Comprehensive Business Strategy Report: VW AG Strategic Analysis

This report provides a comprehensive analysis of VW AG's business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of VW AG's mission, vision, goals, and core competencies. The report then delves into the factors considered in strategic planning, including consumer needs, Ansoff's growth matrix, and gap analysis. The effectiveness of various strategic techniques, such as SPACE, PIMS, and BCG matrix, is also discussed. A significant portion of the report is dedicated to organizational and environmental audits using SWOT and PESTLE analyses, respectively. Stakeholder analysis is also carried out to understand their influence and interests. Finally, the report proposes a new strategy for VW AG, potentially using Porter's generic strategy to improve brand image and increase sales. The report covers the roles and responsibilities of personnel involved in strategy implementation, resource requirements, and the contribution of SMART targets, concluding with a summary of the findings and recommendations.

Business Strategy
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Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1Role of mission, vision, goal and core competencies in formulating strategic planning......3
1.2 Factors that have considered when formulating strategic plan..............................................4
1.3 Effectiveness of techniques used when developing strategic plan........................................4
Task 2...............................................................................................................................................5
2.1 Carrying out organizational audit..........................................................................................5
2.2 Environmental audit of VW AG............................................................................................7
2.3 Significance of stakeholder analyses.....................................................................................8
2.4 New strategy for VW AG......................................................................................................8
Task 3...............................................................................................................................................9
3.1 Analysis of the appropriateness of alternative strategies.......................................................9
3.2 Justification the selection of a strategy..................................................................................9
Task 4.............................................................................................................................................10
4.1 roles & responsibilities of personnel who are charged with strategy implementation........10
4.2 resource requirements for implementing a new strategy.....................................................11
4.3 Contribution of SMART targets..........................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................13
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Introduction
Business strategy is the set of activities and planning that supports an entity in achieving its
desired objective. To retain consumers and to sustain in the market for longer duration
organizations have to make effective strategies. With the help of proper planning and
controlling companies understand the current business situation and modify its operations as
per market requirements (Burlton, 2015). Present report is based on VW AG which is one of
the largest automotive manufacturing firm. It operates in more than 27 countries and having
two big joint ventures in China FAW Volkswagena nd Shanghai Volkswagan. Report will
discuss the mission, vision, objective and goal of cited firm. Factors which are considered in
formulating the strategic plan will be described in this study. Environmental audit of the
organization will be carrying out (Bartlett, 2013).
Task 1
1.1Role of mission, vision, goal and core competencies in formulating strategic planning
VW AG is well known brand in auto mobile industry, it works in international market
and having good commons over the market. It manufactures cars, commercial products to
consumers. Mission of the cite firm is to expand its business across the world. Mission and
vision of the organization assist in deterring its employees well. Overall culture of the
company is much more depended upon the organizational mission and vision (Walker, 2014).
To enhance sustainability, satisfy consumers are the main objective of VW AG. To fulfill
these objective cited firm formulate strategies and improve its products quality. So that it can
satisfy its consumers well.
Mission can be explained as long tern plan of any business unit which it wants to
accomplish in near future (Ghosal, 2015). VW AG is having goal to provide best designed
products to the users and to enhance fuel efficiency. That helps in formulation such strategies
through which it can accomplish its goal soon. Cited firm has skilled people that contribute
well in the economic development of the nation. This core competency assists in strategies
planning. Talented people support the management of the company and they share their
innovative ideas that help in achieving its goal significantly (Nordin, S.K.A., 2015). These
vision, goal and core competencies direct the authorities and accordingly the formulate their
strategies for achieving their goal soon.
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1.2 Factors that have considered when formulating strategic plan
There are several factors that are considered by the organization at the time of formulating
strategic planning.
Needs of consumers: VW AG always concentrates of desires of customers and provide them
products as per the needs and requirements. It is essential elements that help in accomplishing
goal of the organization significantly (Ladib and Lakhal, 2015). When ever cited firm
formulate the strategic plan it look upon recent trends and what people want, so that it can
offer them same products and services as per their requirements. This strategy can support in
achieving goal of the firm soon.
Ansoff’s growth matrix: When the fault is identified buy the company then management can
modify the operations in order to improve the quality and efficiency level of products and
services. Ansoff matrix is the type of strategy that majorly used by auto mobile companies for
their growth. With the help of this organization can get to know about perfect plan for the
development of the firm (Lai, Chou and Chen, 2015).
Gap analysis: It is another factor that support in formulating strategic planning to VW AG.. It is
the model that analyses the gap between actual needs and supplied material. By this way
company can formulate specific strategy in order to fill the gap as soon as possible. That
would enhance quality of cars and commercial vehicle. Thus it will help in making people
satisfied thus, cite firm will be able to achieve it target soon (Papagiannakis, Voudouris and
Lioukas, 2014). With the help of this strategy VW AG identified that there are many things
which are not known by the organization, so it collect information and identify cause of gap
then it implements proper and effective strategies to fill the gap.
1.3 Effectiveness of techniques used when developing strategic plan
There are several techniques that can be used by the VW AG in order to develop strategic
plan such as SPACE, PIMS, Stakeholder mapping etc (Chatterjee and et.al, 2016).
Boston Consulting group’s product portfolio matrix (BCG)
It is the great model that supports entity to create such products which can fulfill long
term, need of consumers. BCG is the effective techniques that show the relationship between
cast eaters and generated by the VW AG. Growth share matrix explains the market growth
and market share in the form of graphs (Ghalib and Agupusi, 2014). On the bases of graph
cited firm allocate resources to each activity. It is the tool which focuses more on products life
cycle. It consists of four elements starts, cash cows, dogs and question mark. With the support
of this technique VW AG can analyses its market share and growth rate. If any of the product
is having less market share then cited firm makes immediate changes in their products so that
it can provide quality products to its buyers.
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Top down approach
It is one of tradition technique which is used by man y auto mobile firms. In this
approach top management decide goal and strategy and instruction circulated to lower
employees. They have to implement this instruction in their working practices so that goal of
the organization can be accomplished (Idemudia, 2017). It is an effective technique which
helps in setting benchmarked of quality standards so that it can satisfy its consumers well.
With the assistance of this tool company will be able to achieve its goal soon.
SPACE planning technique
It is another great tool that helps the organization at the time of developing strategic
planning. It is used by the firms in the initial phase. It pays more attention of competitors and
actual market position of the firm. By this way it will be able to know the strategic position of
the competitor and will be able to modify its plan in order to gain completive advantage
(Aaker, 2014).
Task 2
2.1 Carrying out organizational audit
A SWOT analysis is the best way of organizational audit. With the help of this strong and
lacking points of the companies can be identified. That helps in getting in depth information
about the internal environment of the entity. VW AG is the manufacturing firm , with the help
of audit it will be able to identify its market position. SWOT analyses of cited firm is as
following:
Strength:
 Brand image: VW AG is having strong brand reputation, it is associated with
Volkswagen which is global brand that helps the cited firm in getting high profit
(Chatterjee and et.al, 2016).
 Innovative culture: It is found that cited firm is having innovative culture and its staff
members are satisfied. They contribute well so that company can accomplish its objective
soon. Its green cars and other products are very popular.
Weakness:
 Diesel issue: As per the report of clean air in London campaign, diesel of the VW AG is
the biggest public health catastrophic in UK that causes 5800 premature deaths due to this
sales of the company has got down.
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 Financial crises: Due to poor investment strategies company is suffering from financial
problems that create problem in conducting operations well (Ghalib and Agupusi, 2014).
Opportunities
 Fuel prices: Government has taken step and it has increased prices of fuel and diesel.
That has increased demand of auto mobile products such as electric cars and hybrid
cars. So company will have opportunity to increase its sales to great extent.
 Growth through joint venture: VW AG is having joint venture with Volkswagen this
acquisition can increase global presence of the cited firm and can help in improving
brand image of the organization (Idemudia, 2017).
Threats:
 Fuel prices: Changes in fuel prices create problem for the cited firm if prices are high
then demand of the products can get down.
 Raw material prices: VW AG has to pay high amount for purchasing raw material that is
why net profit of the organization is getting down frequently.
 High completion: It is another threat for the cited firm, competition is very high. People
are satisfied with Toyota and BMW cars so it creates problems for the VW AG and it
fails to build its own brand reputation.
2.2 Environmental audit of VW AG
PESTLE analyses is the best way of environmental audit. It is done as below:
Political factors:
Stability of government, trade agreements, legislation impact on the business
performance of the VW AG. As government makes changes in fuel prices, diesel norms etc.
impact on the business operations to great extent. If there are unstable government then company
has to face issues in selling their products in the market (Aaker, 2014).
Economic factors:
Currency fluctuations, changes in economic condition, inflation, recession etc. impact on
the purchasing power of the customers. If population is having good buying capacity then they
will spend money on buying cars and other vehicles but if there is high inflation or recession
then in such condition over all purchasing capacity of the consumers will get affected (Nordin,
2015).
Social factors:
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Culture, education, age impact on the business performance. If there are educated person
then they will buy products after examine the services but younger like to buy cars frequently.
Technological factor
It is another factor that impact on business performance of VW AG. Cited firm is using
high technologies but Toyota and other competitors are having advanced technical equipments
that manufacture high quality products (Lai, Chou and Chen, 2015). If any new technology
comes in the market then it would be necessary for the cited firm to adopt otherwise it will not
remain in completion.
Legal factor:
Consumer law, employment law, partnership law etc. impact on the profitability of the
organization. If government of UK is increasing tax then cited firm will have to pay more tax
that would affect its business performance and revenues will get down.
Environment factor:
As the main issue cause in the VW AG that due to its diesel many pre mature deaths take
place. If the product is not good for environment then people will not buy that can negatively
impact on profitability and sustainability (Papagiannakis, Voudouris and Lioukas, 2014).
2.3 Significance of stakeholder analyses
Stakeholder analyses of VW AG:
stakeholder Level of Interest Influence Type of
information
shared
Frequency of
information
sharing
Customers High High New product
launched,
High
suppliers high Medium Profitability high
Government High High Overall earning, Medium
Employees Medium Medium Products, market
segments, goal,
expansion
High
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strategy
Sponsors Medium High Profitability medium
It is essential tool that assist in knowing the interest and influencing power of
stakeholders. If stakeholder is having low interest then overall business performance of the firm
can get affected. By this way VW AG can formulate strategies for enhancing interest of
stakeholders. It will help in accomplishing goal of company significantly (Nordin, 2015).
2.4 New strategy for VW AG
Currently main aim of VW AG is to develop its brand image and to increase sales of the
organization. Porter’s generic strategy can support in accomplishing goal of the cited firm. With
the help of this it will be able to identify its market position and it will modify its products so that
people take interest and buy its products. Penetration, market development, products
development and diversification would be better that would help in gaining completive
advantage. It can also use the Ansoff matrix strategy it will support the cited firm in fulfilling
needs of consumers by improving its auto motive products. By this way people will feel satisfied
and sales of the company will get raised (Burlton, 2015).
Task 3
3.1 Analysis of the appropriateness of alternative strategies
The substantive growth strategies are implemented through two main factors. Those are
merger and acquisition. Merger is the combination of two previously separate organizations,
typically as more or less equal partners . The VW AG has more potential to implement merger as
a substantive growth strategy because of its market strength. The acquisition involves one firm
taking over the ownership of another (Walker, 2014). This substantive strategy also can be
implemented by VW AG since it has more market power in the industry. Market entry strategy is
the good alternative strategy in which company can target to new market. Franchising is the great
option that can help the cited firm in increasing sales volume.
Thompson introduces joint venture as limited growth. At the joint venture, two or more
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organizations are shared the ownership (Nordin, 2015). In the joint venture, usually the
competitive advantage is narrow. There are many options available for the VW AG such as
market penetration, EXPANSION, DIVERSIFICATION, ACQUISITION ETC..
Retrenchment is always a remedial action. These remedial actions are taken at the stage
of the inefficiency, economic recession, or strong competition. In case of inefficiency, the
organisation has to take three retrenchment strategies namely assets reduction strategy,
cost reduction strategy and revenue generation strategy. With the help of this strategies
cited firm will be able to reduce its operational cost. If any of the products of VW AG is
not popular then it can eliminate the items and can invest in new product which is giving
profit to the organization (Lai, Chou and Chen, 2015).
3.2 Justification the selection of a strategy
The human resource of the VW AG is one of the critical resources, which pave the way
for achieving competitive advantage. However, organization has identified that there is a need
for further developing of needs of its employees to compete in the turbulent market place. These
skill developments of employees will lead for quality service and finally it will hold to gain the
competitive advantage thorough available resources . The aim of the VW AG is to make superior
profit and performance (Ladib and Lakhal,2015.). Cited firm has identified those areas as
strategy gaps of the organisation.
Considering the above strategic situation, interactive strategies for the VW AG is
recommended. These interactive strategies will be the future strategic directions of the VW AG.
The rationale behind the interactive strategies is gaining the competitive advantage by looking at
the competitors’ strategies. In this connection, the cited firm will have to pay their attention to
interactive price and quality strategies, cooperative strategy, interactive strategies in hyper-
competition, and game theory. According to the interactive price and quality, strategies the VW
AG will have to provide best price and quality for their customers. The interactive strategies in
hyperactive- competition will say how VW AG can face to the hyper-completion and gain
competitive advantage (Papagiannakis, Voudouris and Lioukas, 2014). Collaboration between
some organizations in the same market will lead to achieve competitive advantage. Cooperative
strategies will help this collaboration for VW AG. Finally, game theory also involve with
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competitor movements. Particularly game theory is responses for the competitor movements of
the market place. Thus, VW AG should follow interactive strategies as it future strategies.
Diversification would be best option for the cited firm . by this way VW Ag will be able
to expand its business and it will develop brand image of the entity (Aaker, 2014).
Task 4
4.1 roles & responsibilities of personnel who are charged with strategy implementation
For implementing the strategies various people have several responsibility which they
have to fulfil:
Top level management
 They have to make policies so that operations can run significantly.
 They have to develop gaol and objectives and have to communicate with lower staff
members.
 Motivate people so that they perform their work effectively.
Middle level management:
 They have to distribute work among lower staff members.
 Effective controlling and supervision of employees.
Lower level management:
 Follow instruction and guideline of higher authorities.
 Effective communication with consumers and to give quick response to them
4.2 resource requirements for implementing a new strategy
There are several resources which are needed by VW AG for implementing the new
strategy:
Human resource: Company requires skilled people those who can perform their work
effectively. HR managers have to motivate them so that people stay in the workplace for longer
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duration and perform well (Idemudia, 2017).
Financial resources: Company needs funds to buying raw material, technical equipments etc. So
that it can manufacture quality products.
Material resources: VW AG requires raw material for producing cars. Quality material will
help in manufacturing the good products.
Time resource: Cited firm is required time so that it can eliminate the drawbacks and can
improve production efficiency (Ghalib and Agupusi, 2014).
4.3 Contribution of SMART targets
VW AG wants to enhance its sales volume up to 25% till 2018. It wants to improve its
quality of production so that it can satisfy consumers. With the help of diversification strategy
company will be able to achieve its goal soon. This strategy will support in increasing sales and
by this way organization will be able to enhance its market share to great extent (Chatterjee and
et.al, 2016).
If VW AG sells its cars at different locations then market share will get raised that would
help in gaining competitive advantage thus, objectives of the entity will be accomplished.
Conclusion
From the above report it can be concluded that mission, goal and objectives contribute
well in the strategic planning. It directs in making strategies that can support in fulfilling vision
of the firms. VW AG can use diversification strategy that would be better for the firm. It will
raise its sales volume and by this way company will be able to expand its business across the
world. SMART objective contributes well in achieving goal of the firm.
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References
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Bartlett, R., 2013. A PRACTITIONER'S GUIDE TO BUSINESS ANALYTICS: Using Data
Analysis Tools to Improve Your Organization’s Decision Making and Strategy. McGraw Hill
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Business Process Management 2 (pp. 45-78). Springer Berlin Heidelberg.
Chatterjee, S. and et.al., 2016. How strategy execution maps guided Cisco System’s Sales
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Ghalib, A.K. and Agupusi, P., 2014. Business strategy and corporate responsibility: perception
and practice in the oil industry and the role of non-governmental organisations. Journal of
Business Economics and Management. 15(5). pp.951-963.
Ghosal, V., 2015. Business strategy and firm reorganization: role of changing environmental
standards, sustainable business initiatives and global market conditions. Business Strategy and
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Idemudia, U., 2017. Environmental business–NGO partnerships in Nigeria: Issues and
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Ladib, N.B.R. and Lakhal, L., 2015. Alignment between business model and business strategy
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Lai, G.C., Chou, L.Y. and Chen, L.R., 2015. The Impact of Organizational and Business Strategy
on Performance and Risk in the Insurance Industry. Applied Finance and Accounting. 1(2).
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Nordin, S.K.A., 2015. The alignment between knowledge strategy and business strategy and its
influence on business performance (Doctoral dissertation, Universiti Teknologi MARA).
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