functions, and plans of
the multinational company such as Volkswagen Group call for new production facilities to be
developable in foreign markets. However, the prospective host authorities’ focus on the
establishment of great strict sales and export volume conditions prior giving the necessary

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permission. The managers of Volkswagen Group attempt to have more function moved to host
country by seeking to implement the multinational competitive strategy.
Some essential functions moved back to center
The operations of the company focus on the interdisciplinary team for the mobility of the
future operations. The purpose of moving company’s operations back and center is essential in
ensuring that the company focuses on producing and distributing quality products to clients. The
idea focuses on improving designs of cars and experiences of users. Such experiences aid the
company to work hand in hand for future mobility ideas. Therefore, improved services allow
Volkswagen Group to provide results for its digital strategy (Zuniga & Crespi 2013, p. 12). The
local dealers involve the process of verification for the company to be sure that they have the
registration number, they have the actual address of locating its headquarters, having previously
used automotive services, and understanding if the company operate the legitimate business
practice. The company operates by talking with salespersons in the local area of the firm. The
use of local dealers by Volkswagen Group allows it to use different tactics in competition in the
market by applying the use of smart tactics of going online and getting in touch with people who
have the interest of sharing their experience.
Ways of designing an organizational structure
In developing the structure of the organization in the multinational company like
Volkswagen Group, there is a need to focus on the design of the organizational problem and any
complications that might arise during the designing process. The approaches to developing the
structure of Volkswagen group concentrates on the strategy of implementing issues that develop
in production. Besides, organizational structure applies to develop the arrangement of different

Managing cross the border – Volkswagen Group 9
groups and individuals within the company to meet its goals (Chris & Gerhard 2016, p. 137). It,
however, defines the reporting structure of the organization, type of jobs, compensation, and
responsibilities for every role in operations of Volkswagen Group. Therefore, appropriate
designing of the structure of society need consideration of the values of organization, financial,
and goals of Volkswagen Group. The organization of structure allows for the growth of
operations and the ability to add additional jobs (BASF Coatings de México wins Volkswagen
Group Award 2014). Some ways of designing the organization structure of Volkswagen Group
include the definition of the business unit, determination of the type of structure that best fits its
operation, defining the executive and management structure that provides its services and
establishing the executive as well as management teams of Volkswagen Group.
Design problem
In the designing problem, Volkswagen Group focuses on identifying its business units by
having similar goals and responsibilities that can be overstable and directed by various managers.
The process allows the business units of Volkswagen Group to align and assist in the creation of
the appropriate structure of the organization (Volkswagen Group | Announces further
investments in innovation, technology 2013, p. 11). Depending on the type of organization
structure applicable, departments of Volkswagen Group might align laterally with other
departments or may oversee its operations.
Determining types of structure that fits business needs
The kind of organization structure of Volkswagen Group ensures that it can successfully
function with its reporting process structure. The company can use the ideas that fit business
needs to expand and meet its goals (Berghel 2013, p. 98). For instance, for development of small

Managing cross the border – Volkswagen Group 10
businesses in different markets by Volkswagen Group, it needs to break organization structure
into departments like production, human resource, along with finance. The type of activity and
operations of the multinational company will determine the type of organizational structure to
implement.
Defining executive and management teams
The company’s executives and managers are responsible for ensuring every business unit
meets the goals of Volkswagen Group. Such responsibilities might comprise of one or various
top officials to oversee the whole organization along with managers to direct every business unit
within the structure if Volkswagen Group (Douma 2015, p. 54). Besides, Volkswagen Group
may need one supervisor to oversee all operations or various managers to lead every business
unit, mostly reporting to the top executive.
Establishing performance metrics and compensation
When the organization structure of Volkswagen Group is determinable, the job
description for every stakeholder can be definable and where every job fits in the company’s
hierarchy. Every description of the job has to reflect the competencies needed to perform the
tasks and expectations of every job to meet the goals of Volkswagen Group. After defining every
task within the structure of the Volkswagen Group, compensation should remain set based on the
responsibilities of every task (Stroup 2016, p.81). All these ways of designing organizational
structure focus on the need for differentiation, making the decision about structural choices, the
pressure to select the best techniques, marketing specific differentiated products, need for
integration, and the standardized product.

Managing cross the border – Volkswagen Group 11
Strategies and factors that warrant a structural change in an MNC
The influencers in developing structural change include the local corporate and global
corporations that lead to the creation of world partnership and transition among strategies. Many
strategies that warrant the fundamental shift in the multinational company like Volkswagen
Group include the need of forming collaboration with different corporates. The strategies can
lead to an organizational change to occur in response to internal along with external factors that
affect operations (Volkswagen Group | Announces further investments in innovation, technology
2013, p. 11). Furthermore, structural change within the multinational company such as
Volkswagen Group might stem from internal or external factors. There is a need for effective
change management that requires the ability of the directorate to identify causes of structural
change within the company (Abdullah 2016, p. 1). The capacity of the Volkswagen Group to
determine the signs of impending changes within its operations can aid in preparing for the
modification and implementing policies that will keep the company to be on the growth path.
Factors that warrant the structural changes in the multinational company include the
change in the size of the company, movement of certain key individuals, failure to manage time
and meeting goals. Other factors comprise of overworked employees, moral issues, poor
strategic control, too much monitoring can also stifle innovation and uniform solutions for
unique situations (Li & Tallman 2011, p. 1121). Therefore, different influencers affect structural
changes. Some of the influencers are the increased operational scope, sparse mode of
communication, customer complaints, and various entities to manage an organization. Factors
like acquisitions, job duplication, changes in the marketplace, and process changes affect
structural change in the Volkswagen Group. Acquiring or merging of operations of Volkswagen
Group with another company has the profound influence on the structure of the enterprise.

Managing cross the border – Volkswagen Group 12
Besides, various managers within the Volkswagen Group may create the need for change in
operations of the company.
Control Mechanisms for Global Firms
There are several key issues in deciding the control mechanism like whom they affect,
the speed of making decisions on culture, strategies to use, and choice of structure to follow. The
control mechanism involves performance measurement, like giving feedback, strategic use of
presented ideas, and reporting nature influenced by organizational culture. Another control
mechanism of Volkswagen Group includes the idea of having the appropriate technique of
reporting and information system (Szombathelyi et al., 2016, p. 76). The corporate control
approach has to incorporate goals along with the strategy used to reach the set goals. Some of the
mechanisms and tactics developed with the foresight of particular objectives of operations like
the market share, return on investments and improving cash flow. Additionally, the control
device for the multinational company like Volkswagen Group comprises of reviewing and
evaluating overall performance against tactics, strategies, and operations applicable to define
operations of the company. Therefore, development of tactics for organizational control base on
existing objectives and strategies aimed at developing specific objectives in the context of the
overall strategic plan.
Conclusion
Managers in every multinational company like Volkswagen Group have the mandate of
adapting strategies that led to the best organizational structure. Volkswagen Group should
dedicate its efforts and resources into re-establishing credibility with the company. The
developed strategies by the Volkswagen Group need to focus on globalization and localization of

Managing cross the border – Volkswagen Group 13
its operations. The improved approach will lead to growth based on network and alliances with
the global partners. Most multinational companies like Volkswagen Group have to focus on
strategic changes as part of maintaining the competitive business environment or adjusting to
advance market trends or technologies.

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List of References
Abdullah, S. (2016). CORPORATE GOVERNANCE MECHANISMS AND THE
PERFORMANCE OF MALAYSIAN LISTED FIRMS. Corporate Ownership and Control,
14(1).
BASF Coatings de México wins “Volkswagen Group Award 2004”. (2014). Pigment & Resin
Technology, 33(5).
Berghel, H. (2013). The SCDOR Hack: Great Security Theater in Five Stages. Computer, 46(3),
pp.97-99.
Chris, B. and Gerhard, v. (2016). An investigation of the marketing performance measurement
practices in Hatfield Volkswagen group. African Journal of Business Management, 10(6),
pp.131-139.
Douma, C. (2015). Designing a Quality and Safety Organizational Structure. Newborn and Infant
Nursing Reviews, 15(2), pp.53-56.

Managing cross the border – Volkswagen Group 15
Li, S. and Tallman, S. (2011). MNC strategies, exogenous shocks, and performance outcomes.
Strategic Management Journal, 32(10), pp.1119-1127.
Stroup, C. (2016). INTERNATIONAL DEAL EXPERIENCE AND CROSS-BORDER
ACQUISITIONS. Economic Inquiry, 55(1), pp.73-97.
Szombathelyi, M., Borgulya, Á. and Szondi, G. (2016). Managing cross-border intern corporate
communication of international companies. Management of Organizations: Systematic Research,
75, pp.71-82.
Volkswagen Group | Announces further investments in innovation, technology. (2013). Auto
Tech Review, 2(12), pp.11-11.
Zuniga, P. and Crespi, G. (2013). Innovation strategies and employment in Latin American
firms. Structural Change and Economic Dynamics, 24, pp.1-17.