Strategic Management Process of Volkswagen

SM Project

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
External environment of the industry and Volkswagen.........................................................1
TASK 2............................................................................................................................................4
Internal analysis of the company............................................................................................4
TASK 3............................................................................................................................................9
Strategies for the company.....................................................................................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic management is a process of planning and monitoring the assessment necessary
for company to reach its goals (Ansoff and et.al., 2018). It refers to the formulation and
execution of plan to achieve objectives of the organisation. It involves effective utilization of
resources and develop strategic mission, vision of the company. It is a process of setting various
strategies by analysis of strength and weakness of the company. Report is based on Volkswagen
company which is a multinational automotive company, its headquarter is in Germany and
Wolfsburg. Its revenue is €235.849 billion. Report will include the external analysis of the
company through PESTEL analysis, internal analysis through VIRO and SWOT analysis. Report
also contains the its mission and vision statement and possible strategies that company need to
follow in its core business.
TASK 1
External environment of the industry and Volkswagen
Automotive industry is rapidly growing from past years and it is also affected by some
external factors such as political, economical, social, environmental, technological and legal
factors.
 Political factors: Automotive manufacturers are facing pressure of government in
developing countries (Moutinho and Vargas-Sanchez, 2018). Government earn huge
revenues from these sector. Increasing demand has made difficult for automotive
company's to remain competitive. Increase in the middle class has increased the demand
of automobiles but these automotive sector are affected by the political instability. To
make cars affordable to middle class company need to face the corruption and change in
the government policies. Industry face hurdle in investing in automotive disregard of
increasing demand because company's are affected by the political instabilities of
different countries. There are many opportunities for automotive sector to expand
globally but there are many challenges in terms of change in policies, demand, supply
and competition. Tax on some luxury vehicles are increased by the government.
Technological change has affected this industry very badly and adaption of new
technologies depend on the government which reduce the revenue of the company.
Volkswagens is also facing political factors such as current trade tariffs and political
tension. The new issue of ending the sales of petrol and diesel cars in 2040 by UK
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government has adversely affected Volkswagens. Due to diesel scandal, 1.2 million cars
was banned which has a negative impact on sales and revenue of the company. Brexit
was also one of the main factor that has affected the industry very badly and adaption of
new technologies depend on the government which reduce the revenue of the company.
Volkswagens is also facing political factors such as current trade tariffs and political
tension (Ginter, Duncan and Swayne, 2018). The new issue of ending the sales of petrol
and diesel cars in 2040 by UK government has adversely affected Volkswagens. Due to
diesel scandal, 1.2 million cars was banned which has a negative impact on sales and
revenue of the company. Brexit was also one of the main factor that impact consumer
purchasing power and demand for new cars.
 Economical factors: This industry is extremely affected by the economical situations.
There are huge amount of economic crises such as change or fluctuation of interest rate,
inflation rate and foreign exchange rates which has impacted the automotive sector sales
and revenue generation in different countries. In few countries these sector have stagnant
growth and most of the people already have automobiles. Innovation may boost the sales
in developing countries (Hitt and Duane Ireland, 2017). Economic conditions affect the
growth of the company. If economic conditions are not in favour than sales of the
automobiles fall and reduce the sales which in-turn reduce the profits. The size of the
economy and change in the demand of vehicle at low cost in underdeveloped markets
impact the profitability of the industry and in expansion of the business. Customers have
different purchasing power in different economical areas and industry wholly depend on
the spending ability of the customers. If a brand focus on low priced cars then it will
attract middle and lower class people and if company focus on high priced vehicles than
it will attract higher class people. Economical situation determine the purchasing power
of different countries. Volkswagen is also affected by the economical factors such as
decrease in the economic activity will lead to decline in the demand and company face
loss. The recession point out decline in employment rates across the world which result in
the decrease in the purchasing power of the people (Meyer, Neck and Meeks, 2017).
High economic activity in the stable economy make company earn high profits and
increase sales.
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