Business Strategy Report: Volkswagen's Strategic Analysis

This report provides a comprehensive analysis of Volkswagen's business strategy. It begins with an introduction to strategy and its importance, followed by an organizational audit using SWOT analysis to identify strengths, weaknesses, opportunities, and threats. A value chain analysis is also included to evaluate internal activities. The report then conducts an environmental audit using PESTLE analysis, examining political, economic, social, technological, environmental, and legal factors impacting Volkswagen. The significance of stakeholder analysis is assessed, identifying and classifying stakeholders such as capital providers, partners, society, customers, government, employees, and suppliers. Finally, the report outlines a new business strategy for Volkswagen, including goals, objectives, tactics, and segmentation, targeting, and positioning, along with an overview of the marketing mix (4Ps).

Business Strategy

INTRODUCTION
Strategy will be consider as an action plan for an organisation. This has to be follow by
every person who ate working over there. It is like a guidelines which need to be taken after by
manager as well as staff members; therefore, they will attain coveted targets within certain time
span (Scholes, 2015). It is must for superior to implement it into business in an effective and
efficient manner. Volkswagen is an organisation who is doing their business in automotive sector
and set up in United Kingdom. They are doing their operational activities in more than 100
countries. To determine external and internal factors they will conduct PESTLE and SWOT
investigation respectively. It is essential for them to consider their shareholders while taking
decision. Along with this, there is a description about new strategy which is going to be use by
company. Apart from this, there are various roles and responsibilities which are accomplished by
strategic personnel. By setting SMART targets they will attain desired goals within limited time
span.
TASK 1
Covered in PPT
TASK 2
2.1 Organisational audit
Organisational audit is basically associated with the intrinsic components of an
organisation. With assistance of this, manager of Volkswagen will easily develop strategies as
well as policies in an effective manner (Johnson, 2017). For the above stated purpose, they will
conduct SWOT analysis. This will help to identify the strengths as well as weaknesses. Along
with this, through determining opportunities, firm will deal with their threats effectually.
SWOT analysis of Volkswagen is mentioned as beneath:
Strengths Weaknesses
 International presence
 High profits
 Research and development
 Value supply unit
 Varied portfolio
 Higher competition
 Reduction in goodwill due to scandal
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Opportunities Threats
 Enhancement in fuel efficiency
 Expanding business in different nations
 Automatic driven cars
 Increasing competition
 Decrease in inventive goods
 Slow growth of economy
Value chain analysis:
This method will be utilized by the manager so that they can evaluate intrinsic exercises
of company (Higgins, Omer and Phillips, 2015). Along with this, it helps to determine those
activities which provide maximum benefits to them and in addition help to compete with their
competitors. Actions which require improvements will also be found. Therefore, it will cater all
pros and cons which are associated with VW. Value chain of Porter's is an appropriate technique
for intrinsic investigation as this assists to determine each activity involved in manufacturing of
products as well as services.
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Illustration 1: Porter's value chain
(Source: Value chain of Porter, 2017)

Volkswagen is operating their business at an international level. They use distinctive
production plants and therefore, they can develop effective items. As a result, their cost of
manufacturing will go down and they will take benefits from their rivals in the competitive world
(Woerner and Wixom, 2015). Procedure line of VW is much wide which assist them to produce
every sorts of car, such as racing car, hatchback and so on. As they are using automatic
machines, so, chances of wastage will get reduced. This will help them to improve the efficiency
of their products. Rather than this, major limitation of enterprise is that they have a perfection in
diesel engines and it takes high cost and affect almost 39% of market share.
2.2 Environmental audit of Volkswagen
By conducting this kind of audit, manager will easily determine the external components
which will provide impact to firm either directly or indirectly (Pisano, 2015). This will affect the
operational activities of organisation also. It is essential for management to take them into under
consideration while making policies or strategies for company. For the above stated aim, they
will conduct PESTEL analysis which is described as below:
Political: As firm is doing their business in more than 100 nations; hence, they will face
numerous difficulties in this context. Each and every country has different chances of politics.
But circumstances of UK is much favourable to Volkswagen. They are providing their services
to more than 10 million individuals in all over the world. Therefore, regulatory body caters
financial help to them at the time of recession.
Economical: If there is recession in the nation where firm is operating then this will
affect organisation in an adverse manner (Aitken, 2016). Recovery from it is not easy and this
will provide influence on their working. Before 2012, sales of car at market was very less, but at
present, there are numerous positive alterations.
Social: This sort of element is not much favourable. Emission scandal gave negative
affect on the reputation of VW. There are number of staff members who are dependent on the
firm for their livelihood. Thus, it is important for the manager to give them proper salary so that
they can maintain their standard of living. It is essential for an employer to manage the
organisational culture and respect values and beliefs of every person. As a result, they will keep
up their reputation in the marketplace.
Technological: This element is prominent for each and every kind of company because it
helps in their improvement (Matt, Hess and Benlian, 2015). In this context, VW is using the
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latest techniques and methodologies in their business and update them on time. With assistance
of this, position of enterprise will be decided. Along with this, they utilize new tools for the
development of Bentley as well as Audi. As a result, their sales will get improved and they will
gain higher revenues.
Environmental: Scandal affected the reputation of firm in a negative manner. Along with
this, their cars are increasing a lot of pollution which affect entire environment. Thus, it is
fundamental for them to use the best quality of material so that they can develop high quality
cars.
Legal: After scandal, company has to pay all charges or penalties which are demanded by
the government of UK (Amran and et. al., 2016). Many lawyers claimed that they are producing
low level quality cars. But, manager of VW verified them wrong and proved that they are
producing best quality items for clients.
2.3 Significance of stakeholder analysis
Stakeholder will be a person or may be institution which will either in direct or indirect
manner can provide affect to the strategies and judgements which are taken by management.
Shareholders can be classified into two segments where one is internal and another is external.
They will also influence the activities of firm.
Stakeholder analysis will be done if an association wants to alter their existing strategies
as well as policies. Along with this, it is done if company is going to introduce new plans in the
firm which will put a direct impact upon bondholders (Ibrahim, Dumas and McGuire, 2015). It is
not easy for manager to keep in mind about the expectations and demands of shareholders. But if
they do then, this will aid to improve entire performance of company and in addition their
reputation gets increased. There are numerous stakeholders which consist of staff members,
clients, banks, NGOs, individuals and many more. Thus, they will be classified into some
segments:
Capital providers: These types of people invest their fund in business and they are known
as the investors or banks. Business plan as well as policies will directly influence them in an
effective way. They want some profits and stableness as a return for organisation. In addition,
they have to concentrate that association is using new techniques and methods into their working
procedures. For example: Eco – friendly cars, effective utilisation of assets, etc.
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Partners: This will include trade union, workers and suppliers (Mellat-Parast and et. al.,
2015). They all play an eminent role to attain coveted targets of enterprise within limited period
of time. They will directly get affected by structure as well as plans of company. Instead of all
this, they have some expectations from association and provide satisfaction to clients, similar
opportunities, protection and stability. If all these requirements get accomplished within limited
time span then, this will aid to improve the productivity of Volkswagen and they will reach to
their objectives within specific time duration.
Society: It comprises of NGOs, politicians, government and many more. They all will
affect the firm in a direct way. As per their expectations, they want an adequate relations with
company, eco – friendly car, safe environment etc.
Customers: They are considered as an end user of goods and services. They expect high
from organisation as compared to others (Hockerts, 2015). They need the best quality goods,
protection, safe surroundings and accomplishment of their demands on time.
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Illustration 2: Shareholders mapping
(Source: Shareholder mapping, 2017)

Government: They are also considered as a stakeholder of Volkswagen because they
formulate laws and regulations which need to be follow by organisation. Thus, they will affect
operations and decisions of business either in a direct or indirect manner. They develop some
acts for betterment of staff members and firm, such as health and safety act, equal wages act and
so on.
Employees: They are most fundamental part of each and every kind of company because
they aid superior to accomplish their targets and objectives within certain period of time. It is
must for manager to consider their interest as this will help in their retention at premises.
Suppliers: They provide material to company; so that, they will produce goods and
services for customers as per their requirements. This aids them to maintain their customer base
and improve profits.
Media: They have an ultimate power to build image of company, if VW is doing their
working effectually then, they will able to maintain their reputation.
2.4 Business strategy for Volkswagen
Below mentioned the new strategy for company.
Goals: This aid to cater guidance to staff members; therefore, they will accomplish their
work within limited time span. Fundamental goal of them that they want to improve their
goodwill at marketplace and enhance their 30% sales of each vehicles (Martinez-Simarro,
Devece and Llopis-Albert, 2015).
Objectives: Basically, it is developed for the shorter time frame; hence, entire goals will
attain effectively. Some objectives are:
 They want to accomplish CSR exercises.
 By utilizing latest methods improve level of satisfaction of clients.
 Produce a new and unique strategy for market.
 Control damages.
 Launch new vehicles.
Strategy: They adopt a strategy of “Together” for the year 2024, which basically
concentrate on improvisation of image of firm. With assistance of this, they will increase their
increase their customer base. Along with this, they will fulfil their responsibilities regarding
society as well as environment in an appropriate way (Rosemann and vom Brocke, 2015).
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Tactics: It is way to reach to desired targets of organisation. As goal of Volkswagen is to
increase their 30% sales and for this aim they will utilized below mentioned tactics:
 Develop client oriented goods
 Sustainable improvement
 Accomplish the requirements of partners, investors and along with staff members.
 Utilisation of latest methods
 Not to harm environment.
Segmentation targeting and positioning: Volkswagen fulfil requirement of each and
every sector. Like an example: Polo accomplish wants of those sector who comes into budget
segment. Audi is for those individuals who are business oriented (Lueg, Pedersen and
Clemmensen, 2015). Organisation is operating more than 100 nations; thus, they will easily
overcome from geographical obstruction.
As indicated by targeting, firm has to choose a specific audience to target. As
Volkswagen is having diversified portfolio which help them to cover maximum people of
society.
Positioning portrays that what is place of company in the mind of people. There position
is solid as well as effective which assist them to attract towards their products.
Marketing mix is a technique which has to be controlled by enterprise as this will cater
advantage to them. This will include 4P's: Product: Portfolio of firm is much wide which cater automotive in varied shape, size as
well as capacity. Now, Volkswagen is going to produce an automatic driven cars which
aids them to enhance their market share (Smink, Hekkert and Negro, 2015). Price: Enterprise is adopt a competitive price which assist them to cover each segment.
But, they are using premium values of cars in some well set up countries. Place: They are doing their business in more than 100 nations. But, there major assembly
lines are in some places, which include, Mexico. Germany, India and China.
 Promotion: For this, it is required for enterprise to adopt an effective strategies which are
related with marketing. As per recent era, it is essential for VW to spent some amount on
marketing.
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TASK 3
3.1 Alternative strategies relating to market entry, substantive growth, limited growth
In is fundamental for an enterprise to utilize effective strategies; thus, they can easily
cope up from various challenges as well as issues (Scholes, 2015). In this context, there are some
strategies which will aid organisation; so that, they can overcome from obstructions:
Market entry: With assistance of this, company will easily improve their market by
taking entry into new place. As a result, market share of Volkswagen will get improved. This
will aid them to maintain direct relationship with various clients which will improve their brand
image. To adopt this strategy, some options will be opt by affiliation, such as acquisition,
franchising as well as merger.
Substantive growth: If enterprise is utilizing diversified strategies then they will ensure
their success. Basically, this concentrates on their actual development within limited period of
time. In this context, organisation done horizontal consolidation with a Chinese producer. As a
result, they will decrease their cost and in addition easily access or cover new markets (Johnson,
2017).
Limited growth: This sort of strategy will assist company; so that, they can easily face
hard circumstances of business. For this, some tactics will be utilized by manager, such as
development of an item or market and innovation. Fundamentally, affiliation used it if there
financial situation is not good. Therefore, VW adopt the strategy of development of good and
they produce mark VIII.
Retrenchment: If products of company are not performing effectively then, employer has
to use this technique. This result to divestment as well as liquidation. There are some other
methods which will comprise into this, like merger. In this context, VW is going to collaborate
with Fiat Chrysler (Higgins, Omer and Phillips, 2015).
3.2 Justification of selected strategy
From above mentioned strategies organisation will choose limited growth as this will
help them in market sustainability. It concentrates on improvement of goods, market and in
addition innovation. As a result, they will occupy maximum share of market which aid them to
improve their reputation. In this context, Volkswagen is going to establish a SUV line. Along
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with this, they are going to introduce new items which will comprise Tiguan, Kodiaq and T-roc.
Additionally, they established a new factory in Tennessee.
 There sales was go down after scandal.
 Less revenues.
 Decrease the reputation of firm.
 Company is not updating their methods timely.
 To improve their market, it is essential for them to launch new items for users (Woerner
and Wixom, 2015).
 There are many rivals of VW at marketplace, such as Tesla, Toyota.
 If they use inventive methods into their car then, they can easily survive at market for
long time period.
TASK 4
4.1 Assessment of role and responsibilities of strategic personnel
Strategic individual plays an eminent part in an enterprise. It is must for manager to
develop policies or strategies for organisation by consider all elements which can affect it either
directly or indirectly. Therefore, there are some roles associated with strategic personnel which
will be categorized into three different segments:
Top level: There main duty is to formulate strategies as well as policies for business, but
while doing this, it is must for them to keep in mind the interest of bondholders (Pisano, 2015).
They need to determine some individuals from various divisions who are accountable to apply
plans into firm. Therefore, it is must for them to maintain an adequate conversation so that they
will convey about policies to middle and lower level.
Middle level: As per this, fundamental role of manager is to apply those strategies which
are formulated by top level. They do their task as a formulator as well as implementer of
strategy. If they want to alter any policy then, they will do it without any efforts.
Lower level: Staff members are include into this and there duty is to implement strategy.
It is required for superior to involve their workers while they develop policies as this will help to
increase their interest in company. If employees have adequate abilities as well as skills then,
they can easily apply strategies in a proficient manner (Aitken, 2016).
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4.2 Analyzing resource equipment
To attain coveted objectives and goals effective, some appropriate source will be used by
company. These are stated as beneath:
Financial resources: To run an enterprise adequately, finance is fundamental. With
assistance of this, firm can easily enlarge their business and in addition will launch new goods
for their customers. This will help them to improve their market share and goodwill.
Human resource: They help company to attain coveted targets within limited time span.
If staff members are trained then, this will assist them to perform their task more proficiently and
they will easily compete their rivals at competitive world (Matt, Hess and Benlian, 2015).
Technological resources: It is required for enterprise to use new or latest techniques and
methods into their business. This will assist them to reduce their unwanted cost and they will be
able to fulfill requirements of customers on time. If they are using latest methods then, this will
help them to survive at marketplace for long period of time.
Raw material: It is essential for company to use best material for production of goods
and services. As a result, they can develop quality items which will help them to attract
numerous people towards them.
4.3 Role of SMART targets in strategy implementation
By setting SMART objectives, organisation will attain their goals effectively. Therefore,
this will be described as beneath:
Smart: It is must for manager to set their target which is specific. In this context, VW
wants to improve 30% sales in upcoming year (Amran and et. al., 2016).
Measurable: Objectives which are decided by firm need to be in term of quantity. Hence,
employer is much able to examine performance of their staff members which assist them to
know that they are achieving desired goals timely or not.
Achievable: Targets which are decided by firm has to be attainable. Because if it is not
attained then, this will reduce morale of workers. In this relation, goal which is set by superior to
increase 30% sales is possible as per the thinking of employees.
Relevant: Goals need to be real not fictitious. VW wants to enhance their 30% sales then,
for this they will improve it on quarterly basis. Like, they will increase 5% sales in three months,
which is possible for them.
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