University Strategic Review: Audi Individual Management Report

This individual management report provides a strategic review of Audi, a prominent luxury car manufacturer. The report begins with an executive summary highlighting the company's strengths, weaknesses, and areas for improvement, particularly in market research and product differentiation. It analyzes Audi's strategic position within the global automobile industry, comparing its performance metrics, such as production units and market share, with key competitors like BMW and Mercedes-Benz. The study then applies the Ansoff Matrix to evaluate Audi's marketing strategies, including market penetration, development, and diversification. Furthermore, the McKinsey 7S Framework is used to assess Audi's organizational structure, strategy, systems, style, staff, skills, and shared values. The report concludes with recommendations aimed at enhancing Audi's competitive edge and overall strategic direction, supported by references to relevant academic sources and industry data.

Running head: STRATEGY REVIEW
CW-2
Strategic Review- Individual Management Report
Name of the Student
Name of the University
Author notes

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Table of Contents
Introduction....................................................................................................................3
Analysis of the Organisation’s strategic position in its industry....................................3
Analysis of the Organisation's strategic direction- Ansoff and McKinsey....................5
SAF Framework.............................................................................................................9
Conclusions..................................................................................................................12
Recommendations........................................................................................................12
References....................................................................................................................15

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Executive summary
This is the strategic review of the company Audi. The environmental analysis of the
company shows the strengths and weaknesses of the company. The environmental
analysis shows company need to work in its market research and developmental aspects.
In the strategic review, the researcher has tried to give an idea to the reader about the
operations and management functions of the company. Strategies are the method through
which a company decides their work process and makes their way to success. Audi is the
brand that have huge name in the market, but at the same time it is facing stiff
competitions from its rivals. Differentiation in the products in another important part that
is missing in the strategy of the company. Again, the CSR and stakeholder management
could be beneficial for the company as well.

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Introduction
Audi is a known name in the luxury cars sectors in automobile industry. This
company has its headquarters in Zwickau, Germany and was established in the year 1910.
The company has its business established in a number of countries worldwide. The brand
manufactures cars in 11 production facilities across the nine countries in Asia, Europe, South
and North America. The Audi AG group has the employee number of 91,674. This company
has been able to increase its annual growth every year. The production report of the company
states that the total production unit of the company was 1,871,386 unit in 2018. Total revenue
of the company was €59.248 billion in 2018. The company works in two divisions and six
subsidiaries (audi.com 2019).
The operations of the company are highly based on innovation and technological
interventions. Audi is known for its sleek and sophisticated designs in the luxury cars brands.
The company believes in investing in technological inclusion in their products to cut the costs
and increase the efficiency of the cars performance. The luxury car industry is growing in
each year all over the world. The change in the living style and mentality of people has made
the sales up going. The main competitors of the company are BMW, Mercedes Benz,
Porsche, Jaguar, Volvo, Aston Martin and Toyota. All these names are quite known in the
business sector. As the business scope and target customers are quite limited in this sector,
the competitors are a big challenge for any company to prosper. This is why the company
strategy has to be innovative and unique for gaining market shares. This study will review the
strategies of the company to understand their company direction and operational aspects.
Analysis of the Organisation’s strategic position in its industry
With growth of the automobile industry worldwide, Audi is becoming one of the most
important player in the market. At the same time, there are many impressive names of the

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automobile companies who are giving a tough competition to the company. Most prominent
competitors of Audi are BMW, Mercedes Benz, Porsche, Jaguar, Volvo, Aston Martin and
Toyota. All these companies are dealing in the market of luxury cars and are influencing the
business of each other. In the year 2016, the company has delivered nearly 1.4 million units
of vehicles. When, in the year 2018, the number became 1.8 million (statista.com 2018). This
shows the growth of the company production and customer demand. The key performance
indicators of a business are their revenues, production and other financial statistics. The
comparison between the KPIs of its competitors would give the researcher a clear idea of
how much Audi is going up in its game.
The manufacturing units of Audi is much less than its competitors. Its main
competitor BMW has 31 production centres all around the world; Mercedes has 30
production units for luxury cars. Whereas, Audi has 11 production units in the whole world
through which it operates its manufacturing (audi.com 2019). Both the companies are
preceding Audi in their production units as well.
Market shares of company are another key indicators of its performance. The
increasing market shares actually shows how the company is growing in the international
business. If one compares the market share of the luxury car brands in USA, Audi is at the 4 th
place in the list with 11.17% of share. The first three are Mercedes with 15.8%, BMW with
15.5 % and Toyota with 14.92 %. The market share of Audi has increased by 0.76% in the
year 2018 (statista.com 2018). This shows the overall growth of the company, yet there is a
huge scope remaining to the whole process.
The customers thinks that the sleek and sophisticated design of the Audi cars are the
main attraction point for them. Other than that, the models of Audi is are well equipped with
modern technological supports (Mocker and Fonstad 2017). The competitors of the company

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has different styles and design attributes for their cars. BMW is known for its modern and
attractive models, whereas the Toyota luxury cars are recognised for their classy and
sophisticated looks. In the matter of innovation. Audi is still behind the companies like
Mercedes and BMW. In product differentiation all other companies are ahead of Audi as they
invest in product other than the luxury cars. One thing that makes Audi a tough competitor is
its use of technology and marketing. This company is quite ahead of its competitor in the
matter of marketing and advertisement.
Analysis of the Organisation's strategic direction- Ansoff and McKinsey
Ansoff Matrix of Audi
Audi is known for its unique design and technological interventions in their luxury cars. The
marketing strategy of the company is been affective till now to maintain the brand reputation.
The Ansoff Matrix of the company can give an effective understanding of the marketing
strategies the company has taken till now.
Market Penetration
In the Ansoff Matrix, market penetration means selling the existing products in existing
market (Rothaermel 2016). The company that wants to sell their product in the market that
already have their product in it uses the market penetration strategies. Audi has strong market
penetration strategy. The company gives huge importance in its advertising and marketing
strategies. They promote their existing products on social media and other online channels.
At the same time, offline advertising is done through direct events, hoardings, electric and
press media (Channon and Jalland 2016). The company creates barriers for entry for the new
competitors by improving their luxury factors and car qualities in the market. The existing
customer satisfaction and experience is given special preference. The company continuously
promotes its products to gain new customers in the existing markets. The existing owners of

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the Audi cars are motivated by the brand advertisement to try new launches every time. The
brand reputation is increased by the participation in various sports events as the sponsors.
These measures are taken by the company to increase their sales in the existing markets.
Market Development
Developing market for the existing product is the second part of Ansoff matrix. Audi has its
own strategies to do so. Audi believes in expanding its geographical markets so that it can
grab more opportunities. According to Luthra, Garg and Haleem (2016), the company already
has its business established in various countries where they sell their cars through direct and
indirect channels. The authorized sellers from all over the countries are selling the cars of
Audi. At the same time, this company has alliances with many famous companies in the
countries that do not have their showrooms. To boost the sales in different countries, Audi
potentially expands its business in this process. The selling of the model depend on the
market it is targeting (Kerzner 2019). The geographic barriers are there for the company to
expand as well. As the company has limited production centers, in many countries it has to
export its cars. The taxes for luxury automobiles are higher in most of the countries. This
increases the cost of the cars that the company produces.
Product Development
Product development means developing new products to sell them in the existing market.
This has its own risk in the case of Audi. The selling of the product depends on the trend and
demand of the customers (Ignatyev, Makin and Iakovleva 2017). The number of customers
for Audi and all other luxury cars are limited. Hence, launching new products does not have a
successful impact all the time. The company has regularly launched new variants of their
products. Along with the new products, the company has also launched variants of their
already existing products. The product variety of the company is massive which gives it a

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competitive advantage. The company do invest in their research and development but this is
not quite impressive in respect to the other companies in the market. Audi marketers test the
markets and trends before expanding their business in new countries. This helps the company
to adjust to the market condition of the country to give it a competitive edge (Mohammadi,
Elyasi and Mohseni Kiasari 2017). The marketing team of this brand knows the importance
of product development in the business of luxury cars.
Diversification
Diversification can be done in pricing and product development. This is the riskiest strategy
for any company. This targets to enter a completely new market with new products altogether
(Aydarov et al. 2019). The scope of diversification for the products of Audi is only in the
horizontal level. This company can think to expand its business in other vehicles other than
the luxury cars. Audi can invest in bikes, heavy vehicles, electric vehicles or regular cars. The
company exports its parts form other companies. Therefore, it has the scope of developing its
own parts producing units to reduce their manufacturing costs all across the world (Singh,
Singh and Gandhi 2018). As the company has enriched technological and financial resources,
they can also think of entering other diverse markets like electronic goods or chemical
industries.
McKinsey 7S Framework of Audi
Structure
The Audi has a hierarchical structure for their organizational activities. The framework of the
organization structure starts with the board of directors and have several layer to it. The
company depends on the mangers of the company for its decision making in the initial level.
There are a number of departments in the organization for operating different roles and
responsibilities. The departments are divided in marketing, operations, finance and

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accounting, human resource and some other parts (Schulz and Müller 2017). The authority
takes special care that the departments are taking care of their responsibilities. The company
operations are product centric and also gives importance to the customer experience.
Strategy
The company strategy is product differentiation and provide quality products to the
customers. The company has a huge reputation for its sophisticated design and quality. The
luxury cars by Audi are developed in order to make it a premium brand in the automobile
industry. The company do not have its varied price range products like other competitors
(Kumar and Maqbool 2018). The company solely concentrates on the manufacturing of
luxury cars. The company has expanded its business and is trying to capture new markets by
its innovative cars. It invests a large amount in promotion and advertisements of the products.
Systems
Daily operations are the activities that keeps the company productions moving. For any
organization and successful management of the daily operation results in greater
achievements in future (Fairbanks and Buchko 2018). The systems are related to the daily
activities and operations that are happening in the organization. The use of AI and robotic
technologies are at the heart of the company operations. Wide range of business process are
being managed by the technology and online processes.
Style
Audi is a company that works on market penetration more than anything else. The
organization worker are skilled in their works and the customers are at the heart of strategies.
The company only invests in the luxury cars and has built their brand reputation depending
on this.

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Staff
Employees of the organisation skilled in automobile technology and production. The
managers of the company are well known for their leadership qualities (Nunes, Bennett and
Shaw 2016). Employees of the company has a huge contribution in the reputation of the
brand. Audi authorities make sure that the employees they are hiring has set skills. Regular
training of the employees ensure better performance of them.
Skills
To be the part of such an esteem brand, the employees need to have high competencies in
their work. There is no doubt in the fact that the automobile industry of modern times have to
be well-equipped with technological knowledge and experience (Vladimirovna and Yurievna
2017). Hence, the employees of the company have elevated knowledge on automobile
engineering. The marketing professional of this company are smartly doing their marketing
tasks in the company through effective communication and leadership.
Shared Values
Shared values are the one that the company employees have in common. According to
Dehdar, Azizi and Aghabeigi (2018), this is related to the objective and mission and vision of
the company. The mission of Audi is to deliver quality luxurious cars to their customers that
has all the modern facilities in it. The shared values of the organization is continuous
development of all related to the organization and the customers. The CSR policies of the
company is quite remarkable. Sustainable development of the business is the core value of
the company as mentioned in their annual reports.
SAF Framework
Suitability

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Suitability of the strategy used by the company is the most important aspect. This will decide
the company is going to work in the market or not. Therefore, for any company strategy
making, the first thing the company need to do is to analyze the suitability of the strategies it
is implementing.
The strategy of Audi is to develop the business through the use of technology. They
concentrate in the geographical expansion of their business. The marketing team of the
company is quite active to promote their business worldwide. These strategies depend on the
differentiation method. All these strategies are designed to attract the market for the company
that have potential for the luxury cars business. As the company stresses on the technology to
make their cars full of luxuries, this works as the central factor for its demand in the market.
This is a suitable strategy by the company as it perfectly works for the costs and sales of the
products (Vogel 2016). Another suitable strategy is to expand the business in international
market. The companies that have access to the international market are tend to gain more
profit. Therefore, the expansion of their brand in the world markets is a suitable strategy for
the company growth.
Acceptability
The growth of the company in financial and non-financial aspects shows the acceptability of
the strategies implemented by the company. The continuous growth of the company in past
years shows the acceptability at large (Rizan,S Balfas and Purwohedi 2019). The company
business has grown by 10% in 2018 in USA. This is the fact in other countries in other
countries as well. In the year 2014, the sales of the company even surpassed that of BMW
and Mercedes. The company is been listed in one of the 100 top sold global brands all over
the world. In 2015, the sells unit of the company was 1.4 million, when in 2018, this became
more than 1.8 million. The figures got doubled in four years only. But the revenue number

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are going slightly down in recent year as well. Below is the chart of revenue of Audi in past
few years-
Years Revenue (in million euros)
2018 3.5
2017 4.6
2016 3.05
2015 4.8
2014 5.1
Table: Revenue record of the company Audi
(Source- Statista.com)
These figures have partially affected the confidence of the Audi officials. Hence they have
tried some changes in their productions by involving more technology and innovation in their
products. The increased competition is also problems the company is trying to overcome.
Feasibility
The Audi has a great financial structure for its business. The investors of this company has
been constant with this company for a long time. There is ample resources for the company to
invest in their ventures. It is well equipped with the skilled and competent employees. The
recruitment strategies of the company is strict and addresses the required workforce problems
in the company (Singh and Singh 2018). Audi has to work in its research and development
sectors. The company has to invest more in the innovation. There is another part that need to
be consider here. According to Gopal and Thakkar (2016), to increase the revenue of the
company, differentiation in the product type is necessary. The company only concentrates in
its luxury cars production. It can also try these strategies to develop their business in products