HND Business - Business Strategy Report

This report on Business Strategy for the HND Business course covers various aspects of strategic planning, including an organizational audit, environmental audit, stakeholder analysis, and the formulation of new strategies for Volkswagen. It emphasizes the importance of strategic planning in achieving business objectives and includes detailed analyses using tools like SWOT and PESTLE. The report also discusses the roles and responsibilities of personnel in strategy implementation and the significance of SMART targets in business strategy.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
LO1 – 1.1, 1.2 & 1.3 covered in PPT.....................................................................................1
TASK 2............................................................................................................................................1
2.1 Organisational Audit........................................................................................................1
2.2 Environmental audit of Volkswagen................................................................................3
2.3 The importance of the stakeholders in preparing of the strategies...................................5
2.4 New strategies for Volkswagen........................................................................................5
3.1 Appropriateness of alternative strategies relating to market entry...................................6
3.2 Justification for selection of strategy................................................................................7
4.1 Roles & responsibilities of personnel in strategy implementation...................................7
4.2 Resource requirements for implementing the new strategy for VW AG.........................8
4.3 Contribution of SMART targets in business strategy.......................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Strategy is a plan of action that assist in deriving out a path which can be
followed by employees as to achieve all desired goals and objectives. As stated by Morris
Chang, “without strategy, accomplishment of task is impossible, without achievement and
implementation, strategy is useless”. This is the reason which states that it is important to prepare
a strategy but it is more vital that it is implemented in a proper manner (Astrachan, 2010). If it is
not properly executed then business will have massive failure. A strategy in simple words can be
stated as a tactic that provides guidance with specific goals, mission, vision of an company, so
that all internal and external parties can be directed in a same path to achieve them. In this report
it will be stated how important strategy is for a company. This project will also cover different
tools and techniques that are used by managers in analysing effectiveness of strategy for
organisation such as Volkswagen. SWOT as well as methods of setting SMART targets have
been stated in the report. Today, company requires proper strategy as well as its implementation
so that it can achieve its desired goals and objectives.
TASK 1
LO1 – 1.1, 1.2 & 1.3 covered in PPT
TASK 2
2.1 Organisational Audit
Organisational audit is mainly identified b each and very aspects of the firm which is
affiliated for its liabilities and their assets. To know about the financial, capabilities,
infrastructure and capacity of the company, then it is required to understand and can be able to
make an appropriate strategic plans properly so that they can get aid while competing with the
competitors. To have know about the strength and weakness of the organisation then it is
important to perform the SWOT analysis. This is mainly a tool or a techniques by which a firm
can know about its existent performance, so by that they can be able to set their standards and the
organisation will know about its internal as well as their external environment, it may be in their
favour or it may not be in favour of them (Bharadwaj and et. al., 2013).
SWOT analysis of Volkswagen
Strength  Volkswagen had been organized in a proper way, and it is also
1

having a wide rang of products with them.
 They use to follow the correct framework to do their activities
properly and this may help or support them to perform smoothly.
 Volkswagen is expending its business in fastest way then the other
competitors.
 It is having a good brand image in the market.
 It provide good service quality to the customers and that had made
them very unique and this made them attract more people in
market.
 The day to day operations or the functions which is being done in
the firm is in very good manner and that helps them in solving
their problems in correct manner.
 The best part of this company is that they usually do research in
market this helps them in knowing about the requirements of the
people so that they can develop their products accordingly.
Weakness  There are lots of competitors are over their which affect on their
sales, and that even reduces their prices.
 The parent brand of their company is not that much strong so that
may also affect them in various ways.
 The employees which are working over there is not performing as
much good as they should do so that may also create some
problems to them. The manpower which is working over there is
not meeting the main requirements of the company.
Opportunities  There are different kinds of opportunities they have, they can even
expend in the technologies which is picked up in the scenarios.
This may help the firm in increasing their and their employees
efficiency so that they can be able to attain the good result.
 Customer's is having high demand of the product which is
providing the company a very high advantage of rising their price
then before.
2

 The fuels ratio may also be get increased by them.
 There are many chances for them so that they can develop many
things in their products so that may help them in attracting more
customers toward them.
Threat  The main threat which is facing by the company is that increasing
of their competitors in the market.
 The emission scandal had made very bad affect on the brand
image of Volkswagen.
 They face problems which are faced by them regarding the rules
and policies as because they provide their products to various
places and all the places might have different rules and regulations
so that can affect them badly.
2.2 Environmental audit of Volkswagen
The environmental audit is a view by which the company can be able to know about all
the external factors which is having the great impact on the operational as well as the
organisational functions (Campbell, Edgar and Stonehouse, 2011). By the help of this a firm
can be able to make the proper strategies which may also help in get over from the issues which
arise in the organisation. The affect which is faced by this can be positive and it might be
negative. To know about these factors it is very important to make audit of the firm and it can be
done with the help of PESTLE analysis. PESTLE analysis of Volkswagen is shown under:
Political factor  Volkswagen is facing many issues which arise from the political
factors because it is working in various parts of the nations.
 All the places have different political rules and it is very hard to
follow all the rules and regulation properly at one time.
 This factor might affect the organisation by various ways so they
have to evaluate effectively.
Economical
factor
Many economic factors like interest rate, inflation rate, FDI and wages rate
etc. effects the company very much. If the interest rates are low then it is
better to expand the business because loans and funds can be raise
3

economically at lower rates of interest. If the demand of Volkswagen cars
increases too much then the prices will also be increased.
Social factor It is very obvious that the trends in society always changes like taste and
fashion sense etc. if the interest towards the vehicle of Volkswagen increases
then its demand will go high and it will effect the profits of the company.
Technological
factor
 To compete in the competition market it is very essential to get
updated with the new technologies.
 Volkswagen use many technologies in their company, so that they
can be able to produce new technology products.
 If they would not get updated with the technologies then it will affect
the company badly.
Legal factor Laws and legislatures should be followed by every company from time to
time. It effects completely an organisation. Every organisation is bound to
follow the rules and it fails to do so than will be liable for the penalty.
Specific CO2 emission targets were to be followed by the Volkswagen
company.
Environmental
factor
 It produces car so it is very important to take care about it that it will
not do pollution in the environment.
 The material which is used in their car should not create problem to
the environment.
4

2.3 The importance of the stakeholders in preparing of the strategies
VW AG is an organization which is extended on a substantial topographical range it
indicates that organization has come to this position with commitment of different individuals
who mutually work for it (Casadesus-Masanell and Ricart, 2010). These individuals are inward
partners which are-workers, supervisors, proprietor and so on. The general population who
underpins the business remotely and is keen on its operations are outer partners which are-
government, speculators, clients and so on. Support of them determines the importance to
examine them while figuring another system for VW AG.
Stakeholders comprises are the key individuals of an association which expresses their
contribution while settling on any choices. Their assessment is must while making any sort of
technique which will prompt change in any sort of strategy in association. For example financial
specialist will put resources into business so they are to be educated about their cash that where it
is conveyed, similarly the clients anticipates that the item will be as indicated by their
requirements which must be considered by the organization, representatives are the general
population who will chip away at the methodology so they are to be educated about the
progressions which may be brought through the procedure so that there can be legitimately
coordinated operations and so forth. This determines the significance of partners investigation
while defining a methodology for the association.
2.4 New strategies for Volkswagen
UK is a nation which is confronting contamination issues for which nation is taking
different measures with a specific end goal to control the danger which may be caused to the
country because of this. Contamination is water, air and in addition commotion in UK
significantly air contamination vis car portable have been quickly developing which is affecting
the matter of transport industry. These organizations are not permitted to make car which create
contamination in the earth (Eccles and Krzus, 2010). An examination have discovered that real
contamination cause is car which keep running by diesel thus, these car were most well known in
country which were to be made less. VW AG manages these car and this strategy of government
has made to have an arrangement which could modify this impact.
Henceforth, the organization can actualize the assembling of car which works
electronically. This system of electronic car assembling would be best for the association in
order to maintain in showcase for a more drawn out time frame. Electronic car are robots or PCs
5

which keeps running on bargaining truly smart car other than typical car. They will be best for
the earth of UK and likewise will bolster VW to have an answer for change in assembling. By
this nation is driving towards practical advancement in which VW can contribute by executing
this system.
TASK 3
3.1 Appropriateness of alternative strategies relating to market entry
Before formulating any strategy, Volkswagen should analyse the market environment
because it assists in attaining the best desired result or outcome. There are many strategies by
which company can enter into target market which are given below-
 Substantive growth- According to this, firm enters into a market either horizontally or
vertically. In this, company acquires or merges with another firm and opens a new
venture into target market. It is very good strategy for that firm which wants to expand
their business into new or other sites (Elliot, 2011). VW AG wants to make a strategy for
manufacturing electronic cars for United Kingdom. Hence, it may have a substantive
growth if it targets a new market.
 Limited growth- It includes various elements such as product development, innovation,
penetration and combination of all strategies. It is useful at that time when company is
going to capture new market. VW AG should innovate its products which can be done
through implementation of electronic system in new products. It introduces joint venture
as limited growth in which two or more organisations share the ownership and work for
attaining the common goal and objectives.
 Retrenchment- This theory recommends that company should close down that unit
which is not generating desired result. In other terms, it can be said that units which are
not generating any kind of profit for the organisation should be withdrawal from the
market because it will assist in reducing the cost (Hahn, Kolk and Winn, 2010). Then
this saved cost can be invested in another profitable business so that it can generate more
surplus for the enterprise. So it is advisable for VS AG to shut down its non-profitable
firms or products. In case of inefficiency, company has to take three retrenchment
strategies which are cost reduction, revenue generation, assets reduction strategies.
According to the present situation, VW AG adopted limited growth strategy in which it
did two major joint venture in China. It is adopted by it just because of capturing large market
6

share and also recover from the penalties that will be paid by company to US government and
environment agencies. It will also be adopting green approach which states that company will
start focusing more on making hybrid or environmental friendly engines in UK and other western
countries.
3.2 Justification for selection of strategy
There is a need to select a strategy as to ensure that all issues which exist can be dealt in a
proper manner. According to the condition that is prevailing currently for Volkswagen AG in
united Kingdom, company needs to develop better engines and focus more on hybrid or electric
cars which are future of automotive industry (Haley, Haley and Tan, 2011). In UK also,
organisation is facing a lot of heat over its pollution issues and scandal in US. Authorities are
investigating the company approach in measuring cars efficiency and pollution control. If VW
AG do not go by trends and starts focusing on strengthening its weakness, it will be forced to
move out of market.
The company needs to follow all norms of United Kingdom as reduce level of carbon
emission. While also fulfilling it social responsibility. The company will be adopting an
environmental friendly approach in United Kingdom market while also using Limited growth
strategy. It will assist them in attaining a required level of efficiency in UK while it will be
establishing its venture into China with the aid of joint venture.
4.1 Roles & responsibilities of personnel in strategy implementation
There is new strategy which needs to be executed in a manner that it assist organisation in
achieving all its goals and objectives while overcoming issues which has damaged its image in
global market. Volkswagen AG requires different types of personnel so that functioning of
organisation stays at par with standards and requirement (Li and Tan, 2013). There are many
roles and responsibilities which needs to be fulfilled by individuals working at different levels.
The required people will need to work according to plans so that the impact of penalties and
other punishment which will be there due to scandal do not impact organisation productivity and
profitability. Role of people associated with project is given below:
 Engineers: These are individuals who are qualified in technical work that is required to
keep manufacturing units running. They need to fulfil there roles and responsibilities in
order to achieve required level of production. Engineers need to have knowledge about
their field of work as to assist company in maintaining and enhancing level of production.
7

 Managers: They are the one who implement strategies. They plan, organise, recruit,
direct and control, so that there is proper execution of policies and procedures. They are
the one who supervise everyone working in organisation in a direction that leads to
efficient and effective achievement of goals (Melville, 2010). There are certain roles and
responsibilities that needs to be fulfilled by managers:
◦ Identification of different market trends and issues as to make possible changes in
strategy as to make it more effective.
◦ Communicating all data and information to workers and other branches.
◦ Motivating workforce for better adaptation
◦ Delegation of different roles and responsibilities between co-workers.
 Expatriates: These are the employees who are sent oversees as to accomplish certain
task that are important for company. Employees are transferred to other country when
company is in the process of expansion or there are certain issues which needs to be
addressed by the experts working in home branch.
 Employees: These are the people who will be working according to plan of action that
has been developed as to achieve the mission and vision of company. Their responsibility
is limited to accomplishment of task and fulfilment of their roles.
4.2 Resource requirements for implementing the new strategy for VW AG
For formulating any plan or strategy, VW AG requires some resources or raw material
which is very helpful in implementation of strategy of formation of electronic cars. Those
resource are as follows which are mandatory for successful implementation, are given below-
 Financial resources- Funds are very important for complete a project because without
having this, any task can not be carried out effectively and efficiently (Meskendahl,
2010). VW AG can raise fund from various sources such as shareholders, banks and any
other financial institutions and can also use its retained earning. If firm will not have
proper amount of financial resources then it will not be able to carry out activities
effectively and efficiently.
 People- Human capital is the first and most important resource which is required for the
implementation of strategy. Without having it, organisation can not attain its specified
objectives. So for getting the required result, firm should hire skilled and experienced
8

persons which can be possible from internal and external sources. VW AG can formulate
its strategy with the help of man power .
 Parts of car- VW AG has two options either to purchase the parts of car or can
manufacture itself. Company takes this decision on the basis of cost (Mithas and Lucas,
2010). If it purchases the parts of cars from the manufacturers is lower then it will
purchase and vice versa.
 Fixed resources- A plant and a machinery to have a proper development of cars will
require fixed resources. These are to be taken by VW AG so as to provide a place for the
people to work on its strategy which it have implemented.
 Equipments- If company wants to manufacture cars then it requires many types of tools
or techniques which are required for assembling the parts at one place. Hence,
organisation should acquire proper resources if it will not have then it will create
disturbance in manufacturing process and then firm will not be able to complete its
project.
4.3 Contribution of SMART targets in business strategy
Implementation of strategy is very difficult task so before formulating it, company should
analyse the marketing environment which will aid in achieving the specified objectives. Hence,
target should be set with the assistance of SMART which helps in the formation of proper
justified and relevant targets to achieve (Montgomery, 2011). For getting the best result, VW AG
sets specific, measurable, achievable, relevant and time oriented objectives which aids the
company in attaining the goals effectively. SMART target is as follows-
 Specific- It states that organisation should set clear or specific aim so that people can
work accordingly and effectively. Clear objective provides a direction to the man power
that what to be done or not.
 Measurable- The target which is set by company, should be measurable in numeric
terms because it will help in knowing about the exact result that are achieved by the firm.
 Acceptable- Company should set that objective which is accepted by employees in terms
of achievement (Wang and Verma,2012). It will lead to reduction in wastage of time
which can be invested in attaining the targets and there would be less chances of vague
informations.
9

 Relevant- It states that strategy should be integrated with the operation of company. For
example- if VW AG is dealing in auto mobile sector then it should develop its plan
accordingly so that there is less possibility of confusion.
 Time bound- Specified objective should be time bound so that company can attain it
with in specified period of time (Woodcock, Green and Starkey,2011). It will aid in
utilizing time in an effective manner which assists in attaining competitive advantages
over its competitors.
CONCLUSION
Concluding the report, it can be stated that a company needs to be true and implement
strategy as stated. There should be no use of wrong tactics which breaches laws enacted for
betterment of business and society. Volkswagen AG did not follow ethical way because of which
company will be paying heavy fines and duties. Also its image is damaged which is a point of
concern for everyone in organisation. Now they need to adopt a strategy that assist them in
overcoming this time of struggle and make them achieve their mission and vision. There are
certain SMART tactics that can be used by company as to ensure right level of implementation
and execution of strategies. There are several tools and techniques which can be used by
company to gain what has been lost.
10