Business Strategy Report: Volkswagen Strategy Analysis and Planning

This report presents a comprehensive analysis of Volkswagen's business strategy. It begins with an introduction to strategic planning and the factors involved in formulating strategies, followed by a SWOT analysis of Volkswagen, evaluating its strengths, weaknesses, opportunities, and threats. A PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors affecting the company. The report then assesses the significance of stakeholder analysis in shaping new strategies, discussing marketing, motivational, and corporate citizenship aspects. A new strategy for Volkswagen is proposed, including goals, objectives, and a marketing mix. The report also explores alternative strategies, such as market entry, substantive growth, limited growth, and retrenchment, justifying the selection of a limited growth strategy. The roles, responsibilities, and resource requirements for strategy implementation are outlined, along with the contribution of SMART targets. The report concludes with a summary of the findings and references.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Covered in PPT.......................................................................................................................3
TASK 2............................................................................................................................................3
2.1 SWOT Analysis of Volkswagen .....................................................................................3
2.2 PESTLE analysis-.............................................................................................................4
2.3 Significance of stakeholder analysis in formulating new strategies-...............................5
2.4 New strategy for organisation..........................................................................................1
TASK 3............................................................................................................................................2
3.1 Alternative strategies for Volkswagen.............................................................................2
3.2 Justification of selection of strategy:................................................................................3
TASK 4............................................................................................................................................3
4.1 Roles and responsibilities of personnel who are charged with strategy implementation.3
4.2 Resource requirement for implementing new strategy for Volkswagen AG...................4
4.3 Contribution of SMART targets in business strategy.......................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In an organisation to achieve the goals and objectives strategies are formulated as this
way the probability of reaching to successful results increases (Aaltonen, 2011). These are the
guidelines which are construed and communicated in the whole work place which also facilitates
a common vision. In the following report it will be discussed that how strategies are formulated
and what all main factors are needed to be consider while designing a new code of conduct.
Thereafter, the internal and external audit will also be conducted of an organisation which will
show the effect of surrounding on a particular business.
TASK 1
Covered in PPT
TASK 2
2.1 SWOT Analysis of Volkswagen
Strengths-
 Strong brand portfolio-It has widest brand portfolio amongst various companies
involved in automotive sector in UK.
 World wide plants- Volkswagen has around 119 manufacturing units all over the world.
Most of them are in north and south America , Europe, Africa, Asia and Oceania. It has
highly skilled employee base in its industries. It has around 6 lac workers in nearly
twenty European nations.
 Effective R&D- They are investing big amount every year and its cost rises
approximately 3.8 % . Due to this, it has strong and effective research and development
section which operates on new public demand, technology, and designs of cars.
 Workforce- It has around 592,586 employees working hardly to make the brand stronger
than before (Al-Turki, 2011).
 All over presence- It operates in more than 153 countries. Three largest factories are
located in German, China, and Brazil which manufactures most of the cars and export to
world.
Weaknesses-

 Weak position in India and US- It has around 3% market share in India and 4.8 %
market share in US which is an important weakness of Volkswagen as it failed to grab
more customers in both markets.
 Non- environment friendly cars- Most of its cars are not environment friendly as these
cars are harming the environment by generating carbon-de-oxide gases. In case
government will take legal step against the company then it will affect the brand image
badly.
 Diesel deception scandal- In 2015, it faced this scandal which resulted in weak position
of this company in global market (Al-Turki, 2011).
Opportunities-
 Technology- Changing technology is an essential opportunity for Volkswagen as it can
manufacture eco- friendly cars by adopting new and advanced technology. It will help in
building strong brand image.
 Market share in US- Competition and restrictions are high in US market so, there are
opportunities to grab the market share.
 Fuel prices- Volkswagen makes fuel dependent cars and since fuel prices are decreasing
so, it may result in increased sales in future.
 Social responsibility- By changing technology and manufacturing environment- friendly
cars will help in fulfilling social responsibility.
Threats-
 Increasing prices of raw materials is an serious threat for this company.
 Decreasing fuel prices will result in less demand of hybrid cars.
 Brands like Toyota, fords are capturing market share in developing countries.
 Increasing facilities in local transportation may result in negative sales in future.
2.2 PESTLE analysis-
Political- Volkswagen is facing various political problems which is not just in one or two
countries but in around 150 nations. Political factors of every country is not same so, it has to
make strategies as per different factors in different countries. Many developing economies are
focussing on developing automotive sector thus, Volkswagen can take advantages of it (Bryson,
and Alston, 2011).

Economical- Automotive industry is considered important in development of economy.
Volkswagen contributes to GDP of country due to which it is getting help from those countries
which is good for its brand image. Developing these industries is beneficial for developing
economies and Volkswagen is taking advantages of it.
Social- Society plays an vital role in growth of automotive industry. Society for this company is
different from country to country. It gives employment opportunities to people which helps in
enhancing level of society and improving their standard of living (Chakrabarti, Vidal and
Mitchell, 2011).
Technological- It plays major role in success of any company. Advanced technology is
important for producing strong cars like Mercedes and BMW. Company uses production
techniques like JIT which is possible by using effective technology. It helps the company in
achieving competitive advantages.
Legal- It is required to follow legal requirements which is an tough challenge for Volkswagen as
it operates in 153 countries and it has to follow laws of all countries. In case of import and export
it should ensure the taxation rules of government. They also need to follow laws like consumer
protection law, intellectual property law, labour law, competition law.
Environmental- Automotive industry has huge impact on environment of a country. Cars needs
diesel and petrol as fuel which pollutes the environment. Volkswagen has many plants and their
smoke is emitted in air and wastage is disposed in water. It need to focus on environment
sustainability for this it has to invest money in research and development so that it can take steps
to protect environment for society. It also need to focus on reducing consumption of energy
(Cornish, J.A. And et. al., 2011).
2.3 Significance of stakeholder analysis in formulating new strategies-
Stakeholder may be a person, group, organisation that has interest in an organisation. They can
affect actions, objectives and policies of business. It includes creditors, directors, employees,
government, suppliers, unions and firms from where Volkswagen gets its resources. They may
affect the company directly or indirectly.
Significances in formulating strategies-
Marketing strategies- While developing marketing strategies it is required to be careful in
considering important stakeholder groups. It is important to be honest, careful and fair with

customers. Market research is required to know needs and motives of target users. Product
development and promotion is highly dependent on findings of research in stakeholder analysis.
Motivating strategies- Motivating employees is necessary for optimizing satisfaction and
production. It is required to understand their needs and interests that will help in motivating
employees and setting up work environment suitable for them. Motivation will help in bringing
out the best amongst them and make them focussed towards organisational goals. It is needed to
follow employment laws related with hiring , promotions and fair practices to maintain non-
discrimination at workplace (Cusworth, K. and et. al., 2015).
Corporate citizenship- Contributing to social responsibilities long with profit making is
necessary to operate honesty and integrity. If Volkswagen wants to create good image in front of
community then it has to give some charity to local NGO, schools, health institutions.
Involvement in such activities helps in building goodwill of company.
Forming partnership- Supply chain management is an important part of business. It is
combination of manufactures, distributors, and retailers to give value to customers. It is
important to operate them with openness and integrity. It is crucial to maintain trust with partners
and supply chain members to grow in long run.
2.4 New strategy for organisation
It is necessary for firm is to measure basic objectives, aims, techniques and methods of
Volkswagen. This process will help in developing new strategies for the organisation.
Goals- The main motive of this firm is to increase in sale and make proper improvement
in auto-mobile in the large market place (Fleming, 2011). This will assist in enhancing company
reputation among customers.
Objectives-
 To make modifications in features of cars
 To became popular in auto-mobile industry
 To enhancing selling by attracting more customers
Strategy- The main purpose of organisation is to became one of the leading auto-mobile
sector firm and adopt effective strategies which help in increasing productivity and profitability.
Tactics- Company required to promote various products an services by adopting different
effective strategies and use some sources that includes television, radio, books, magazines,
newspapers.

Target market- An enterprise will set their target market for attracting potential customers
at different place. Organisation will divide buyers according to specific area that are as under:
 Demographic- It is that segment which is fully based on age, gender, caste, religion and
young people targeted more.
 Psycho-graphic- This segment is analyse by people income group and living standard of
an individual by which they easily divide rich and middle class people (Gabrielsson and
Gabrielsson, 2013.).
Marketing mix- This is an important factor which directly affects sale of goods in the
market and other necessary elements that are required for growth. Volkswagen marketing mix
are as follows:
 Place- It is needed for company is to expand their organisation in many other countries
like china, USA, India and some other. They can also try to open stores in different
places.
 Product- An enterprise required to modify their products design, shape, colour which
manly attracts large number of buyers. It is the responsibility of company is to make
quality goods.
 Price- Every company has right to fixed their product price which are best suitable for
their goods and services.
 Promotion- It is an necessary activity of firm is to promote their commodities by using
various sources like radio, television, newspapers etc.
TASK 3
3.1 Alternative strategies for Volkswagen
A firm has various alternatives that can be used for managing its activities and achieve
higher level of productivity. Volkswagen has to conduct in depth analysis of various aspects that
are related to market expansion. The company bears the burden of breaking land laws by US
environmental authorities. Thus there are different that can be used here:
 Market entry: There are various ways by which Volkswagen can utilized to entering
into the market again. It can develop strategic alliance with a local company before
investing huge amount in the country. This strategy can prove to be one of the best
method towards entering into the market.

 Substantive growth: This strategy can be used by those firms which has plenty of
resources of it own. Here horizontal and vertical approach is apply by manager towards
market. He also ensures about growth of the market share of Volkswagen. The tool of
Merger and Acquisition is adopted to enhance organisation capabilities.
 Limited Growth: Companies used this strategy at the time of lack of resources. In this
scenario, instead of putting companies all resources in expansion, they build tie ups with
other small companies. This helps them in establishing a huge base for themselves which
later support it to expand in future. Here Volkswagen can adapt this strategy to maintain
its current capabilities. Also it will allow them to consumption of their resources at
optimum level.
 Retrenchment: This strategy is effective for those companies who is suffering from
higher losses.
3.2 Justification of selection of strategy:
Volkswagen requires a strategy through which they can ensure that their capabilities
should be maintained properly and should not be hampered in any way. Company is suffering
from the burden of paying penalty of around $19 billion, which is huge amount. Thus
organisation have to find various methods for keeping down their current liabilities. Their is
requirement for higher efficiency to boost their strategies. Behind limited growth strategy, there
are basically three reasons:
 Optimum utilisation of resources.
 Maintain competitive edge in market place
 It will assist company in paying penalties easily and without disturbing its current
projects.
The limited growth strategy will be helpful in minimising wastage of resources by
increasing efficiency. All quality products will effectively gives competitive edge to the
company in market. Cost reduction and image building strategies can give effective outcomes by
implementing these plans into action, It can understand through this example: Marketing has
done in China, it has formed two types of Joint Ventures in which manufacturing will be done by
the other firm and Volkswagen will only focus on customer satisfaction and market activities.

TASK 4
4.1 Roles and responsibilities of personnel who are charged with strategy
implementation
In the organisation it is important that whatever change is done it is
well communicated to the individuals who will be effected by the same.
During the implementation of new strategy a the existing working
environment gets effected (Gershkov, A. and et. al., 2013). Therefore in that
case the person who is in charge for the strategy implementation has to
perform various duties and responsibility among which the most common
are as follows:
Communication of strategy – it is the most important part which
has to be performed with maximum care. All those person whose working
will be effected by the changes needs to be communicated with well details
so that they can accordingly carry out their future operations.
Making the change understanding – if the desired results need to
be achieved than the person in charge has to clear all the doubts related to
the change to the work force so that they do not resist to adopt it in their
daily working.
Create a need – whenever any change is brought by the
administration it is initially resisted by the work force. It is de to the reason
that the employees are in habit of doing particular operations in a set
pattern and when alteration is done they have to take efforts to learn the
same. If they are made aware about the positives of the new strategy than
they may develop interest in the same and hence accordingly show their
dedication in adopting the new method of doing the whole work.
Training and development – once the work force is well aware
about the new strategy than the person in charge has to ensure that the
employees are provided with required training and learning as how they

have to use it and complete their operations (Hill, Jones and Schilling,
2014).
4.2 Resource requirement for implementing new strategy for Volkswagen AG
Needs for the resources changes with variations in the strategy. When aggressive changes
takes place, investment and defensive methods requires that time. Because any new changes
requires to be combined into organisation core process and each task is to be completed within a
set period of time. `Various types of resources is required to boost organisation ability to offer
productivity and profitability. The officers have to be coordinate with each department to ensure
that the flow should be created which will increase the efficiency levels of Volkswagen. Some of
the resources which are required in the present case are as follows:
 Financial Support: Every action needs back up of money and fund. So that strategies
can be implemented properly. Company has to pay $19 billion penalties to US
government. To pay the penalty, Volkswagen requires resources and support from
stakeholders. Its the responsibility of financial managers to ensure about the timely
recording and entry of every transactions. To avoid the big losses company has to
managed financial resources properly.
 People: These resources has to be used effectively for proper functioning of the
company. Without capable workforce no company can survive and operate. Volkswagen
has to focus on proper modification of these resources through training and enhancing
their skills. The managers of Volkswagen has to ensure about proper association of task
through assigning it to right person.
 Raw Material: These are raw goods which are acquired by the company to convert it
into finished goods. Availability of these resources allows company to keep the smooth
flow of production without any break or pause.
 Fixed: Volkswagen has managed to acquire more than 27 places where it can provide
manufacturing facilities. These manufacturing places are physical evidence of the
company which shows the capabilities of organisation. The company has to invest its
huge amount on its sites development and ensure that they should be updated properly.
These resources need to be organised and used by company for making their operations
efficient and feasible. So its the responsibility of a manager to supervised these resources
properly for effective outcomes.

4.3 Contribution of SMART targets in business strategy
Volkswagen is a multinational auto-maker and it has to manage various task in a effective
manner to maintain its ability to serve market in a proper way. Its the duty of every manager to
ensure about whether the conservation of scarce resources is managed properly or not.
Volkswagen don't have any opportunity to expand its business in this rapid growth rate of
market. The burden of penalties levied by US agencies stops this company in expanding its
business. Company has to ensure that each task should be completed in a set period of time. It
requires an action plan as well as policies to control various activities in an effective manner. It is
important for maintaining its capabilities as well as boosting its productivity. There are is
requirement of constant evaluation of various activities as well as process so that any existing
variances can be identified and removed (Astrachan, 2010). Also, they have to formulate plans
that will allow it in making sure that they have a set path to follow for achieving goals and
objectives.
The SMART target allows organisation to make their process more
effective and efficient according to its goals. This concept describes about
the goal, as it should be realistic, specified, measurable, accurate and time
bounded.
CONCLUSION
From the above discussed report this can be summarised that in
Wilkinson marketing manager performs a very important role. It works
towards maximising the total profit by taking responsibility of different
critical activities. It also has its influence on the other sections of the same
organisation and together they work towards goal accomplishments.
Thereafter, marketing mix of same firm is discussed which shows how it is
utilised in the firm. Lastly the report ended with a fresh marketing plan for
the organisation which can be implemented to achieve higher benefits in
future in which its strength and weaknesses are discussed.

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