MGT604: Strategic Management Analysis of Volkswagen AG's Challenges

This report offers a contemporary analysis of Volkswagen AG's strategic management, focusing on the challenges the company faced, particularly concerning the emission scandal and its implications on corporate social responsibility. The analysis includes a PESTEL analysis to understand the external factors influencing the company. The report identifies strategic influences, emphasizing the importance of sustainability for maintaining a competitive advantage. Strategic implications are discussed, highlighting the need for sustainable practices to enhance market competitiveness and build a loyal customer base. The report suggests strategic courses of action, such as implementing alternative fuel sources and reducing emissions. It concludes with recommendations for achieving strategic goals related to sustainable development and responsible corporate practices. The report emphasizes that the implementation of the sustainability strategies would help in the overall development of the situations that have been faced by the company thereby leading to the conditions wherein the company would gain a proper stability within the given markets thereby leading to the increase in the competitive advantage within the given industry.

Running head: STRATEGIC MANAGEMENT – CONTEMPORARY ANALYSIS
STRATEGIC MANAGEMENT – CONTEMPORARY ANALYSIS OF VOLKSWAGEN AG
Name of the Student
Name of the University
Author Note

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EXECUTIVE SUMMARY
The paper discussed the issues that were faced by the Volkswagen AG since the year 2015. The
report discussed the various issues and the implications of the same on the overall operations of
the company. The major strategic influence discussed in this case referred to the issues that are
related to the maintenance of the various factors that have been dealing with the corporate social
responsibility as is maintained within the given territorial boundaries. The report further
discussed that the implementation of the sustainability strategies would help in the overall
development of the situations that have been faced by the company thereby leading to the
conditions wherein the company would gain a proper stability within the given markets thereby
leading to the increase in the competitive advantage within the given industry.

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Table of Contents
Introduction..........................................................................................................................3
Aim..................................................................................................................................3
Information......................................................................................................................3
Identification of strategic influences...............................................................................4
Identification of strategic implications............................................................................5
Strategic course of action.................................................................................................6
Strategic goals..................................................................................................................7
Conclusion...........................................................................................................................8
Recommendations................................................................................................................9
References..........................................................................................................................10

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Introduction
Volkswagen AG is one of the major companies that have been dealing in the automobile
industry. The company in discussion is a multinational company that finds its headquarters at the
area of Wolfsburg, located at the region of Lower Saxony at Germany. The company is widely
known for the manufacture of the various vehicles used for the personal as well as the
commercial uses. The company is also known for the other services that find a relation to the
management of the fleet, the leasing of the fleet as well as financing the fleet. The company is
known to have been the major automakers since the year 2016 and finds the seventh place among
the largest companies that have been functional within the world. However, the company has
been observed to have faced issues regarding emission control devices. The company is known
to have a workforce of 302554 people who had helped the company in earning a revenue of 278
billion US dollars in the fiscal year of 2018 (Volkswagenag.com, 2019).
Aim
The following paper attempts a discussion on the implementation of strategies within the
given automobile company in discussion, Volkswagen AG in order to attain the sustainability
within the organization.
Information
The company in discussion, Volkswagen had faced an issue in the matters that have been
related to the emissions of the nitrogen oxides within the atmosphere which in turn had been
responsible for the increase in the overall amount of pollution that have been faced by the
company. The company had been observed to have violated the regulations that had been set by
the governmental bodies of the given organization. The business organization had implemented

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the programs and the measures that resulted in the demonstration of the low emissions within the
test environments only. This had led to misleading the governmental bodies as well as clients of
the organization in terms of the various factors related to the overall environmental issues that
might arise from the condition. The company in discussion had attempted to deceive the
concerned authorities in the matters that are related to the overall betterment of the environment
as well (Makortoff, 2015). The company was found to have been implemented the programming
of the turbocharged direct injections or the TDI in the diesel engines such that the concerned
vehicles demonstrate low emission levels only within the test areas. The concerned vehicles
emitted low amounts of the given harmful gases during the tests that had taken within the given
setup for testing. However, the same vehicles demonstrated a high amount of emission while
taking part in the tests that were conducted outside the settings for the testing of the quality. The
vehicles were observed to have been emitting almost 40 times the permissible amount of the
pollutant gases thereby leading to the violation of the Clean Air Act that was implemented by the
United Nations Environment Protection Agency or the EPA (Money.cnn.com, (2015). The
company was reported to have installed the software in a huge number of cars worldwide which
had to be called off from the market in order to rectify the issues.
PESTEL Analysis of Volkswagen AG
The PESTEL analysis of Volkswagen AG is as follows.
Political  Trade policies that have been implemented by the organization.
 Tax regulations that are imposed within the international markets
(Volkswagenag.com, 2019).
Economic  The favorability in the operating conditions.

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 Economic conditions are uncertain in some international markets
(Volkswagenag.com, 2019).
Social  The scandals led to the loss of the brand image and the trust.
 However, the company still provides proper employment
opportunities (Volkswagenag.com, 2019)
Technological  The increase in the investment in research and development
(Volkswagenag.com, 2019).
 Development of the skills within the country.
Environmental  The scandals led to the effects on the carbon footprints as have
been observed within the countries.
Legal  The strict legalities that need to be followed within the country of
operation.
 Impact on the brand image due to the non-compliance of the
company (Volkswagenag.com, 2019).
Identification of strategic influences
The major strategic influences that are highlighted in this case refer to the
implementation of the various issues in terms of the various factors that are related to the
development of the corporate social responsibility within the given organization. The major
strategic influence in this case refers to the issues that are related to the maintenance of the
various factors that that have been dealing with the corporate social responsibility as is
maintained within the given territorial boundaries (Crane et al., 2019). The company in this case
is observed to lack the issues of the proper sustainability within the given territorial boundaries.

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The lack of the implementation of the proper sustainability within the given company
have led to the conditions wherein the company had faced a huge setback. The company had
been observed to have implemented the measures that led to the issues within the given area on
the matters that are related to the pollution that is faced by the residents of the area. The
concerned vehicles emitted low amounts of the given harmful gases during the tests that had
taken within the given setup for testing (Quarshie, Salmi & Leuschner, 2016). However, the
same vehicles demonstrated a high amount of emission while taking part in the tests that were
conducted outside the settings for the testing of the quality. The implementation of the
sustainability strategies would help in the overall development of the situations that have been
faced by the company thereby leading to the conditions wherein the company would gain a
proper stability within the given markets thereby leading to the increase in the competitive
advantage within the given industry (Reinecke, Arnold & Palazzo, 2016). This in turn would
help the company to deal with the sustainability within the given markets as well.
Identification of strategic implications
The major strategic implementations that might be derived in this case refer to the
increase in the overall competitive advantage within the given international as well as the local
markets. The implementation of the various issues that are highlighted in the given case of
Volkswagen tends to help in the overall development of the given organization in terms of the
sustainability that is faced by the company. The implementation of the sustainability within the
given company is observed to be helpful in the development of the various practices that are
undertaken by the company in terms of the increase in the competitive advantage within the
given markets (de Bakker, Rasche & Ponte, 2019). The implementation of the various
sustainable practices helps the company to gain a proper and loyal client base within the given

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territories as well. The company was found to have been implemented the programming of the
turbocharged direct injections or the TDI in the diesel engines such that the concerned vehicles
demonstrate low emission levels only within the test areas. The concerned vehicles emitted low
amounts of the given harmful gases during the tests that had taken within the given setup for
testing (Hotten, 2015). The vehicles were observed to have been emitting almost 40 times the
permissible amount of the pollutant gases thereby leading to the violation of the Clean Air Act
that was implemented by the United Nations Environment Protection Agency or the EPA
(Topham et al., 2015). The company in discussion might thus be claimed to highlight the need
for the overall development of the company in the given markets. The implementation of the
sustainability measures also helps in the overall development of the competitive advantage of the
company in the given markets as well.
Strategic course of action
The company was found to have been implemented the programming of the turbocharged
direct injections or the TDI in the diesel engines such that the concerned vehicles demonstrate
low emission levels only within the test areas. The concerned vehicles demonstrated a high
amount of emission while taking part in the tests that were conducted outside the settings for the
testing of the quality (Zsolnai, 2015). The vehicles were observed to have been emitting almost
40 times the permissible amount of the pollutant gases thereby leading to the violation of the
Clean Air Act that was implemented by the United Nations Environment Protection Agency or
the EPA (News18.com, 2019). In order to deal with the issues of sustainability that are being
faced by the given organization, the company might be advised to highlight the various factors
that are related to the overall implementation of sustainability measures. The company might be
advised to implement the various processes that would in turn help in lowering of the harmful

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nitrogen oxide emissions within the atmosphere which in turn had been responsible for the
increase in the overall amount of pollution that have been faced by the company (Painter-
Morland et al., 2016). The company might further be advised to implement the alternate fuel
sources and charging systems within the given vehicles that are manufactured by the company.
This in turn would help the company to lower down the contribution of the company towards the
overall pollution within the world (Schaltegger & Burritt, 2018). The implementation of the
sustainability strategies would help in the overall development of the situations that have been
faced by the company thereby leading to the conditions wherein the company would gain a
proper stability within the given markets thereby leading to the increase in the competitive
advantage within the given industry (Rhodes, 2016). This in turn would help the company to deal
with the sustainability within the given markets as well.
Strategic goals
The major strategic goals that might be highlighted in this case refer to the goal of the
implementation of the sustainable development within the given markets. the company might be
advised to manufacture the vehicles that consume lesser quantity of fuel within the given
markets. This in turn would help the company to arrest the various issues that issues that have
been highlighted within the given organization as well (Cavico & Mujtaba, 2016). The company
should aim at the maintenance of the lower rates of emissions within the organization. This in
turn would help in the proper understanding and the maintenance of the corporate social
responsibility as needs to be taken care of by the company in discussion, Volkswagen AG (Li et
al., 2018). The proper maintenance of the corporate social responsibility within the organization
further helps the concerned organization, Volkswagen AG, in this case to gain a better
competitive advantage within the given markers as well.

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Conclusion
In conclusion to the above discussion, it might be stated that the company in discussion
should pay notice to the implementation of the corporate social responsibilities of the company
in order to deal with the issues that are related to the emission of the pollutants within the
atmosphere. The company was found to have been implemented the programming of the
turbocharged direct injections or the TDI in the diesel engines such that the concerned vehicles
demonstrate low emission levels only within the test areas. The concerned vehicles emitted low
amounts of the given harmful gases during the tests that had taken within the given setup for
testing. The vehicles were observed to have been emitting several times the permissible amount
of the pollutant gases thereby leading to the violation of the Clean Air Act that was implemented
by the United Nations Environment Protection Agency or the EPA. The implementation of the
sustainability within the given company is observed to be helpful in the development of the
various practices that are undertaken by the company in terms of the increase in the competitive
advantage within the given markets. This in turn would help the company to deal with the
sustainability within the given markets as well.
Recommendations
The company in discussion might be advised to follow the following recommended
measures in order to deal with the issues that the company has been facing.
 Introduction of battery-driven vehicles
This would help in controlling the emissions from the given vehicles.
 Training and development of the staff on the importance of emission controls.
This would help arrest the unethical practices within the organization.
 Development of the research and development section within the company.

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This would help in the development of the vehicles manufactured by the company as
well.

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References
Cavico, F. J., & Mujtaba, B. G. (2016). Volkswagen emissions scandal: a global case study of
legal, ethical, and practical consequences and recommendations for sustainable
management. Global Journal of Research in Business & Management, 4(2), 303-311.
Crane, A., Matten, D., Glozer, S., & Spence, L. (2019). Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press.
de Bakker, F. G., Rasche, A., & Ponte, S. (2019). Multi-Stakeholder Initiatives on Sustainability:
A Cross-Disciplinary Review and Research Agenda for Business Ethics. Business Ethics
Quarterly, 1-41.
Hotten, R. (2015). Volkswagen: The scandal explained. Retrieved 15 August 2019, from
https://www.bbc.com/news/business-34324772
Li, L., McMurray, A., Xue, J., Liu, Z., & Sy, M. (2018). Industry-wide corporate fraud: The truth
behind the Volkswagen scandal. Journal of cleaner production, 172, 3167-3175.
Makortoff, K. (2015). What you need to know about the Volkswagen scandal. Retrieved 15
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the-volkswagen-scandal.html
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index.html
News18.com. (2019). Everything You Need to Know About Volkswagen Diesel Emission
Scandal. Retrieved 15 August 2019, from

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https://www.news18.com/news/auto/everything-you-need-to-know-about-volkswagen-
diesel-emission-scandal-1784005.html
Painter-Morland, M., Sabet, E., Molthan-Hill, P., Goworek, H., & de Leeuw, S. (2016). Beyond
the curriculum: Integrating sustainability into business schools. Journal of Business
Ethics, 139(4), 737-754.
Quarshie, A. M., Salmi, A., & Leuschner, R. (2016). Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and
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Reinecke, J., Arnold, D. G., & Palazzo, G. (2016). Qualitative methods in business ethics,
corporate responsibility, and sustainability research. Business Ethics Quarterly, 26(4),
xiii-xxii.
Rhodes, C. (2016). Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), 1501-1518.
Schaltegger, S., & Burritt, R. (2018). Business cases and corporate engagement with
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Topham, G., Clarke, S., Levett, C., Scruton, P., & Fidler, M. (2015). The Volkswagen emissions
scandal explained. Retrieved 15 August 2019, from
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emissions-scandal-explained-diesel-cars

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Volkswagenag.com. (2019). Volkswagen Group Homepage. Retrieved 15 August 2019, from
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