Report: Volkswagen's Market Entry Strategy for Australian Market

This report provides a comprehensive analysis of Volkswagen's global market entry strategy in Australia. It begins with an assessment of Volkswagen's global readiness, highlighting its strengths in innovation and product portfolio, and its application of the Resource-Based View (RBV) theory. The report then delves into the micro and macro environmental factors influencing the attractiveness of the Australian market, including a SWOT analysis that identifies strengths, weaknesses, opportunities, and threats. It examines political, economic, social, technological, environmental, and legal factors. Finally, the report critically discusses various market entry strategies for Volkswagen, including exporting, franchising, and joint venturing, evaluating the advantages and disadvantages of each approach to provide insights into the most suitable entry methods for the company. The report concludes by summarizing the key findings and offering strategic recommendations for Volkswagen's successful market entry into Australia.

Global Markets and
Entry Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Critically analyse the global readiness of Volkswagen...............................................................1
Micro and Macro environmental factors affecting the attractiveness of Australian market for
strategic entering..........................................................................................................................2
Critical discussion of market entry strategies..............................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
With the advancement of time, entering in a global market has become a major challenge
and concern for the organisations. Operating the business activities on a global level will help in
carrying out of the services and meeting needs of international customers on an effective level.
The report will cover the international market entry strategy of German auto mobile enterprise,
Volkswagen in Australian market. The report will analyse the global readiness, micro and macro
level variables that can affect the international market penetration and market entry strategy that
will be undertaken by German auto mobile enterprise.
MAIN BODY
Critically analyse the global readiness of Volkswagen
Volkswagen is one of the most advance and largest auto mobile enterprise that aims to be
a major market player in Australia. It has many major automobile brands as its subsidiary that
increases its product portfolio to a greater level. Besides this ability to innovate in automobile
industry is the key advantage that help in proper planning of market entry measures which makes
Volkswagen to be globally ready for market expansion measures. The high range of innovation
and effectiveness to carry the product development measures on the basis of global markets will
help in proper developing of a market operation strategy by the organization (Market Entry
Strategies. 2019).
Volkswagen will follow the Resource based view (RBV) theory that will lead to carrying
out the frameworks that will assist the organization to evaluate their potential market and its
competitive advantage regarding it. It will not only help Volkswagen to identify and evaluate its
tangible and intangible resources but also to identify the organization's capability to carry out the
international business operations at Australia. It includes the following components:
Tangible resources: This are the elements that can be touched and felt like the products,
infrastructure, engine technology, outlets etc. owned by Volkswagen and it subsidiary on
international level.
Intangible resources: This will involve the factors which can't be touched or felt, but can be
seen by organization. Customer goodwill, loyalty, rise in market share, sales etc are the
intangible factors which will play a crucial part in improving out the international presence of the
organization.
1

Capabilities: This includes the work effectiveness and scale of operations possessed by
Volkswagen to facilitate their internationalization on a greater level. Extent of innovation,
resources available and extent of customer loyalty are certain capabilities measures which will
influence the Volkswagen's market entry within Australia.
All these factors indicates that Volkswagen is relatively ready to execute its operations
and trade activities on global level. It will guide the firm to operate within Australian market.
As per the views of Lasserre (2017) , Presence of Volkswagen on global level indicates
its readiness and ability to enter within Australian market. It will help in carrying out of market
strategies and developing the proper planning of operations. It also supports a good rise in
carrying out of market development measures. The evaluation of Buckley and Ghauri (2015)
suggests that Australia is a suitable market to enter for a company like Volkswagen as its has a
stable government, high GDP rate and purchasing power of customers. Besides this, the
supportive trade polices and other employment laws will assist an auto mobile firm to easily
enter and establish within market.
Micro and Macro environmental factors affecting the attractiveness of Australian market for
strategic entering
Effective micro and macro environmental factors are required to look after by
Volkswagen in order to effectively identify the effectiveness of Australian market that will help
in carrying out of the strategic entering within a market. The proper market penetration by the
chosen enterprise will include the following factors:
Micro environmental factors:
SWOT
Strength Weaknesses
 Wide range of product portfolio:
Volkswagen has the widest range of
product portfolio that helps the
company to cater a wider range of
customers with varied requirements.
This will help the firm to promote
various cars like SUV's, Sedan,
hunchbacks and luxury cars in
 Alleged for having high rate of
emission: Certain models of
Volkswagen are accused for faulting the
emission standards to an extensive
level. The diesel emission scandal is
one such example that showcase that
such cases have relatively tarnished the
image of company to a greater level.
2

Australia.
 Brand image: The chosen auto mobile
enterprise has the effectively high
brand image. This makes the firm a
reputed name in the auto mobile
industry and has a trustworthy and
loyal customer base. This will help in
increasing their sales in Australian
market (Thenmozhi and Chand, 2016).
 Futuristic innovations: Volkswagen is
known for the incorporation and
embedding high quality innovations
and technical advancements that are
been taken in consideration by the firm
to improve their product quality and
develop a unique product to offer to
their customers. The development of
low emission and electronic vehicles
are few major instances of innovative
approach of Volkswagen. Volkswagen
will innovate their cars as per the
conditions in Australia.
 High sales rate: Volkswagen is one of
the world’s largest enterprise on the
basis of units of cars sold all around the
globe. This indicates that the
organisation is having a high number of
customers and ensuring a good
customer base. This will help in setting
up of outlets in Australian market.
Volkswagen will look after developing
its cars as per the emission standards of
Australia.
 Large recall rates: Certain subsidiaries
of Volkswagen are notoriously known
for recalling many of its cars from the
market due to technical faults and
technological complaints. This has
created a negative image of the
organisation among its distributors and
customers, affecting its sales and brand
image. The firm is required to check
their cars before delivering in
Australian market.
 Lack of proper expertise in electronic
vehicle segment: Although looking at
the extensive market opportunity in
future and lack of much competition in
electronic vehicle's sector, the firm has
entered in the production of electrical
vehicles, Volkswagen lacks the
effective knowledge and details of the
concurrent sector that makes its venture
of launching electrical cars and other
auto mobile in market to be susceptible
to failure or loss (Rao-Nicholson and
Khan, 2017.). Volkswagen will carry
out the effective research process and
can collaborate with electric cars
manufacturing firms to gain effective
knowledge.
3

Opportunities Threats
 Largely unexplored Asian and
Australian market: The firm has a
wider opportunity to operate and
expand its business in many of the
Asian and Australian countries.
Especially, Australia is major an
unexplored market for Volkswagen and
possesses a great prospect for launching
its auto mobile products and has a
strategic entry (Blevins and et.al.,
2016).
 Investment in sustainable
technology: Volkswagen had made an
effective and significant investment in
the futuristic and sustainable
technologies like electric vehicles and
self-driving cars. This will help the firm
to enter in Australian market.
 Rise in competition: As many auto
mobile manufacturers are increasing
their product and service portfolio on
the larger scale. This will lead the
organisation in carrying out of the
activities and make strategic plan in
order to avoid adverse impact on it
market share. Hence, to enter in
Australian market, firm is required to
plan strategically to tackle competition.
Besides this, many macro environmental factors are also taken in consideration by
Volkswagen which will influence its strategic market entry operations in Australia (Liu, 2017).
Some external environmental factors that are taken in considerations are:
Political: The supportive trade policies, taxation rates and import duties that are applicable while
having a strategic market entry within the organisation that helps to execute trade in Australian
market. This also help in improving the market presence of the organisation in Australian
market.
Economic: As Australia is one of the developed and emerging economies, proper pricing and
costing is required to be observed that will help in placing of auto mobile organisation within the
Australia. Also, the economic growth measures and rise in industrialisation have improved the
4

purchasing power of people. This will make Australia as ideal market to launch their high end
cars (Lasserre, 2017).
Social: Being an emerging or developing market, entry of Volkswagen in Australian market will
create the job opportunities and setting up of other industries within Australia that will help in
bringing a social growth and support organisation to have a sustainability. The availability of
cheaper labour will make Volkswagen to choose Australian market for expansion.
Technological: Volkswagen will bring a great technological advancement in Australia that
supports setting up of the manufacturing measures. Besides this, the organisation will look after
the growth of R&D measures within the country, facilitating the technical advancement within
the continent (Hitt, Li and Xu, 2016). It will assist the organisation to carry out their entry in
Australian market with ease.
Environmental: As the continent is ecologically diverse, the pollution can have an adverse
impact on flora and fauna. But the flexible ecological and environmental laws will make it easy
for Volkswagen to enter within Australian market.
Legal: supportive trade policies and taxation laws are certain legal factors that can influence the
market entry of Volkswagen in Australia. This will make Australia as the most suitable and
preferable country to enter for expansion of its market presence.
Critical discussion of market entry strategies
Various market entry measures will be observed by Volkswagen which assists the
organisation to have a sustainable entry within Australian market. Critical assessment of various
market entry strategies to be opted by Volkswagen are:
Exporting: This includes the practice of selling and delivering the cars from one country to
another in an oversea country. It required proper logistics services and effective investment for
the marketing measures.
Advantage:
 It provides higher profit due to elimination of intermediaries (Cavusgil and Knight,
2015).
 Company has the controlling on the transaction measures that are been followed.
 It is more secure to carry out business activities and selling out of cars.
Disadvantage:
 It requires more time and resources to operate.
5

 The logistics is required to be very accurate and effective to carry out operations related
to exporting.
Franchising: This includes the planning of the operations which are been carried out by the
organisation in foreign market with the help of a local trader. The franchiser will look after the
selling out of the services and products (Cars) in Australian market.
Advantage:
 It will help in carrying out of the operations or selling up of the cars in unexplored market
of Australia (Knight and Liesch, 2016.).
 It does not require much amount of resources for the market for the establishment of their
business operations.
Disadvantage:
 It leads to sharing of the market share that will impact the revenue generation of the
organization.
 Franchiser may not be able to provide complete services and details related to services or
products offered by the firm.
Joint Venturing:
In this approach of market entry, Volkswagen will look after collaboration with a local
Automobile retailer in Australia to sell its cars. This will help in improving the sales and setting
up of the market within Australian continent. It will facilitate selling the services offered by the
organization in most effective way.
Advantage:
 It helps the organisation to improve the quality of services and provide the products
offered by Volkswagen in Australian market.
 It prevents the failing of the marketing structure and provides the organisation with a
loyal customer base (Gillespie and Riddle, 2015).
Disadvantage:
 This leads to division in profit and market share affecting core profitability of the
organisation.
 It is based on an agreement and sometimes the transparency of operations become a
major issue for a firm like Volkswagen.
6

CONCLUSION
On the basis of the effective research that is been carried out by the organization, this can
be said that the global presence of the enterprises and their internationalization measures are
required to be monitored and effectively managed. The report included the proper effectiveness
of RBV model to assess the global readiness towards market entry operations. Besides tjhis the
impact of micro and macro environment factors on the attractiveness of Australian market for the
chosen firm is been evaluated. Other than this, different market entry modes are critically
evaluated for the setting up of the operations by the firm this will improve the international
market presence of the selected firm.
7

REFERENCES
Books and Journals
Blevins, D.P. and et.al., 2016. Institutional changes within the European Union: How global
cities and regional integration affect MNE entry decisions. Journal of World
Business. 51(2). pp.319-330.
Buckley, P.J. and Ghauri, P. eds., 2015. International business strategy: theory and practice.
Routledge.
Cavusgil, S.T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
Studies. 46(1). pp.3-16.
Gillespie, K. and Riddle, L., 2015. Global marketing. Routledge.
Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and
beyond. Journal of World Business. 51(1). pp.58-73.
Knight, G.A. and Liesch, P.W., 2016. Internationalization: From incremental to born
global. Journal of World Business. 51(1). pp.93-102.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Liu, Y., 2017. Born global firms’ growth and collaborative entry mode: the role of transnational
entrepreneurs. International Marketing Review. 34(1). pp.46-67.
Rao-Nicholson, R. and Khan, Z., 2017. Standardization versus adaptation of global marketing
strategies in emerging market cross-border acquisitions. International Marketing
Review. 34(1). pp.138-158.
Thenmozhi, M. and Chand, G.S., 2016. Forecasting stock returns based on information
transmission across global markets using support vector machines. Neural Computing
and Applications. 27(4). pp.805-824.
8

Online
Market Entry Strategies. 2019. [Online] Available through :
<http://www.fao.org/3/w5973e/w5973e0b.htm>
9