Business Strategy Report: Analysis of VW Group Strategic Planning

This report provides a comprehensive analysis of the business strategy of the Volkswagen (VW) Group. It begins with an introduction to business strategy and its importance, then delves into Task 1, which explores how goals, objectives, vision, mission and core competencies inform strategic planning, the factors considered in strategic planning, and the effectiveness of techniques used in strategic plan formulation. Task 2 analyzes the strategic positioning of VW through an organizational audit, including SWOT and value chain analyses. It also conducts an environmental audit, assesses the significance of stakeholder analysis, and proposes a new business strategy for VW. Task 3 examines alternative strategies related to market entry, growth, and justification of the chosen strategy. Task 4 assesses the roles and responsibilities of strategic personnel, analyzes resource requirements, and evaluates the contribution of SMART targets. The report concludes with a summary of the findings and provides references.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Goals and objectives inform strategic planning ..............................................................1
1.2 Factors are considered in strategic planning....................................................................2
1.3 Effectiveness of techniques while formulating strategic plan..........................................3
TASK 2............................................................................................................................................4
2.1 Analysis of strategic positioning of VW..........................................................................4
2.2 Environment Audit for VW..............................................................................................5
2.3 Significance of Stakeholder Analysis...............................................................................7
2.4 New business Strategy of VW..........................................................................................7
TASK 3............................................................................................................................................9
3.1 Alternative strategies relating to market entry, substantive growth, limited growth.......9
3.2 Justification of Selected strategy....................................................................................10
TASK 4..........................................................................................................................................10
4.1 Assessment of roles and responsibilities of the strategic personnel...............................10
4.2 Analyzing the resource requirement...............................................................................11
4.3 Contribution of SMART targets.....................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business Strategy is a plan of action for a business in the long term configured to achieve
its set objectives (Ackermann and Audretsch, 2013). It is basically a plan which states how the
objectives will be achieved and design activities for accomplishment of same. Strategy is a core
function in the organisation. Developing a good strategy and executing it effectively can do
wonders to the company. This report consists of implementation of various business strategies on
VW group.
Volkswagen is a German based car manufacturing company that is operating globally.
Present report focuses on the business strategy of company for coming period. Report will
analyse the importance of effective targeting and segmentation of people. Also, new strategy will
be developed keeping in mind the internal as well as external factors affecting firm’s operations.
The business planning, development and evaluation of business strategy will also be taken under
consideration.
TASK 1
1.1 Goals and objectives inform strategic planning
Strategic planning plays an important role in growth and development of every business
organisation. It helps managers to get high competitive advantage from target market. Strategies
planning is a procedure which helps managers to establish priorities and it forces people to make
choices what to do or what not. Along with this, it provides broad outline regrading allocation of
resources. While developing any business strategy managers are required to considered certain
important factors in order perform effectively in target market.
Vision A vision statement is a detailed information about business organisation.
It means what it would likes to achieve in short as well as long term
period. It serve as a proper guideline in order to set course of action
(Azar, 2011). For example- the vision of cafe cultural is to become the
leading food and beverages provider in UK by delivering higher
customer satisfaction in terms quality as well as cleanliness.
Mission It refers with the fundamental purpose of a company for which its is
existing in target market. A clear mission statement represents a clear
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picture an organisation. For example – the mission statement of Caffe
cultural is to committed towards continuous development and training to
employees.
Goals and objectives Goals are known as basic guidelines which provides direction to a
company in order to achieve its vision. Whereas objectives are defined as
such strategies or steps so as to attain predetermined goals (Annabi and
McGann, 2013). Business objectives should be more specific and clear.
For example- the goals and objectives of Caffe cultural is to ensure
higher level of customer satisfaction by supplying qualitative products.
Core competencies It is essential for companies to realise its core competencies; it gives
strengthen to activities and operations.
1.2 Factors are considered in strategic planning
In order to grow and diversify in target it is essential for managers to analyse all
important aspects. Along with this, it can improve the effectiveness of strategic planning and
increase the chances of getting success. There is described certain following factors which must
be involved in strategic plan: - Management – Effective leadership styles and management process should be involved
in the business strategies. Strong ownership can put an impact on morale of staff
members as well as organisational cultural (Ang, 2011). Various forms of management
helps Caffe cultural in its decision making process and improve the quality of working
activities. Market competition – Strategic planning also should encompasses with market
competition. So that plans and policies have to developed after analysing market
competition. There are are so many rivals of a firm which can affect its sales and
profitability. Climate changes – Climate is uncertain which can have direct and indirect impact on
business activities. Therefore, this factors should be also considered while making firm's
strategies and policies.
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 Availability of resources – Effective and adequate resources should be used in strategic
planning process. In the context, companies need to usage new and innovative tools of
production so as to get higher level of efficiency and productivity. It would helps a firm
to achieve its goals and objectives in a certain time period. Apart from this, managers
also have to monitor availability of human resources.
1.3 Effectiveness of techniques while formulating strategic plan
There are various types of tools and techniques should be used while developing a
strategic plan. In this context, firm can use two types of techniques, i.e. PESTLE analysis and
Ansoff matrix so as to monitor the potency of strategical activities.
PESTLE analysis of Caffe Cultural: -
Political factors The coffee industry is influenced by various political factors. It
involves trade relationships and government attitude between two
countries (Ackermann and Audretsch, 2013). In this context,
improving governmental support for infrastructure is an opportunity of
Caffe cultural.
Economical factors It involves rising labour costs, declining unemployment rates and high
growth of developing countries etc.
Social factors Coffee is high in caffeine, which might leads drug addition among
people. Therefore, some people avoid to drink coffee.
Technological factors Leading position in research and development, new evolutions in
technologies, high level of innovators.
Legal factors No stated minimum wage, foreign investments are strongly increasing.
Environmental
factors
Strong international environmental image and several taxes on waste
management.
Ansoff matrix – It is also known as BCG matrix, through firms can get high market share
and success. It is often used to prioritize product mix within company in order to get more
fundings as well as attention. BCG is classified into four parts, such are defined as below: -
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Question Marks
Low market share and high market growth
(These products new entered in market in
market in order to high opportunities, decide
whether to increase investment or not)
Stars
High market share and high market growth.
(Doing well and great market opportunities)
Dogs
Low market share and low market growth.
(Such products are weak in market and
difficult to make profits.)
Cash cows
High market share and low market growth
(Doing well in no growth, market with limited
opportunities)
TASK 2
2.1 Analysis of strategic positioning of VW
Organizational audit is an activity which is carried out to assist a business for raising the
level of its operations by thoroughly understanding its strengths and weaknesses for the purpose
of goal achievement (Ang, 2011)
This audit takes into account SWOT analysis and internal audits for the purpose of
building an effective business strategy.
SWOT Analysis of Volkswagen Group is as follows:
Strengths
 The largest car maker all over the globe
 Differentiated portfolio
 Synergy between the various groups
 The latest joint ventures with the
Chinese Goodwill
Weaknesses
 The latest case of using illegal software
to bypass emission test hampered the
image of the company.
 Changes in the top management.
 No achievement in bringing forth
battery driven or eco cars.
 Low market share in various countries
Opportunities
 Electric or battery driven vehicles
 Building image
 Transformation in the euro exchange
Threats
 Regulation in the vehicle laws
 Pending fines which are to be paid by
the company.
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rate Self-driven vehicles
 competition
Value chain analysis is a critical tool used by organization for the purpose on analyzing
firm’s internal activities (Annabi and McGann, 2013). This analysis focuses on recognizing the
activities which stands valuable for the organization and those that are not being performed as
expected so that they can be improved to gain a competitive edge over others. In general terms, it
focuses on finding the firm's competitive advantage and disadvantages.
Volkswagen Group being such a global scale automaker makes almost all the units of an
automobile. It has expanded into all the progressing continents and has a plant in local areas
which produces for its residing market. This helps in producing the automobile at a lower cost
because there is no transportation involved which later helps in gaining competitive advantage
over the rival companies (Azar, 2011).
Another advantage for VW is that it has a lengthy assembly line up because of the
number of varied products being manufactured. Mostly all the tasks are carried out by robots
insuring minimal wastage and no chances of errors. The only disadvantage with VW group was
the use of software to bypass the emission tests defamed the image and the company lost market
capitalization up to 40%. As for now the company is working to reestablish the image so that
customer would not lose faith in the company.
2.2 Environment Audit for VW
It is the assessment of the various external factor which affect the working of the
company in the direct and indirect manner (Boies, Lvina and Martens, 2011). It can be
examination of the activities and ensuring that they are following the rules and regulation
relating to environment.
The various factor are as follows:
Political Environment:
It is a multinational company it operates in many nation so there are different political
norms in every nation. Germany and Canada being the foreign market. There lies changes in the
policies of the government which carry a direct influence on the cost of producing a commodity.
It is always difficult to perform in foreign market as there lies subsidies for the domestic
companies.
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Economic Factors:
The economic factors taken into consideration the cost involved in production and the
finances and their rates of interest. Diversification and achieving economies of scale are the two
main aspects of the working of the company to achieve the goal in the profitable manner.
Social factors:
The social factors for Volkswagen are not good as well. The emission scandal had a very
bad image in the brand value of the company. People are still waiting for their cars to be returned
and checked again for the emission test. The environmentalist people are also not very happy
with the way things have turned out for them.
Technological Factors:
The company have always been updated with the technology used in production of
goods. But however, there is a difference in them and the other companies which are focusing on
the innovation aspects a s well. AEV models are being launched into the market by the company.
Efficiency and sustainable technologies are the main concern
Environmental Factors:
The company violated the environmental norms of government in the countries where it
operates. It was found out that the level of pollution emitted by cars was 40% more than
permissible limit. The company admitted that they have installed 11 million of engines with
support of that software and have inclined the results for Nitrogen oxide. Diesel is categorized to
be most harmful and have caused around 5,800 premature deaths every year in the United
Kingdom. The company have agreed to pay 3.5 billion euros in civil and criminal penalties in the
United States (Dey and Sircar, 2012).
Legal Environment:
The legal environment for VW is not positive for VW as they were involved in legal
trouble with the operating nation In the UK still awaits the government to take decision on the
emission scandal, Environmental Audit Committee have reported that many of the transportation
committee established by the government have failed in performing their duties by letting this
matter to slide. The proof was sufficient to order the investigation for the name but eventually
nothing happened. Compared to UK the USA and Australia have already filed charges against
the company on environmental grounds. Over 100,000 vehicles have gone through the technical
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measures on to their cars (SWOT analysis of Volkswagen, 2016). Lawyer in UK are trying to get
the compensation for the sub-standard quality product as well as the harm they have caused to
the environment and the people. But the Head of VW, UK claims that no cars in Europe were of
sub-standard quality and claimed that best is provided to them.
2.3 Significance of Stakeholder Analysis
It analyses behavior of the stakeholder in context of organizational activities.
Stakeholders are the individual whose interest lies with the organization. In other words,
stakeholder can be defined as individuals, organizations who are concerned by the act ivies of the
organization.
Stakeholder analysis takes place when the company plans a new project or on the
inception phase and takes into consideration their attitudes or suggestions regarding that
particular activity.
This is carried out on annually basis for assessing purposes. The views of stakeholder
about a project or an activity can be positive or negative. Stakeholder can be the creditors,
employees, shareholders, unions and community depending upon it (Fernandes, 2011). They can
be classified into 3 broad categories:
Primary Stakeholder: These are the individuals or organizations who are directly
affected by actions of the company either directly or indirectly.
Secondary Stakeholder: This category is indirectly influenced by the actions of the
company.
Key stakeholder: They stand crucial for the organization and have the influence and
carries a power with themselves.
After the classification of stakeholder, it is very crucial to prioritize them on the basis
power, influence and interest in the project. Individual carry higher power and interest should be
alloted with the best possible efforts to satisfy them. Whereas the people with low power and
interest should not be paid much attention but effective communication is required (Fowzia,
2011).
This analysis is carried out to develop an understanding between the stakeholder and
project development team and have their interest and support in the project to carry out it in best
possible manner with adequate available resources.
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2.4 New business Strategy of VW
Upcoming strategy for Volkswagen group is given as below:
Goals
The goal of the company to achieve the sales which have been affected due to emission
scandal. There should be minimum 20% increase in the sales and to bring back the faith the
consumers had it in the company (The Group's strategy. 2017).
Objectives
These are the short-term plans which are to be accomplished.
 VW will recall the cars which have been sold with flaws in emission and upgrade the
engine to a standardized one.
 Increase the Sales
 New product launch. Jetta 2.0
 Work on the engine refinement CSR
Strategy
The company launched “TOGETHER”- strategy 2025 focuses on tomorrow’s growth.
The company aims to be the best provider of “sustainable mobility” (The Volkswagen Group,
2013). This new era of the company calls for new collaboration to create a better tomorrow.
Tactics
Tactics is the plan to achieve the goals. Listing down some of the tactics which will help
the company achieve its objectives.
 Customer Oriented Approach
 Competent Employees
 Responsibility towards environment Profitability, ensuring competitiveness and growth.
Marketing Mix
VW has a diversified portfolio. VW group covers the 4p's of marketing in an efficient
manner.
Product: Large heterogeneous portfolio which carries cars with different shapes, sizes,
engines configurations from the budget segment Polo to the premium racing Lamborghini all lies
with the company. Company should now venture in to hybrid as well as electric vehicles.
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Price: Competitive pricing is to be adopted by the company keeping in mind the area of
operations. It can charge higher amount in established nations.
Place: Operating at a global level and having assembly lines in Germany, Mexico and
China, India etc.
Promotion: This now stands as a most crucial part. Considering the circumstances
additional funds to be allotted to this section. The use of 360 branding to promote to each
product individually (Galpin and Lee Whittington, 2012). Social media marketing is to be used
in an aggressive manner so that company can achieve a strong position in the market.
STP: VW group has its roots in all the segments from budget to premium, from city to
sports. Target audience covers all a wide section. Positioning is now vital as the company has to
position themselves again as the most reliable and solid German build car.
TASK 3
3.1 Alternative strategies relating to market entry, substantive growth, limited growth
Market entry
Market entry refers to entering into unexplored markets. For instance, the VW group is
entering into the Kenya as they were already operating in North and South Africa and have built
a production facility there (Kellermanns, Dibrell and Cruz, 2014). Along with the offerings
company is giving maintenance and service plans to lure customers.
Substantive Growth
This strategy aims at gaining great growth in a short span of time. The main advantages
are growth, competition, and wealth creation. The company adopted a horizontal integration in
China to create Shanghai Volkswagen for increasing the scale of operations.
Limited Growth
Market penetration and product development are the alternative strategies to the Limited
growth. VW group will launch Polo 2018 and net gen golf mark VIII. Company can try to
consolidate a customer to build a bigger market share (Klettner, Clarke and Boersma, 2014).
Retrenchment
Organic growth, merger and taking over are the alternate strategies to retrenchment. VW
is in talks with Fiat Chrysler to form an alliance due to droop in the profit of the company.
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Company is deliberately looking for a strong partner after a year and a half in the emission
scandal.
3.2 Justification of Selected strategy
The company should opt for merger with a rival firm due to the vulnerability they are
facing in the market.
 There is a constant decline in the profits of company in respected circumstances. The
company can be benefited from a strong partner company.
 The company will get benefits if collaborate with Fiat in terms of brand value as well as
profits.
 Fiat can help VW in providing better technology in making products.
 This merger can help keeping low the capital investment and fixed costs.
 This merger can introduce the company into the markets where they carry a strong hold
and a good market share.
 Synergy could be created and the company together launch some future oriented vehicles.
 VW can make use of the well-regarded management of the Fiat in the times of
management crises (Li-Hua and Lu, 2013).
 Merger can help the company in stabilizing the stocks of a company which are currently
on roller coaster altogether.
TASK 4
4.1 Assessment of roles and responsibilities of the strategic personnel
Developing an effective strategy is necessary but implementation of the strategy is a
crucial part of the organization. The Task of implementation is further divided into 3 levels of
management that are as follows:
Top Level
The top-level management is responsible for creating and implementation of strategic
plans. This relatively small group of people are the ones to decide what is best for the
organization and developing a strategy accordingly (Montgomery, 2011). They identify
departments and create a team specifically for implementation of strategic plans. They are the
one to assign the duties regarding implementation and carries individual from each department.
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