Business Strategy Report: Volkswagen's Strategic Position Analysis

This report provides a comprehensive analysis of Volkswagen's business strategy, examining its mission, vision, goals, and objectives. It delves into factors influencing strategic planning, including industry and competition analysis, and evaluates the effectiveness of various techniques like the BCG and Ansoff matrices. The report assesses Volkswagen's strategic position using SWOT and PESTLE analyses, highlighting its strengths, weaknesses, opportunities, and threats. Furthermore, it explores the importance of stakeholder analysis in formulating new strategies and proposes a new strategy for Volkswagen, justifying its selection and outlining resource requirements and evaluation metrics. The report concludes with a discussion on the responsibilities and roles of personnel involved in strategy implementation.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1.1 Vision, mission, goals, objectives and core competencies of business.................................1
1.2 Factors which are considered while making strategic plans.................................................2
1.3 Effectiveness of techniques for developing business plans..................................................3
TASK 2............................................................................................................................................5
2.1 Strategic position of Volkswagen.........................................................................................5
2.2 Environmental audit of Volkswagen.....................................................................................6
2.3 Importance of stakeholder analysis at the time of new strategy...........................................7
2.4 New strategy for Volkswagen...............................................................................................8
TASK 3 ...........................................................................................................................................8
3.1 Effectiveness of alternative strategies...................................................................................8
3.2 Justification for strategy selection.......................................................................................10
TASK 4..........................................................................................................................................10
4.1 Responsibilities and roles of personnel...............................................................................10
4.2 Resource requirement for the implementation of new strategy..........................................11
4.3 Evaluation of SMART targets for achieving implementation of strategy..........................12
CONCLUSION ............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is defined as one of the important concept in an organisation as it
supports a company to achieve various objectives and goals. It can be termed as a kind of
management plan which has been used by an enterprise for attaining business objectives,
strategic planning consist of distinct types of strategies in order to make sure long term growth of
business (Ang, 2011). This report is based on the topic of strategy on the case study of
Volkswagen, an auto-mobile manufacturing company of Germany. In this report, goals,
objectives, mission, vision and different factors influencing strategic plan will be analysed.
Effectiveness of different techniques used for making plans, strategic position of a company,
environment audit and selection of appropriate strategy used for achieving goals will also be
determined. Business strategy is a set of different kinds of works which supports a company to
achieve success in a market.
TASK 1
1.1 Vision, mission, goals, objectives and core competencies of business
Mission can be defined as a company's purpose statement and the reason for their
existence in a market. It also defines abilities and facilities of a company. It tells about values
and ideals which an organisation is pursuing in a short time period. It focuses on business
activities and main value of a business (Burlton, 2015). VW also have a mission statement,
which can be defined as:
“ To form long term strategic partnership with customers and to support them in creating
right choice in regards with their business needs, by decreasing fleet cost and giving world
class service for customers.”
Vision is defined as a statement which defines what company want to be in future. It
helps in showing organisation its future directions and what needs to be done in future. Vision
statement is a type of inspiration for a company, when there no answer regarding problems. It
defines way of doing things. Vision statement of VW can be defined as:
“To focus on positioning and to be a global economic and environmental leader among
manufacturers of auto-mobile.”
Objectives and goals are defined as specific results which a system or person wants to
achieve in a particular time frame and with the support of available resources (Champoux and
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et.al., 2012). These are the basic tools which underline strategic activities and planning.
Objectives of a mentioned can be described as:
 They want to capture leading position in world in terms of manufacturers by making use
of intelligent technologies and innovation to shape customer's quality and satisfaction.
 They want to exceed sale by 10 million vehicle per year.
 Wants to be excellent employer in all markets, between various communities and regions.
Core competencies is the way to gain competitive advantage in a market. Several
strategies should be gathered by company which will make them better in comparison to their
competitors. Core competency of Volkswagen is to produce wide variety of products in premium
segment which must be economic. They create products which are full of innovative and creative
technology which are termed as their core competencies.
1.2 Factors which are considered while making strategic plans
Strategic planning is defined as the process with the help of which an organisation can
state various strategies and can make decisions regarding allocation of resources so as to pursue
strategy. It also assist in giving guidelines needed to implement strategy. There are three factors
which must be considered while formulating strategic plans (Davis, 2012). They can be defined
as follows: Industry: At the time of strategic planning, it is very necessary to evaluate overall
industry. The potential and past growth, market size, competitive profitability, future
threats and new market entrants must be analyses while evaluating industry. The change
in such impacts may have large impact on organisation's activity. Competition: Determination of position of competitor is defined as a significant factor
which must be taken into consideration while formulating strategic plans. Success cannot
be achieved by VW, if they will not analyse competitors nature who are there in market.
Organisation should analyse strengths and weaknesses of their competitors and finds way
regarding how competitors meet customer's needs (Helms and Whitesell, 2013).
 Strengths and weakness: SWOT analysis is important so as to formulate strategic plans.
Strengths and weakness are considered as internal factors while threats and opportunities
are termed as external factors of an organisation. Internal strengths should be determined
by an enterprise so as to increase them. It is also necessary to identify weaknesses, so that
a company can make necessary improvements and can decrease weaknesses.
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1.3 Effectiveness of techniques for developing business plans
There are different techniques which are used for the development of business plans, and
can be described as follows:
BCG Matrix
BCG Matrix assist companies in distinguishing in what areas more resources and
investments should be used. This is an effective technique while developing strategic plans for
business (Onkila, 2011).
 Question Marks: This defines businesses who are having high growth in market and are
having low market share. If market share will be untouched or low, then an organisation
will consume large amount of money. Dogs: In this businesses have low market share as well as low market growth. It has
ability to put down or sink an organisation. Companies here are defined as weak and
finds difficulty in earning profit.
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 Stars: These are the businesses having high market share as well as growth. They are
business leaders and have great opportunities. They need high investment to gain high
share in market (Oyedijo, 2012).
 Cash cows: These are the businesses having high share in market and low growth. These
are the business who perform well in market but are having low growth.
Ansoff Matrix
(Source: Ansoff Matrix, 2017)
 Market Penetration: It is name which describes growth strategy where business focus to
sell existing product in existing market. It increase and maintains market share of
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Illustration 1: Ansoff Matrix, 2017

products, secure growth market dominance, restructure mature market by eliminating
competitors. Market development: In this business sells their existing products in new market. This
strategy can be approached by including new product packaging and dimensions, new
geographical markets, new distribution channels etc. (Palmer and et.al., 2015). Product development: In this business introduce new products in existing market. In this
strategy development of new competencies are required and also needs businesses to
make modified product which can attract more customers. It includes development and
research and innovation, details regarding customer needs etc.
 Diversification: In this business introduce new product in new market. This kind of
strategy is bit risky as business enters in new market with little or no experience.
TASK 2
2.1 Strategic position of Volkswagen
Strategic position is defined as the action of a company which is doing different activities
from its competitors or performing similar activities in distinct manner. With the help of this VW
becomes superior performer in industry and make distinct market position which helps company
to take advantage of competitive business environment (Pugh and Bourgeois, 2011). In order to
make strategic market position, company make use of SWOT analysis.
STRENGTHS WEAKNESS
 Large brand portfolio between various
automotive companies
 Best strategy regarding diversification
 New TOGETHER-2025 strategy
 Synergy among brands
 Joint ventures in collaboration with
Chinese local auto-makers
 Highest rate of recall in market
 Low share of market in US automotive
market
 Negative publicity decreasing image of
VW brand
 No competence and little expertise in
producing battery driven vehicles
OPPORTUNITIES THREATS
 Prices of fuel are expected to increase
in future
 Increase in regulations of government
 Further damages and fine which needs
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 Acquire competences and skills with
the help of acquisitions
 Demand of autonomous vehicles
 Decrease in exchange rate of euro
 Focus on improving sustainability
policies as a remedy for damaged
reputation of brand
to be paid
 Intense competition
2.2 Environmental audit of Volkswagen
Environmental audit of a company makes inclusion of PESTLE analysis. In order to have
scanning of environment, VW AG make use of strategic approach which helps them in scanning
various kind of factors which will effect firm's operation. Political factors: The company is making its operations in 150 countries or more,
therefore every country has distinct political aspects. Various regulations and laws of
government impact firm in different ways. Policies of UK government has created
distinct impact on company (Ross and Blumenstein, 2013). Economical factors: This factor have important impact on activities and entities of
business. Economical policies include monetary as well as fiscal policies. All such
policies impact working of an organisation. Economic conditions of UK helps in
expanding business of VW AG. Social factors: Various social factors are there which has effect on company like cultural
environment, buying habits and preference of consumers, consumer choice etc. In UK
customers prefer to buy luxury cars and hence there is an increase in purchase power,
which positively affects company. Technological factors: It includes various technological factors like use of creative and
advanced technologies for an organisation. The auto-mobile manufacturing company
make use of various technologies in order to produce different products (Shirey, 2011). Environmental factors: VW AG has great impact on business operations, company
produce various kinds of products like diesel and petrol products with the help of which
they attract many customers. Diesel products produce pollution in an environment, so
organisation have to produce products which give less negative impacts on environment.
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 Legal factors: Company's legal factors includes various factors which affects company's
growth. Apart from it, organisation also face several legal problems in its day to day
operations. In UK, organisation have to pay penalty in order to make diesel cars.
2.3 Importance of stakeholder analysis at the time of new strategy
Stakeholders are defined as a organisation, group or a person that is involved with an
organisation. Community, unions, employees, creditors, suppliers, government, directors,
shareholders and directors can be termed as stakeholders. Analysis of stakeholder is defined as a
technique used for identification of people who assist in business activities (Teece, 2010). There
are three steps which are involved in analysis of stakeholders and can be described as follows:
Step- 1
The first step which is involved in analysis of stakeholder is to make analysis of people
who are affected by or involved in operations of business.
Step- 2
The next step is to make identification of power, influence and interest of stakeholders. In
order to this company should make stakeholder grid.
(Source: Stake holder's grid, 2017)
 Stakeholders with high interest and high power make large effort to promote product,
satisfy customers and to influence strategies.
 Stakeholders with low interest and high power influence strategies but they also become
bored with company (Verbeke, 2013).
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Illustration 2: Stake holder's grid, 2017

 Stakeholders with high interest and low power should be informed as they are essential
for an organisation.
 Stakeholders who have less interest and low power does not effect much on organisation
so that organisation should focus less to monitor them.
Step- 3
The final step in the process of stakeholder analysis is to maintain good understanding of
necessary stakeholders for an organisation in order to get sufficient support and feedback.
2.4 New strategy for Volkswagen
Main marketing objective of a company is to maintain strong and positive growth in each
quarter and to make achievement of steady increase in market penetration. The company cater
essential information from market in order to know about its customers. The auto mobile
manufacturing company is generally focused on technology and quality so as to expand business.
The firm also focus on positioning of their products by building a brand by making use of
advanced and unique technologies for their business (Reinhardt and Stavins, 2010). Firm is
continuously expanding its business by attracting potential customers with the help of product
branding. VW AG principle strategy is to become leading provider of sustainable mobility in
world. VW AG is going to adapt new strategy which is TOGETHER- strategy 2025, which will
helps in building better, stronger and new Volkswagen. They want to surprise their customers
with innovative solutions for mobility and fascinating vehicles, wants to be a role model and
technology leader when it comes to integrity, environment and safety. Company will represent
attractive investment with the help of competitive profitability and will remain secure, reliable
and excellent employer with the help of new strategy.
TASK 3
3.1 Effectiveness of alternative strategies
There are several alternative strategies which are used by VW AG in order to have
development and growth. These strategies can be defined as follows:
Market entry strategies Organic growth: When a development has been conducted on own organisation in a
similar way as done in starting then it is termed as organic growth.
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 Merger: It is a process in where two organisation combine and perform as a single
business entity. Acquisition: This occur when 100% owner of other company purchased by a particular
organisation (Shirey, 2011). Strategic alliance: When assets of two or more business are being shared so as to achieve
objectives. Licensing: It is termed as a design with the help of which parent company give
permission to another company to make use of its trademarks and in exchange takes some
fees. Parent company is termed as licensor and the other one is licensee.
 Franchising: In this parent company not just give trademarks but also give services like
strategy, maintenance cost etc.
Substantive growth Related diversification: When company practice diversification which is in relation with
product line, then it is termed as related diversification. Unrelated diversification: When diversification is made by company which is distinct
form existing one is called unrelated diversification. Horizontal integration: When several companies are involved in business at same time
of production in different or same industries then it is termed as horizontal integration.
 Vertical integration: When distinct organisation are involved in distinct stages of
production in similar industry then it is termed as vertical integration (Ross and
Blumenstein, 2013).
Limited growth Market penetration: In this penetration of existing market is done by maximizing market
share of existing products or by making fostering of new products, which can be done
with the help of various strategies like discount, advertising etc. Market development: In this company makes offering of existing service or product in
distinct marketplace.
 Product development: It means marketing, creating and designing of new products as per
customer's needs. It helps in maximising revenue.
Retrenchment
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 Turnaround: This kind of strategy is used in converting a underperforming organisation
into profitable organisation. It is applied on distressed or sick company so as to make
solutions regarding financial crisis and to improve financial performance (Helms and
Whitesell, 2013). Liquidation: This strategy is used by a company when it is on last stage of life cycle.
With the support of this strategy company winds up its business and sell its assets and
return in paid to creditors.
 Divestment: It involves sell of business to any other company.
3.2 Justification for strategy selection
In alignment with the perspective of market, VW AG requires new notions and new
products which will support in capturing the marketplace. For the future growth, company
should do enquiry of market which will help an organisation in developing new products as per
the needs of customers in order to make product and service diversification and can also gather
new segment in market.
VW AG should also make use of upright integration so to increase their organisation.
They can start by making alliance with auto-makers in order to attract new market segment.
Company is at the good place and can generate profit by coordinating with new corporation
(Strategy. 2017). Alliance which are made with affiliated corporation will help company to have
more efforts on the need of customers and can also produce new merchandise class so as to
satisfy customer's desire. They can also have market expansion by generating new product line.
TASK 4
4.1 Responsibilities and roles of personnel
The implementation of strategy needs a person who can lead other personnel and can
classify work between employees as per their level and role in an organisation. The VW AG
employees who are responsible for implementation of strategies should have some
responsibilities and roles. In order to implement successful strategy , responsibilities and role of
personnel should be explained clearly. CEO of VW AG should be charged to communicate
information related with strategy to various parties and employees. He also have responsibility to
guide planning related with different strategies.
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In the case of strategic plans, VW AG personnel who is responsible for implementation
of strategy should also maintain necessary records. It is essential for planning of strategies and
also supports in avoiding legal responsibilities. Effective monitoring is also required for
successful implementation of strategy. Controlling and monitoring means having periodic review
of activities. It also supports in identification of proper and actual steps which are taken by
employees so as to make implementation of strategy (Helms and Whitesell, 2013).. It also make
use of necessary corrective actions if there is any requirement. Supports in encouraging strategic
planning overall performance. An essential role is also played by lower management level, they
helps in carrying out various operations in a way which supports in the achievement of
objectives and goals set up by middle management level.
4.2 Resource requirement for the implementation of new strategy
There are various types of resources which are required for the implementation of
effective new strategy in VW AG. These different resources will assist in implementing strategy
as per the desired targets and aims. These resources can be explained as follows: Human resources: In account to have successful implementation of strategy in an
organisation, human resources must be considered by VW AG. They are the key element
used for strategy implementation as well as used for increasing performance of company.
In order to have effective implementation of strategy there must be HR who have good
productivity and technical knowledge. Financial resources: These are the resources which explains how VW AG make finance
for their strategy in order to make it effective. There are two ways to make finance which
are equity and debt. It is recommended to make use of equity as it involves no interest
bearing cost on principle (Shirey, 2011). Material and time resources: In order to make implementation of any strategy, it
includes some specific material and time limit which is required so as to have effective
implementation. VW AG should make use of machines for fulfilling development of
adopted strategy and high quality of technology.
 Environment: It is very important that environment should be supportive for strategy
implementation. It means that if there is any modification or alteration in the
organisation's strategy then it will need change in environment in order to assist
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implementation of strategy. It will also helps an organisation in attaining objectives and
goals which are made in relation with strategies (Burlton, 2015).
4.3 Evaluation of SMART targets for achieving implementation of strategy
SMART targets means that goals and targets which are fixed by VW AG which must be
of specific nature, measurable with existing criteria which can be achieved in time and should be
of realistic nature. In an organisation these targets will help in achieving objectives in organised
manner. These targets are the set parameters which makes sure company's movement in specific
direction. The description of SMART targets can be as follows:
'S' means specific target which helps in increasing profitability and market share for VW
AG. If targets will not be specific then all efforts of company will be of no use.
'M' means measurable targets which are set up by VW AG. If the targets which company
needs to achieve is not measurable as per the desired targets then it is impossible to make
identification of any leakage (Davis, 2012).
'A' stands for the targets which can be achieved easily. It is clear that if desired strategies
will get implemented in an appropriate manner than it will be easy for an organisation to achieve
targets in appropriate way. The VW AG can definitely achieve expected results with selected
strategies.
'R' means targets which are of realistic nature. It is clear that objectives which are set up
by VW AG is realistic. Company has not done any unrealistic claim in respect with increasing
share of market.
'T' means the approach which is time bound in relevance with SMART targets. Every
activity which takes place in a company has specific time limit (Shirey, 2011). So a target must
have time and they should get achieved in that time by VW AG.
CONCLUSION
From the above mentioned report it is concluded that effective strategy implementation is
dependent on proper external environment analysis. The main strategic objective of VW AG is to
make leading position in world as a global leader in environmental and economic terms. In order
to achieve this strategy, it is needed that there should be profound analysis. Company should
make use of upright integration strategy so as to achieve development and growth in a market. It
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has been analysed that effective strategy implementation depends on the conditions of target
market, so it is advised that company should be aware of such conditions.
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Strategy. 2017. [Online]. Available
through:<https://www.volkswagenag.com/en/group/strategy.html>. [Accessed on 29th
June 2017].
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