Business Strategy Report: Volkswagen Group Strategic Analysis

This report provides a comprehensive business strategy analysis of the Volkswagen Group. It begins with an introduction highlighting the importance of business strategies in achieving organizational goals and the significance of resource allocation and performance improvement through a balanced scorecard approach. The report then delves into a detailed organizational and environmental audit of Volkswagen, including a SWOT analysis that identifies the company's strengths, weaknesses, opportunities, and threats. A PESTLE analysis is also conducted, examining the political, economic, social, technological, legal, and environmental factors impacting the company's operations. Furthermore, the report explores stakeholder analysis, categorizing stakeholders based on their power and interest levels and outlining strategies for managing each group. A new strategic plan for Volkswagen Group is proposed, emphasizing a shift towards the Asian market and increased investment in electric vehicle production. The report also analyzes the appropriateness of alternative strategies, such as organic growth, mergers, and acquisitions, and justifies the selected strategies. Finally, the report discusses the roles and responsibilities of personnel involved in strategy implementation, estimated resource requirements, and the contribution of SMART objectives to ensure effective execution of the strategic plan.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Analysing strategic position by conducting organisational audit of Volkswagen group......1
2.2 Environmental audit of Volkswagen group..........................................................................2
2.3 Importance of stakeholders analysis.....................................................................................2
2.4 New plan for Volkswagen group..........................................................................................3
TASK 3............................................................................................................................................3
3.1 Analysing appropriateness of alternative strategies..............................................................3
3.2 Selected strategy justification...............................................................................................5
TASK 4............................................................................................................................................5
4.1 Roles and responsibilities of personnel who are charged with strategy implementation.....5
4.2 Estimated resource requirements for the implementation of strategy...................................6
4.3 Contribution of smart objectives...........................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategies has a crucial role in helping an organisation in achieving business
goals. It is an art, science and craft of formulating, implementing and evaluating cross functional
decisions which helps companies in reaching their targets and mission. Through a business
strategy, organisation's mission, vision and objectives can be formulated (Scholes, 2015). This
report highlights the important resources which has to be allocated to implement the plans and
projects. Other than this, a balance scored approach is also included in this so that the overall
performance of the business can be improved. But there are some internal and external factors
which can hamper the growth of the organisation. This report will be dealing with such factors
where the SWOT and PESTLE analysis of Volkswagen Group will be done to know the impact
of these elements on their business operations. Apart from all these mission, vision, goals and
core competencies will be highlighted.
TASK 1
1

2

3

4

5

6

7

8

9

TASK 2
2.1 Analysing strategic position by conducting organisational audit of Volkswagen group
Volkswagen is leading enterprise of auto-mobile industry. They have have approximately
350 subsidiaries and they are running their business in different part of this world. Below is
SWOT analysis of cited corporation:
Strength – This organisation is present many countries. They have global reach and their
brand value is very high. Most of the customer in auto-mobile industry buy vehicles of this
company because they have faith in their products (Pugh and Bourgeois, 2011). They are not
dependent on any single market and this is their main strength. The are successfully capturing
emerging markets.
Weakness – Volkswagen is a big organisation. They cannot adopt rapid changes which is
significant part of automotive industry. They do not have sound presence in US passenger car
market.
Opportunities – They can invest more funds in Asian region because this continent will
deliver huge amount of revenue in next 5-10 years. They can also enter in electric car market
which is considered as future of this industry.
10

Threats – Companies like Tesla has gained significant amount of share in very less time
in auto-mobile sector. Fluctuation in fuel prices is another major threat for them.
2.2 Environmental audit of Volkswagen group
These are various external factors which can make a huge impact on the performance of
an enterprise. Below is the PESTLE analysis of cited corporation:
Political -Governments in Asian region are getting special tax deductions to companies
like Volkswagen because they understand that these enterprise has capacity to invest huge
amount of money (Reinhardt and Stavins, 2011). This will solve their problem of unemployment
and infrastructural development in these nation. This situation make a positive impact on their
business.
Economical – Rising inflation in various nation are stooping customers to spend their
money on new cars. They are giving preference of necessity goods. This is not good for the
business of Volkswagen.
Social – The preference of customers in emerging market is changing. They have buying
power has enhanced and they are giving more preference to SUVs and MUVs. This is beneficial
for this business of cited company.
2.1 Analysing strategic position by conducting organisational audit of Volkswagen group
Volkswagen is leading enterprise of auto-mobile industry. They have have approximately
350 subsidiaries and they are running their business in different part of this world. Below is
SWOT analysis of cited corporation:
Strength – This organisation is present many countries. They have global reach and their
brand value is very high. Most of the customer in auto-mobile industry buy vehicles of this
company because they have faith in their products (Pugh and Bourgeois, 2011). They are not
dependent on any single market and this is their main strength. The are successfully capturing
emerging markets.
Weakness – Volkswagen is a big organisation. They cannot adopt rapid changes which is
significant part of automotive industry. They do not have sound presence in US passenger car
market.
Opportunities – They can invest more funds in Asian region because this continent will
deliver huge amount of revenue in next 5-10 years. They can also enter in electric car market
which is considered as future of this industry.
11

Threats – Companies like Tesla has gained significant amount of share in very less time
in auto-mobile sector. Fluctuation in fuel prices is another major threat for them.
2.2 Environmental audit of Volkswagen group
These are various external factors which can make a huge impact on the performance of
an enterprise. Below is the PESTLE analysis of cited corporation:
Political -Governments in Asian region are getting special tax deductions to companies
like Volkswagen because they understand that these enterprise has capacity to invest huge
amount of money (Reinhardt and Stavins, 2011). This will solve their problem of unemployment
and infrastructural development in these nation. This situation make a positive impact on their
business.
Economical – Rising inflation in various nation are stooping customers to spend their
money on new cars. They are giving preference of necessity goods. This is not good for the
business of Volkswagen.
Social – The preference of customers in emerging market is changing. They have buying
power has enhanced and they are giving more preference to SUVs and MUVs. This is beneficial
for this business of cited company.
Technological – Electric and Hybrid cars are the future of auto-mobile world and this
firm has already shifted their focus on this area (Ross and Blumenstein, 2013). This
technological factor made a positive impact on this enterprise.
Legal – This organisation is still paying huge sum for following the laws. Emission
scandal made many negative impact on this corporation.
Environmental – This company is going to increase the production of their electric car
because they want to reduce the pollution in the environment. People like to buy products from a
firm who care about atmosphere.
2.3 Importance of stakeholders analysis
Volkswagen has many shareholders like government, raw material suppliers, employees
etc. They can be divided in four groups which are as follows:
High power, high interest – People who lie in this group should get special attention
from the side of management because they have power to change the decisions taken by senior
managers. All of their advice must be included in the plans and significant decision should not be
12

taken without taking their consent. If a company want to run their business operations in
effective way then they should address demand of these stakeholder in short period of time.
Low interest, low power – These types of stakeholders do not care about the
organisation. Management does not need to care much about their reviews, they do not need to
take any kind of permission from them at the time of making any decision. The activities should
be monitored regularly because it assist a company in at the time of forming crucial plans.
High power, low interest – These stakeholders do not take much interest in the business
operation of the organisation but they have power to influence the decision which is taken by
management. The strategy of ''keep them posted'' should be followed for this group.
Low power, high interest – Stakeholders who lie in this unit cannot make any impact on
the management of company. But it is important to consider their views because they have better
ground knowledge. Financial reports and other significant document of the organisation should
be send to this group in regular interval of time.
2.4 New plan for Volkswagen group
This enterprise should shift their focus on Asian market because in next two to three
decades, population and buying capacity of people is going to increase by many folds. They
should also increase the manufacturing capacity of electric cars because they demand is
continuously increasing in the industry (Schaltegger and Wagner, 2011). They have to focus on
attaining their environmental goals because emission scandal made a negative impact on their
global image. Currently they are investing huge sum in innovation and should keep their present
policy.
TASK 3
3.1 Analysing appropriateness of alternative strategies
Strategies to adopt at the time of entering new market
Organic growth – It is related to developing a completely new product or enhancing the
output of present commodities without taking assistance of any other firm.
Merger – In this strategy, an organisation conduct business in a country with support of
any other enterprise. They make a new corporation in this process.
13

Acquisition – Volkswagen can buy a new company for making entrance in an new
market.
Illustration 1: Definition of business
strategy.
(Source: Definition of business strategy. 2017)
Substantive growth
Product development – For attaining continuous growth, cited company can install new
features in their vehicles. They have to make necessary modification in regular interval of time
so they can attract more buyers.
Vertical integration – In this approach, many companies develop different parts in order
to manufacture the final product.
Horizontal integration – Volkswagen can buy other firm or merger with any other
corporation for increasing their production.
Limited growth
Market penetration – Offering high discount on old cars and making aggressive strategy
of advertising Volkswagen can achieve limited growth.
Market development – Cited enterprise can sale their existing cars in new market for
attaining limited growth.
Volkswagen focus on organic growth in Asian region. Horizontal integration will be best
strategy entering in some African countries (Definition of business strategy, 2017). The strategy
of market penetration will help in attaining limited growth in European market.
14

3.2 Selected strategy justification
Since the company is dealing in the product type which has continuous demand it is good
to adopt the strategy of market expansion. This will help the cited organisation in increasing its
total customers which will further raise the amount of revenue generated. New market offers
fresh opportunities to the organisations and hence this way the competitive advantage can be
earned (Teece, 2010). Apart from this the idea of bringing innovation to the existing designs of
the product will also be a positive move for Volkswagen as this way more and more customers
will be attracted towards the brand and hence growth will be experienced in the long run. Asian
region is the next big auto-mobile market so organic growth is essential in this continent. By
lowering down the price of products in developed market cited firm can easily enhance their sale.
TASK 4
4.1 Roles and responsibilities of personnel who are charged with strategy implementation
If the formulation of strategy is done in its best manner but implementation of same is not
done properly then it leads to the failure of plan. Therefore, leaders have to ensure that strong
leadership is practised so that they can hold and execute desired change in the best possible
manner (Bharadwaj and et.al., 2013). Distinct roles which have to be performed while the
implementation of plan are discussed as below:
 Proper explanation of the strategic content – In this, the leaders has to ensure that they
set a clear vision at the workplace so that everyone would work with a common goal and
understand what is being expected out of them. Intention behind the same should be well
communicated to all so that no one will be left with any confusion regarding the work
which has to be done.
 Clarification of individual duties – While the process of strategy implementation take
place, it also has to be taken care by the authorities at different departments that duties
and obligations of every individual is well communicated so that their accountability can
be established. Apart from this, through the practice, it is also clear that who will be
reporting to whom which helps in establishing more discipline. Apart from this, the
issues at different levels are also solved better when close interaction is set among
various departments (Astrachan, 2010).
15

 Monitoring of work in progress – After the strategy is successfully implemented, it is
the duty of department head to ensure that plan which has been formulated is carried out
in the same manner it was desired to be as only after that their responsibility is said to be
fulfilled.
4.2 Estimated resource requirements for the implementation of strategy
 Human resource - To have an effective technique, HR must be considered by
Volkswagen as it is vital for executing a system and in addition, companies results
depends so much on the employees working in the same. Refereed organisation must
have skilled employees so that they can bring the best results at workplace.
 Financial resource - This department is concerned with how organisation carries out
their operations with the available finance (Verbeke, 2013). Funds can be made available
in two ways i.e. debt or own investment. In most of the cases, self-raised finance is more
preferred as it does not create any kind of interest cost for the owner. As finance is the
most important resource of organisation, it has to be taken in use with maximum care so
that more returns can be earned and profitability can be maximised.
 Time and material – Be it any methodology, there is a particular time restrain and
demand of some material which is needed for executing the venture. It is important to
provide enough time duration to finish the given project so that they can maintain good
standards and use other resources to their best capacity. Volkswagen should utilize good
and effective innovation techniques so that development of the business can be
experienced.
4.3 Contribution of smart objectives
SMART targets is the technique through which it becomes easy for organisation to
achieve their desired goals and objectives. Volkswagen with the implementation of same can
earn better and effective results as through following the same a direction is provided to the same
organisation (Campbell, Edgar and Stonehouse, 2011). Role of this concept is better explained in
the below text under different heads:
Specific (S) – It has to be ensured that whatever target is set is specific in nature as only than
they can be achieved. If they fail to explain what actually is required than the whole process of
16

strategy formulation will be wasted. For instance it should be specified to the work force that
they will work in a manner that at least 15% hike in total sales is experienced.
Measurable (M) – The refereed organisation is operating on a large scale. Hence to keep control
over its performance is of great importance so that any leakage if present can be identified at the
same time. For the same it is crucial that performance is measurable in nature as this will assist
in identifying the variations in the end results which will be of great help in taking the corrective
actions at the same time (Chang and Chuang, 2011). For this company can use the technique of
comparing the performance of one accounting year with the previous one so that they can
observe the difference and can decide that weather the formulated strategy was effective or not.
Attainable (A) – It refers to the capacity of attaining the targets which are set against the work
force. While designing the targets it has to be kept in mind that those limits can be achieved with
the provided resources and time. Management of Volkswagen can set limits for each department
which they have to achieve in a particular time duration after analysing the past trends.
Realistic (R) – Since all the imaginary things are not possible to be practised in real it is
necessary that the desired results are realistic and are not vague so that investment of various
resources do not go in vain. Like to ask employees to increase the profit margin directly to 50%
would be unrealistic as it is a situation which is tough to achieve (Cinquini and Tenucci, 2010).
Time (T) – To complete any project required time frame is required which should be given
properly so that work can be carried out in its best manner. To the department of marketing
Volkswagen must give enough time duration so that they can analyse the market and than
accordingly design the policies and strategies for future (Pagani, 2013).
CONCLUSION
From the above report it has been summarised that with the help of business strategy
companies can increase their sales thus directly putting impact on productivity and profitability.
When they will have a business strategy they will gain knowledge that what can be the path
which they have to follow or what operation they need in order to achieve the goals in effective
manner. As Volkswagen AG wants to expand their business so they use various strategy to gain
success in this and these strategy may be either product development or market development.
They have assigned the duties and responsibilities to various people through looking at their
skills and interest so that efficiency in the work can be achieved.
17

REFERENCES
Books and Journals
Astrachan, J.H., 2010. Strategy in family business: Toward a multidimensional research agenda.
Journal of Family Business Strategy, 1(1), pp.6-14.
Bharadwaj, A. and et.al., 2013. Digital business strategy: toward a next generation of insights.
Campbell, D., Edgar, D. and Stonehouse, G., 2011. Business strategy: an introduction. Palgrave
Macmillan.
Chang, T.C. and Chuang, S.H., 2011. Performance implications of knowledge management
processes: Examining the roles of infrastructure capability and business strategy. Expert
systems with applications. 38(5). pp.6170-6178.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?. Journal of Accounting & organizational change, 6(2), pp.228-259.
Pagani, M., 2013. Digital business strategy and value creation: Framing the dynamic cycle of
control points. Mis Quarterly .37(2).
Pugh, J. and Bourgeois III, L.J., 2011. “Doing” strategy. Journal of Strategy and Management. 4.
(2). pp.172-179.
Reinhardt, F.L. and Stavins, R.N., 2011. Corporate social responsibility, business strategy, and
the environment. Oxford Review of Economic Policy.26(2). pp.164-181.
Ross, P. and Blumenstein, M., 2013. Cloud computing: the nexus of strategy and technology.
Journal of Business Strategy. 34.(4). pp.39-47.
Schaltegger, S. and Wagner, M., 2011. Sustainable entrepreneurship and sustainability
innovation: categories and interactions. Business strategy and the environment. 20(4).
pp.222-237.
Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning,
43(2), pp.172-194.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Online
The Volkswagen Group. 2013. [Online]. Available through: <https://prezi.com/sfcypysiewnt/the-
volkswagen-group/?webgl=0>. [Accessed on 26th October 2017]
Definition of business strategy. 2017. [Online]. Available through:
<http://strategicplanningforgrowth.co.uk/business-success/>. [Accessed on 28th
September 2017].
18