Business Strategy and Management

This assignment provides a comprehensive review of various business strategy and management topics, including innovation, digitalisation, and sustainable entrepreneurship. It includes references to academic articles, books, and online sources, such as Volkswagen's 2025 strategy targets digitalisation and mobility. The assignment is suitable for business students looking to understand key concepts in business strategy and management.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Role of business missions and goals in creation of strategic plan....................................1
1.2 Important factors in formulation of a plan.......................................................................1
1.3 Effectiveness of techniques that are used in development of strategic plans...................1
TASK 2............................................................................................................................................1
2.1 Organisational audit of Volkswagen group .....................................................................1
2.2 Environmental audit of Volkswagen ...............................................................................2
2.3 Importance of stakeholders analyses................................................................................3
2.4 Future strategy for Volkswagen group.............................................................................4
3.1 Analysation of appropriateness of alternative strategies..................................................5
3.2 Justification of selected strategy.......................................................................................6
4.1 Responsibility of personnel who play crucial role in execution of strategy.....................7
4.2 Need of resources for strategy implementation................................................................8
4.3 Role of SMART targets in implementation of strategy....................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Every organisation has some objectives which they want to achieve by utilising their
resources in an effective manner. Business strategy is a long term plan which basically covers the
activities that a company is going to do in next 3-5 years. This work help them in attaining their
major goals. Volkswagen group is one of the leading companies of auto-mobile sector. They are
running their operations in more than 150 nations. This file will discuss about vision and
objectives which make is taken in account at the time of strategic planning. Evaluation of
techniques which is used in formation of tactics will be included in this report. Organisation and
environmental audit will also become the part of this assignment. Responsibility of various
personnel who are selected for implementation of plan will be discussed in this project. This
report will explain estimation of resources which are required for the execution of tactics. BCG
and Anstroff matrix will get discuss under this file.
TASK 1
1.1 Role of business missions and goals in creation of strategic plan
Covered in PPT
1.2 Important factors in formulation of a plan
Covered in PPT.
1.3 Effectiveness of techniques that are used in development of strategic plans
Covered in PPT.
TASK 2
2.1 Organisational audit of Volkswagen group
Cited company is considered as one of the most successful organisation of auto-mobile
sector. They are financial sounds and the have 340 subsidiaries (approximately). Following is the
SWOT analyses of Volkswagen group:
Strengths – This company has strong global presence, they do not have any competitors
who has such a wide portfolio (London and Hart, 2011). After emission scandal, industry experts
were thinking that this company is almost finish but they revived in a very short time because of
their goodwill. Their customers still have faith in them and they do not want switch their car
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brand. This company has done remarkable work in term of installing new technology in their
vehicles. Their research and development department is working on future cars and new
technology. They are successfully expanding their business in developing market like China and
India. This will assist them in earning high amount of profit in forthcoming time.
Weakness – They are operating at a large level. The decision making process in this firm
is very slow which is hampering their growth in emerging as well as in developed market.
Negative publicity tainted their image, their valuation has gone down because of incidents like
emission scandal.
Opportunities – Volkswagen should invest more funds in emerging markets like in Asian
countries (Pugh and Bourgeois, 2011). They should launch more products in this region in order
to capture significant amount of share. Company should launching hybrid cars, they must
concentrate on developing vehicles which can run by using electricity.
Threats – Companies like TESLA are getting surprising results in short period of time.
Most of the experts of auto-mobile industry believe that petrol and diesel would get disappear
after 2030. Volkswagen group is still trying to develop electric car, on the other hand enterprises
like TESLA and Google has done remarkable work in this field. Competitors of Volkswagen is
is stealing their market. They are trying to capture the emerging market where cited enterprise
has strong presence.
2.2 Environmental audit of Volkswagen
Business environment, where a company is operating, can affect performance of a
company. Managers of an enterprise need to understand various external factors which has
capacity to derail the operations of a firm. Below is PESTLE analyses of cited group:
Political – This organisation is working in almost 150 countries. Political conditions in
these nation varies so management of Volkswagen face trouble in making a sound and standard
policy (Reinhardt and Stavins, 2011). Sometime government raises tax which made a negative
impact on profit of firm. Their are several countries who are inviting companies like Volkswagen
because they understand that these organisations has capacity to do infrastructural development.
They are ready to provide special deduction in taxation.
Economical – Demand of cars will be more in an economy which is growing at a high
rate. Purchasing power of buyers in Asian region is enhancing, this will help cited firm in
increasing their sale. European continent is facing issues relating to low economic growth, this
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may decrease the overall revenue of Volkswagen group because they earn significant amount of
profit from this region.
Social – This company is providing job to millions of people. Their image in public will
improve if they resolve this crucial issue of unemployment. This firm should concentrate of
various culture and religion at the time of making any policy.
Technological factor – Most of the customers in upcoming time is going to buy electric
or hybrid car. Automation made a huge impact on auto-mobile sector and cited firm reduced
significant amount of cost by using this process (Ross and Blumenstein, 2013). Some of the
innovation are very expensive and they are play crucial role in enhancing cost of a product. This
may hamper overall sale of cited enterprise.
Legal – An organisation who is selling their vehicles in approximately 150 countries has
to deal with various legal problems. Lawsuits relating labour, emission and intellectual property
rights made a negative impact on progress of Volkswagen group.
Environmental – Nowadays, customers like a buy a cars which do not pollute
environment (Schaltegger and Wagner, 2011). Cited company need to speed up the work on
electric cars because this is essential for environmental purpose. They need to allot more money
to their research and development department so they make a products who do not spread any
kind of pollution in the atmosphere.
2.3 Importance of stakeholders analyses
If a company want to smoothly implement their strategy that they need to get support of
various stakeholder. Government, suppliers, customers etc. are some of its key examples. Their
are four ways in which they can be divided:
Stakeholders with high power and high interest – Management of an organisation should
include there people in decision making process, they have capability to influence the plans
made by senior managers of a company (Scholes, 2015). Their ideas and advice should be
considered at priority level because they significant part of the business. An enterprise should
focus on this group in order to run their firm in an effective manner.
Low power and low interest – These stakeholders cannot take part in process of decision
making and they hardly check financial statements of company. An organisation should not give
them more preference as they are much important for business (Slack, 2015). But they need to
monitor their activities as it is significant for making long term plans.
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High power but low interest – This segment should be handle by following strategy of “
keep them posted”. It is important to keep them satisfied as they have power to change the
decision which is taken by board of directors (Definition of business strategy. 2017). It is
significant to solve their queries because they support company in tuff time.
Low power but high interest – It is important to consider their view and advice, they may
not have capacity to influence business operation of a firm but they can assist an organisation in
enhancing their goodwill (Bucolo and Matthews, 2011). Company should send them significant
information in order to consult some small issues with them.
2.4 Future strategy for Volkswagen group
Cited firm need to focus on basically two areas in upcoming time. First is expansion of
their business in emerging markets and second is speeding up the process of installing
innovations in their future cars. Experts of auto-mobile sectors believe that Asian region will
play crucial role in success of faire of a business. Volkswagen group should think about
investing more money developing countries like China, India. They must try to capture a
significant amount of share of these emerging markets (Ross and Blumenstein, 2013). Demand
of affordable vehicles is very high in these nations, their economy is also growing rapidly which
results in enhancing purchasing power. This is essential for attaining long term goals as
investment in this region will provide stability to cited firm.
Driverless cars is considered as the future of auto-mobile industry. Volkswagen group
should provide more funds to their research division so they can launch this type of vehicle in
short period of time. They must focus on designing of their cars because their competitors in
future like TESLA are known for sporty look vehicles (Pugh and Bourgeois, 2011). Volkswagen
should take advance of their global presence, they have a wide portfolio. If they launch a hybrid
or electric driverless car before 2020 then they will definitely get some extra edge over their
competitors. Their is another area where they need to focus on priority basis i.e. reducing carbon
emission. This organisation was found guilty for breaching government rules relating to
environmental pollution. They have to aggressive work on this project in because recent
incidents shows that they are not serious rules made by various government. They should
increasing production of affordable cars in development markets while they need make proper
plan for promoting their luxury vehicles in developed market (Tsamenyi, Sahadev and Qiao,
2011).
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3.1 Analysation of appropriateness of alternative strategies
Below are some of the tactics that can be used but cited firm for expanding their business
operations:
Strategies for entry in new market
Organic growth – This kind of expansion can only be achieved by investing more amount
in fixed assets. Cited company can develop a new product or they can also consider enhancement
in present level of output (Palmer and et.al., 2015). This is significant for maintaining the control
business operations of a firm.
Illustration 1: Definition of business
strategy
(Source: Definition of business strategy. 2017)
Merger – Most of the multi-national enterprises adopt this adopt at the time entering in
new market. They do not had basic experience that is need to operate in new economy so they
choose this option. Organisation either merger their firm with a domestic company or they ask on
of their subsidiary business to sign a deal with then and make a completely new enterprise
(Chang and Graham, 2012).
Acquisition – Volkswagen group is known for their sound financial position. They can
acquiring an emerging company in new market, this will provide them complete control on the
business operation and they can smoothly enter in an unknown territory.
Substantive growth
Product development – Auto-mobile in an industry where companies has to modify their
vehicles in short intervals of times because it is essential to retain present customers (Helms and
Whitesell, 2013). Cited enterprise can think about rapidly instalment new technology in their
cars in order to increase their revenue.
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Vertical integration – In this strategy, more than one company develop different parts so
they can develop final product. Volkswagen group can think about this option, if they want to
speed up their production without investing huge money.
Horizontal integration – Cited enterprise can think about external options like acquiring
new firm or merger in order to increasing their production capacity.
Limited growth
Market penetration – By using aggressive strategy of advertising and promotion, an
organisation can attain limited growth. Discount offers can attracted large number of buyers.
Market development – This strategy basically focus on new customers who are not aware
of feature and products of a company (Davis, 2012). An enterprise can sell their current product
in completely new territory in order to increase sale of organisation.
Retrenchment
Turnaround – Cited firm can think about selling one of their subsidiary firm so they can
improve their financial position and pay their debt in appropriate time.
Liquidation – In this strategy, company should end their business because they do not see
any hope of growth in upcoming time.
Volkswagen group should adopt the strategy of organic growth in developed market but
they must adopt other options like merger and acquisition for expanding their business in
emerging economies like India and China. They must adopt option of horizontal integration for
enhancing their supply.
3.2 Justification of selected strategy
Cited company do not have sound presence in some emerging markets like India.
Domestic players in this economy is very strong and they are not giving breathing space to the
foreign enterprise. If Volkswagen group acquiring a leading organisation of auto-mobile industry
in this market then they can easily target large number of customers in one short. Europe and
USA region has highest contribution in revenue of this firm. These continents are demanding
electric and hybrid cars. By adopted strategy of organic growth, cited firm can provide strength
to their current position (Champoux and et.al., 2012). Horizontal integration is necessary for
enhancing production capacity, it is important for timely deliver of a product. In present
scenario, customers of cited firm, in emerging market like India, has to wait for their 5-7 days for
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getting their booked vehicle. Demand of cars made by Volkswagen group is continuously
increasing and this is a economical option for expanding their business.
(Source: Volkswagen’s 2025 strategy targets digitalisation and mobility. 2017)
4.1 Responsibility of personnel who play crucial role in execution of strategy
Managers present at various level are accountable for proper implementation of different
plans. They are responsible for explaining the targets to workers so they can manage their work
according. These personnel should also identify the training need of employees so they can
develop necessary skills which is essential for execution of strategy (Burlton, 2015). Manager
play significant role in solving various issues which employees face at the time of
implementation of plan. They must solve all the queries in order to remove confusion that may
arise between two or more then two departments. Top level management is responsible for
taking continues feedbacks from senior manager so they can make necessary changes in the
strategy without wasting any time. This will assist in resolving different problems at the point of
their generation.
Head of various department of an organisation is responsible for monitoring the progress
of a project. They must find the difference between set objectives and actual performance so they
can find the mistakes which company is committing and solve them in appropriate time.
Employees who are working at ground level play important role in success of a plan, they are
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Illustration 2: Volkswagen’s 2025 strategy targets digitalisation and mobility

responsible for taking and communicating reviews of customers to their managers so they can
understand the thinking of buyers and make their future strategy accordingly.
4.2 Need of resources for strategy implementation
An organisation need various kind of resources in different amount for execution of
strategy. Without essential requirements, company cannot get attain their goals (Ang, 2011).
Below are some significant resources which cited firm will be needing at the time of
implementing their plans:
Finance – If Volkswagen group acquire a company, then will need huge amount of
money. If they want to buy a company in emerging markets like India then it will cost them
billions of pounds. They would also require financial resources for expanding their production
capacity. Research and development division of cited company need heavy investment so they
can develop future cars in less time. In order to implement their strategy in an effective way, they
have to hire more people in organisation, this will result in more requirement of monetary funds.
Human resource – Employees are considered as one of the most important assets that is
present in an enterprise (Annabi and McGann, 2013). Volkswagen group have to recruit more
people in their plants so they can enhance their production capacity. They also need to hire more
sales personnels, this is essential for increasing their sales because their executives play crucial
role in making strong contacts with buyers. Cited company will be requiring more engineers in
R&D department, if they want to speed up their research work then they have to hire more
candidates.
4.3 Role of SMART targets in implementation of strategy
The elongation of SMART is S – specific, M – measurable, A – attainable, R – realistic
and T – time based. These targets assist in an organisation by showing them right track which
they have to follow for achieving their long term strategy:
Specific – Cited firm should try to capture 15% of the total revenue of Asian region. A
specific targets will play crucial role in providing stability in the business operation of
Volkswagen group (Stiakakis and Georgiadis, 2011). They may get 16% revenue in first years
and 14% in next but this fluctuations is not good for growth of cited firm.
Measurable – Some of the goals relating to R&D department are not measure. This
elements of SMART objective states the targets should always be measure so manager can
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compare expected and actual performance of a division. This will help cited company is
minimising their wastage as they can easily find the areas of leakages by using this technique.
Attainable – Some enterprises set a target which they can achieve in decided time. Failure
in attaining goals result in extra pressure which is not good for morale of employees (Davis,
2012). Most of the targets set by Volkswagen group is attainable but employees have to give
their best for reaching aggressive targets.
Realistic – All the objectives which cited enterprise is trying to achieve is realistic. They
are not planning to earn 100% revenue that auto-mobile industry in Asia generate in one year.
Time bound – Volkswagen group has decided the time which are going to taken in
attaining every objective. This is essential for maintaining a positive pressure on employees and
it also assure that company speedy expansion of business. Most of the firms make time bound
goals in order to move along with the growth of industry.
CONCLUSION
Formation of strategy is essential for attaining mission of an organisation. Various factors
like growth of industry, performance of competitors, etc. create different challenges in
construction of a plan. Their are many techniques like BCG matrix, Anstroff matrix, etc. which
help a company in making right decisions. Organisational and environmental audit depicts the
correct position of an enterprise. It is important to include various stakeholders at the time of
long term planning, they play crucial role in enhancing goodwill of a firm. SMART goals assist a
company in making good plans, this is essential for maintaining a stability in the revenue of a
company.
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REFERENCES
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Pugh, J. and Bourgeois III, L.J., 2011. “Doing” strategy. Journal of Strategy and Management. 4.
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Online
Volkswagen’s 2025 strategy targets digitalisation and mobility. 2017. [Online]. Available
through: <https://www.sbdautomotive.com/en/volkswagen-2025-strategy>. [Accessed
on 28th September 2017].
Definition of business strategy. 2017. [Online]. Available through:
<http://strategicplanningforgrowth.co.uk/business-success/>. [Accessed on 28th
September 2017].
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