Strategic Analysis and New Strategy Recommendation for VW AG - Report

This report provides a comprehensive analysis of VW AG's business strategy. It begins with an introduction outlining the company's mission, vision, goals, and objectives. The report then delves into an organizational audit using SWOT analysis to assess VW AG's strengths, weaknesses, opportunities, and threats. An environmental analysis is conducted using the PESTLE framework to examine political, economic, social, technological, environmental, and legal factors impacting the company. The significance of stakeholder analysis is discussed, identifying key stakeholders such as shareholders, staff, consumers, suppliers, and the government. Based on these analyses, the report proposes a new strategy for VW AG, focusing on market development and product development. The appropriateness of alternative strategies, including market entry, substantive growth, and retrenchment, is evaluated. Finally, the report discusses the roles and responsibilities of personnel in strategy implementation, estimated resource requirements, and the contribution of SMART targets to achieving the strategy's goals. The report concludes by presenting a justification for the selected strategy, emphasizing its potential benefits and associated costs.

BUSINESS
STRATEGY

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
2.1 Analysis of strategic positioning of VW AG by carrying out an organizational audit .........1
2.2 Environmental analysis .........................................................................................................2
2.3 Significance of stakeholder analysis while formulating new strategies ...............................2
2.4 New strategy for VW AG .....................................................................................................3
3.1 Appropriateness of alternative strategy relating to market entry, substantive growth and
retrenchment for VW AG ...........................................................................................................4
3.2 Justification for selection of the strategy ..............................................................................5
4.1 Roles and responsibility of personal in-charged with the strategy implementation .............6
4.2 Estimated resource requirement for implementing a new strategy for VW AG ..................7
4.3 Evaluation of contribution of SMART targets to achievement of strategy implementation
in VW AG ...................................................................................................................................7

INTRODUCTION
Strategies are formed in the company for achieving long term and short term goals in
strategic manner. It is critical that action plans should be formed in the company by adopting a
strategic approach. Present report is based on VW AG which is leading auto mobile company of
UK. The report describes about Mission, vision, goals and objectives of the enterprise. Along
with this Analysis of factors that gives impact on the strategic plans of the business also have
been mentioned. Environmental audit for the company has been done by making use of PESTLE
analysis.
TASK 1
TASK 1 HAS BEEN COVERED IN POWER POINT
TASK 2
2.1 Analysis of strategic positioning of VW AG by carrying out an organizational audit
SWOT analysis is an effective technique that could be used by the business organizations
for carrying out the organizational audit. It supports for assessing the weak performing areas and
on the basis of that measures can be taken for making improvements in the overall performance
of the business. SWOT analysis for VW AG is as follows :-
Strength :- It is a leading auto-mobile manufacturing company of the world and it has the widest
brand portfolio among all the auto-mobile companies that are working across UK. Company has
made new joint ventures with local Chinese auto-makers that helps for enhancing the existing
business of the company.
Weaknesses :- Neghative publicity has given impact on the brand image of the firm and it has the
highest recall rate in U.S. Market. Company has vary little expertise in making battery driven
vehicle and low market share are posses by company in U.S. Automotive market.
Opportunities :- Company has opportunity for enhancing its existing market in new areas so
that profitability can be enhanced. Demand for autonomous vehicle is rising and company can
make use of this opportunity for selling their product in market (Auzair, 2011).
Threats :- Automotive industry is facing intense competition and due to which challenges are
faced by firm in maintaining its existing market share (Hoejmose, Brammer and Millington,
2013). Along with this intense competition is also giving impact on the business performance
1

and along with this increasing government regulations are also giving impact on the overall
performance of the business.
2

2.2 Environmental analysis
External environmental factors gives impact on the overall performance of the business
so it is vital that measures can be taken for carrying out the environmental audit. PESTLE
analysis provides details about external factors that affects the overall performance of the
business. PESTLE analysis for the VW AG is as follows :-
Political :- Rules and regulations that are formed by the government are mandatory to be
followed (Haley, Haley and Tan, 2011). Changes in the political situations in the country also
affects the sales performance of the business.
Economical :- changes in the economical condition of nation affects the purchasing power of the
people and due to this sales of the product in the company gets affected (Issa-Salwe and et.al.,
2010).
Social :- changes in needs. Preferences, attitudes and beliefs of the consumers affect the strategy
planning process and due to that impact is being observed on the functioanl activities that are
performed in the entity.
Technological :- Regular innovations in the technical sector gives impact on the overall
performance of the business. It is critical that innovations and new techniques should be adopted
so that advanced and innovative auto-mobile products can be offered to consumers (Casadesus-
Masanell and Ricart, 2010).
Environmental :- Currently company has faced threats from US Environmental protection
agency for installing illegal software to cheat the emission test (Klettner, Clarke and Boersma,
2014). Along with this clean air in London campaign also has given instructions for auditing the
VW activities in UK.
Legal :- it is critical that all the business activities should be performed in legal and lawful
manner so that risk and threats available for business can be mitigated.
2.3 Significance of stakeholder analysis while formulating new strategies
Stakeholders analysis aids for assessing the impacts given by different individuals on the
overall performance of the business. Various stakeholders of VW AG are as mentioned :-
Shareholders :- Necessary funds that are required for performing the business functions are
provided by the shareholders. Company provides them with the value on money that is being
invested by them.
3

Staff members :- positive support is given by employees for completing the assigned work and
job responsibilities in successful way (Elliot, 2011). Strategies can be implemented successfully
by making use this approach and skills and capabilities posses by staff members play a pivot role
in implementing the strategy successfully.
Consumes :- Auto-mobile products that are manufactured by VW AG are purchased by buyers
and it is required that their needs and preferences should be considered while implementing the
strategy successfully (Robinson, Sherwood and DePaolo, 2010).
Suppliers :- Raw material provided by suppliers should be of good quality so that superior
quality products can be made and it will help for selling large amount of products to the
consumers of business.
Government :- taxation policy and other norms that have been created by government are
essential to be followed for implementing the strategy in successful way.
2.4 New strategy for VW AG
VW AG presently is making use of Cost leadership strategy in which lower price
products are offered to the buyers. In this strategy lower price products are offered to the buyers
so that large amount of products could be sold. When auto-mobile products of the company are
sold in the reasonable price rates than it will become easier for attracting all age income group
consumers for selling the products and services that are being offered by the company.
New strategy that could be used by VW AG :-
Market Development :- It is the strategy that could be used by VW AG group and in this
management can give focus on targeting new market areas with existing products. Making use of
this approach will assist the company to expand it existing business in new market areas and it
will render a effective medium for developing the market of the firm. This action plan will
entails for enhancing the operations of business from current market to a new market area where
presently company is not competing. VW AG group can focus on its existing products and
increase its promotions so that more number of buyers could be made aware about the products
that are sold by the firm. Advertisements and promotional campaigns can be designed in
impelling manner so that more number of buyers can be attracted for selling the products offered
by the firm.
4

Product development :- Auto-mobile industry is getting highly competitive and it is required
that innovative approaches should be used by firm for targetting the consumers. Research and
development department of VW AG group can make efforts for introducing new products in
market. New attributes and features could be added in the existing products and it will support
for catering to the existing market with better and effective approaches.
More number of consumers can be added in the existing buyer list and profitability and
share prices can be enhanced by making use of this approach. Initially when the prices of auto-
mobile products will be kept low than it will support for recovering the investment cost that has
been made for carrying out the manufacturing and other operational process. Middle group
consumers can also be targeted along with upper income group consumers and it will support for
making sharp increments in the existing products and services that are being offered by the firm.
Huge market share can be gained by making use of this approach.
TASK 3
3.1 Appropriateness of alternative strategy relating to market entry, substantive growth and
retrenchment for VW AG
Top management of VW AG has adopted price skimming strategy for meeting with the
required goals and objectives of the firm. It will help for enhancing the profitability of the
company by involving a strategic approach. Along with this it is critical that alternative strategies
should also be determined so that objectives that have been formed could be achieved in
effective way. Different alternative strategies that could be used by the company are as follows-
Market entry strategy :- It is vital that effective strategies should be made by VW AG so that
effective measures can be taken for entering into new market area. Along with this action plans
can be made for entering into new market for targetting consumers. Direct exporting is the most
feasible options that is available with the company (Bentley, Omer and Sharp, 2013).
It will help for saving the manufacturing cost and profitability and revenues can be
enhanced by adopting effective marketing strategy. Moreover, tie-ups and alliances can also be
made with other business houses so that auto-mobile products can be sold to large number of
consumers. Target market area can be covered and consumers can be attracted towards the
vehicle products that are offered by the company (Blackburn, Hart and Wainwright, 2013).
5

Substantive growth strategy :- Acquisition of a new firm can be done and it will help for making
increments in existing resources of the acquired firm. Similarly franchising can also be done and
more number of people can be sold the products that are offered by the company. Along with this
this growth strategy will support for making enhancement in the existing consumer base and
increasing the profitability and revenues that are earned by the company.
Limited growth strategy :- VW AG can adopt market growth penetration strategy so that overall
investment price for performing the business functions can be reduced. With this big market
share can be achieved by making use of this approach and it will aid for gaining limited growth
for the business.
Retrenchment strategy :- Under this company can go for reducing the overall investment coat so
that challenges and risks that are associated with the business can be reduced.
3.2 Justification for selection of the strategy
It is critical that strategic approach should be used by management of VW AG for
reducing the challenges and risks that are faced by the company. Market penetration strategy has
been selected in which focus has been given for selling large volume of auto-mobile products to
big consumer base in target market.
Justification for selection of this strategy :- VW AG has planned for adopting market
development strategy and product development strategy. It will support for adding new features
in the auto mobile products and adding new attributes under it. Market development strategy
will help for targetting more number of buyers for selling the vehicle products.
Benefits of using this strategy :-
 More number of buyers can be attracted for selling auto-mobile products of the firm.
 Investment cost for implementing the strategy is less.
 It supports for recovering the manufacturing cost for making the vehicles.
Cost for implementing the strategy :-
 Resources such as financial and human resources are required for successfully
implementing the strategy.
 Skills need to be provided to the staff members so that they can support for implementing
the strategy.
6

New market areas can also be identified and on the basis of that action plans can be made for
targetting and attracting the consumers for selling the products that are offered by the firm. With
this market penetration strategy will support for reducing the risk and challenges that are
associated with implementing price skimming strategy in the business (Ackermann and
Audretsch, 2013). Moreover, initially price skimming strategy has been adopted by the company
and if this fails than market penetration strategy is the best available strategy that could be used
by the company. Along with this method will help for reducing the overall investment cost and
on the basis of that manufacturing activities can also be reduced so that profitability of the
company can be enhanced.
TASK 4
4.1 Roles and responsibility of personal in-charged with the strategy implementation
It is critical that people associated with the implementing the strategy should play their
part well. It will support for achieving the required objectives by implementing the strategy in
effective manner. Staff members should be given specific job roles and they should be directed
for completing their assigned work on due time.
Human resource manager is accountable for ensuring that all the individuals that are
responsible for implementing the strategy should posses required skills. Allocation of task and
responsibilities is also done by the manager (Reinhardt and Stavins, 2010). Finance manager is
responsible for making it ensure that proper funds and resources are available for implementing
the strategy. People working at top management level needs to ensure that appropriate directions
and instructions are given to employees so that all the functional activities can be directed
towards a common goal. Operational manager is accountable for executing all the functional
activities in strategic manner (Verreynne and Meyer, 2010). Marketing manager is responsible
for ensuring that attractive promotional and advertising strategies should be made so that
consumers can be targeted for selling the auto-mobile products and services of the firm. It is
critical that required raw material should be purchased and purchasing manager is responsible for
achieving this objective.
4.2 Estimated resource requirement for implementing a new strategy for VW AG
All the strategies that have been formed in the business can be accomplished if only
proper resources are allocated for implementing them. Human resource is the biggest
7

requirement without which it is not possible for achieving the required objectives from the
strategies.
Along with this skills and capabilities are also required in an individual so that al the
tasks and activities that are required for successful completion of strategy could be achieved.
Raw material and machines and equipments are required and proper funding is also required so
that strategies and action plans can be implemented in successful way (Boyer, 2010). Marketing
department requires funding so that advertisement and promotional campaigns can be performed
successfully in the company.
4.3 Evaluation of contribution of SMART targets to achievement of strategy implementation in
VW AG
SMART objectives are defined as a appropriate planning that is done for achieving the
required goals and objectives of the firm in successful way (Organizational structure. 2016).
Step by step and organized process is used in these objectives so that required objectives of the
company can be achieved successfully. SMART objectives for VW AG are as follows :-
SPECIFIC Objective of the VW AG is to enhance its
existing market share by 5% in coming year.
Major focus will be given for enhancing the
existing market share so that more number of
buyers can be added in the existing consumer
base.
MEASURABLE The objective determined by the company is
measurable as quantitative techniques have
been used for determining the objective.
ATTAINABLE SWOT analysis and PESTLE analysis has
supported in ensuring that objectives set by the
company are attainable.
REALISTIC It is a realistic target that has been set by the
company.
TIME RELATED Proper timeline has been set in which required
objectives needs to be achieved. Required
objectives will be achieved in the time duration
of 1 year.
CONCLUSION
8

Summing up the present report it can be concluded that it is critical that business
strategies in an organization. It is critical that strategies should be formed in the organization by
making use of strategic approach. Mission, vision, objective and goals of the firm needs to be
clear so that company can achieve success and gain competitive advantage. SMART objectives
aids in completing al the operational activities in systematic manner. Market growth strategies
supports for enhancing the existing consumer base and achieving the long term growth and
success for the business. Along with this external and environmental factors that gives impact on
the business performances needs to be considered while making strategies for the business.
9

REFERENCES
Books and journals
Ackermann, S. J. and Audretsch, D. B., 2013. The economics of small firms: A European
challenge (Vol. 11). Springer Science & Business Media.
Auzair, S., 2011. The effect of business strategy and external environment on management
control systems: a study of Malaysian hotels. International Journal of Business and Social
Science. 2(13).
Bentley, K. A., Omer, T. C. and Sharp, N. Y., 2013. Business strategy, financial reporting
irregularities, and audit effort. Contemporary Accounting Research. 30(2). pp.780-817.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Boyer, J., 2010. Business Intelligence Strategy: A Practical Guide for Achieving BI Excellence.
Mc Press.
Casadesus-Masanell, R. and Ricart, J. E., 2010. From strategy to business models and onto
tactics. Long range planning. 43(2). pp.195-215.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly. 35(1). pp.197-236.
Haley, G. T., Haley, U. C. and Tan, C., 2011. The Chinese Tao of business: The logic of
successful business strategy. John Wiley & Sons.
Hoejmose, S., Brammer, S. and Millington, A., 2013. An empirical examination of the
relationship between business strategy and socially responsible supply chain management.
International Journal of Operations & Production Management. 33(5). pp.589-621.
Issa-Salwe, A., and et.al., 2010. Strategic Information Systems Alignment: Alignment of IS/IT
with Business Strategy. JIPS. 6(1). pp.121-128.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
10