Volkswagen Business Project: Operations, Analysis, and Strategy

This report provides an overview and analysis of Volkswagen's business operations, highlighting its competitive advantages and exploring its business environment using tools like PESTLE and SWOT. It examines the company's history, market share, and financial performance, including revenue and profit. The report identifies Volkswagen's strengths, such as its brand portfolio and advanced German technology, as well as weaknesses, like the emission scandal. Opportunities for improvement, such as investing in fuel-efficient and electric vehicles, are discussed, along with threats like increasing competition and changing environmental regulations. The report concludes with recommendations for Volkswagen to maintain its competitive advantage and regain customer trust. Desklib provides access to a wide range of study resources including similar reports and past papers.

EXTENDED BUSINESS PROJECT
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Table of Contents
Introduction........................................................................................................................3
Company Overview...........................................................................................................4
Competitive Advantage......................................................................................................6
Analysis Tools....................................................................................................................8
Recommendations...........................................................................................................11
Conclusion.......................................................................................................................12
Reference List..................................................................................................................13
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Introduction
The project shall provide an overview and analysis of the business operations
performed by the famous German multinational automotive company, Volkswagen.
Volkswagen is synonymous to perfection and excellence in the automotive world. The
report shall highlight the competitive advantages possessed by the company and
explain how they help in gaining an edge over its competitors. It shall explore and
examine the workings of the business with the help of various tools such as PESTLE
and SWOT. The approach of the construction of the project shall assist in gaining
relevant information regarding the external and internal environments of the company.
The assignment after the analysis through the mentioned frameworks shall highlight
areas that require improvement by providing recommendations to enhance its
productivity.
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Company Overview
The company, Volkswagen, was formed and provided the name Volkswagenwerk
meaning the “The company building people’s car” in the year 1937 (Denning, 2015).
The company was initially run by the Nazi organisation, German Labour Front. The
geographical location of headquarter of the company still remains the same and is
situated at Wolfsburg, Germany. The company has been, since its inception, focusing
on delivering quality products for the mass at prices that are far more affordable as
compared to other rivals in the market keeping the quality in consideration.
Figure 1: Market share in relevance to new automotive registrations of Volkswagen in
the EU from June 2017 to July 2018.
(Source: Volkswagen, 2018)
Volkswagen was the largest automaker in the worlds in aspect of sales in the year
2016. This year saw the company producing approximately 10.1 million automotive
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vehicles worldwide. The total percentage of cars being manufactured under the
Volkswagen group that owns the esteemed luxury car brands such as Bentley and
Porsche, saw a rise of 4.3 percent in the sales through the South American and Eastern
Europe markets (Volkswagen, 2018). The company though saw a downward fall in its
share in the market due to the allegations made in the year 2015 relating to
manipulating emission data related to the cars and other vehicles being manufactured.
The company has always given competition to its rival automakers in the industry a
tough competition relating to the volume of the production of passenger as well as other
vehicles. The company has been able to increase its net profits by more than double in
the year 2017. The percentage of net profit to the shareholders was set at 11.4 billion
Euros, which previously was 5.4 billion Euros a year. The revenue of the company
reached a 6.2 percent mark and created a record of 230 billion Euros. Despite the
reputational damage, Volkswagen was able to overtake Toyota in 2015 and disclosed a
cost of 25 billion dollars in its operations. The company has set a target of reaching the
margin of 6.5 to 7.5 percent of earnings. The net cash pile of the company decreased
by 4.7 billion Euros last year but still managed to remain over the pre-crisis mark of 21.5
billion Euros (Volkswagen, 2018).
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Competitive Advantage
The meaning of competitive advantage is the circumstances that let any organisation
enjoy a privilege and gain an edge over the rivals in the respective industry. The
organisations or the companies are able to produce or manufacture product and
services of similar values and attributes in a much desirable manner than the
competition in the concerned industry. The factors such as quality, marketing,
production, pricing, supply chain, brand value and others influence the competitive
advantages of organizations. The stability of the competitive advantage is directly
proportional to the security of the company in the industry and against its rivals in the
market (Jaques, 2017). Volkswagen has a number of competitive advantages
possessed such as having a large group of subsidiaries under it, huge sales figures,
and exceptional quality as well as service (Miravete et al., 2018). The list below shall
explain some of the competitive advantages owned by the company:
Volkswagen Group of Companies
Volkswagen owns a good number of brands that are famous worldwide and enables the
brand portfolio of the company to have an exceptional brand value. Some of the
renowned brands under its belt are Skoda, Audi, Porsche, Bugatti, Bentley, SEAT and
MAN (Wolte and Georg, 2015). These brands come up with exceptional designs and
car models that never fail to amaze the audience. The power of owning such superior
brands is not enjoyed by any other car manufacturer.
High percentage of Revenue and Profit
A high number of brands translate to a high number of generated profits and sales
(Christopher, 2016). The revenues earned by the Volkswagen group remain unbeaten
and the pricing strategies hugely contribute towards it. The company targets to become
the world’s largest automaker in 2018 but as per the data of the previous years it is
already at the lead. The revenue of 200 billion dollars earned by the company is a figure
that gives competition to large oil companies and not only carmakers.
Advanced German Technology
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The inception of the technology being used by Volkswagen dates back to the times of
the existence of the Nazis (Beck, 2018). It has since then improved the technology
being applied in the manufacturing process creating exclusive German techniques and
engineering that is way above than that of the others.
Quality and Original Parts
The skilled artisans as well as certified engineers and technicians at the Volkswagen
group create car parts of unmatched quality. These original parts provide a factory fit to
the company’s manufactured cars that promise a long useable life and a performance
that is seamless (Miravete et al., 2018).
Luxury and Safety
The Volkswagen group is able to provide lavishly designed cars at nominal rates. The
luxury interiors and exteriors of the cars do not come in luxury pricing and acts as a
factor that gives the company a great advantage over the others. The safety features
such as Adaptive cruise control, blind spot removal in the mirrors, Parking Assists, drive
assistance ensures a safe arrival at the destination by the drivers, and passengers
travelling in Volkswagen manufactured cars and other vehicles (Broggi et al., 2016).
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Analysis Tools
Two analysis tools shall be utilised in the project to assess the environments, internal
and external, in which Volkswagen operates.
PESTLE Analysis
This framework assists in analysing the external environmental factors that influence
performances of the organisations in relation to operations and market. PESTLE stands
for Political, Economic, Social, Technological, Legal and Environmental factors that
affect the business and operations of the company. Hence, this part of the project shall
highlight the factors mentioned in the PESTLE framework affecting Volkswagen and its
business in the U.K.
Political
The political stability of a country influences the operations of the businesses working in
it. The 21st century has witnessed the strengthening of the stated fact. The recent
effects of Brexit have taken away the privileges of free trade from the German car
manufacturer, Volkswagen. The abolished free trade agreement has affected the
business in the U.K. but the company through its worldwide operations manages lower
economic repercussions in the country (Steger, 2017).
Economic
The United Kingdom leaving the EU has affected the German carmaker hugely. The
recessions of the years 2008 and 2009 has also influenced the performance of the
company and has caused slow recovery of the losses. The sluggish pattern of the
economy in the country has resulted in a decrease in the sales figure (Bhagat et al.,
2017).
Social
Volkswagen through its innovative techniques has evolved the process of the
production of products for the U.K. customers keeping the focus on their nature and
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culture. The company has been able to provide products meeting the cultural values as
well as the standard of living of the customers in the country.
Technological
The improved German technology and the adoptions of the latest available technology
by the leading carmaker have been able to meet the requirements and the changing
taste and preferences of the U.K. customers. This has further led to the maintenance of
the position in relation to the market share of the company in U.K.
Legal
The rules regarding pollution and emissions have become stringent as well as affect the
company’s business hugely (Doppelt, 2017). The company has already been defamed
of being in the practice of manipulating emission figures through modifications in the
diesel engines manufactured by it.
Environmental
Environmental hazards caused by the large production companies have always been an
issue that has been strictly dealt with in the U.K. The emission scandal of the year 2015
in which the company was found guilty has made it reorganise and reform its strategies
as well as processes in relation to the environmental hazards.
SWOT Analysis
The SWOT analysis shall enable the assignment to highlight and explain the internal
factors of Volkswagen operating in U.K. SWOT stand for Strengths, Weakness,
Opportunities and Threats.
Strengths
The brand value held by the brand portfolio of Volkswagen is one of the major factors
that contribute in its organisational success. The global high percentage of revenue
generation helps it to balance the business operations and keeps the position of the
company in the auto market stable. The German technology as well as the engineering
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adopted by the company enables the Volkswagen cars to have quality inbuilt features
and trusted performances (Bhasin, 2018).
Weaknesses
The parent brand Volkswagen utilises large amounts of funds in strengthening brand
value for Audi, Bentley and other premium brands under its belt but fails to meet the
need of doing so for itself. The emission scandal of 2015 in which the company was
found guilty has caused a major setback for the company and is still regaining the lost
trust of the customers (Bhasin, 2018).
Opportunities
Volkswagen can tap the opportunity to boost its performance by incorporating
technologies relating to increasing fuel efficiency of the vehicles being manufactured.
Hybrid and electric vehicles are clearly the future of the automotive industry, hence the
company needs to research and develop such options for the mass to stay ahead in the
industry (Bhasin, 2018).
Threats
The brand reputation of Volkswagen has suffered and the trust of the customers has
been lost dues to the adverse emission cases in which the company was involved. The
changing emission and pollution laws around the globe hold major threats to
Volkswagen. The increasing competition also needs to be kept in check in order to
maintain the market share being held at present in the market (Bhasin, 2018).
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Recommendations
Volkswagen should adhere to the following suggestions and recommendations for the
next two to five years in order to maintain its competitive advantage:
 Volkswagen needs to work on the lost trust in the relationship it shares with its
customers across the globe. This shared relationship was vastly damaged by the
company’s involvement in the manipulation of data relating to the emissions
being produced by the vehicles manufactured by it in certain countries. However,
the global customer based felt let down by the company. It now needs to come
up with strategies it can adopt to change the scenario and advantages it can offer
to customers to gain back their trust.
 Volkswagen should look into producing vehicles with lower fuel consumption to
beat the competition and continue owning a large base of loyal customers.
Higher fuel efficiency is the common demand of the customers across various
markets around the world.
 The company needs to invest in the research and development of hybrid and
electric vehicles, as they are the clear future of the automotive industry. It will
enable the company to be ahead of the competition even in the future and
provide refined relevant technology braced vehicles to the mass across the
globe.
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Conclusion
The assignment has been able to shed light on the history of Volkswagen and its
business operations. The market share as well as its recent financial performances is
mentioned in the assignment. The competitive advantage possess by Volkswagen has
been identified as well as explained in a lucid manner. The assignment has been
successful at reflecting the PESTEL as well as the SWOT analysis for the concerned
company and vital information in relation to it. It also provides suggestions for
improvement of the company’s image and performance.
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Reference List
Beck, U., 2018. What is globalization?. John Wiley & Sons.
Bhagat, R.S., McDevitt, A.S. and Baliga, B.R., 2017. Global Organizations: Challenges,
Opportunities, and the Future. Oxford University Press.
Bhasin, H. (2018). SWOT analysis of Volkswagen - Volkswagen SWOT analysis.
[online] Marketing91. Available at: https://www.marketing91.com/swot-analysis-of-
volkswagen/ [Accessed 2018].
Broggi, A., Zelinsky, A., Özgüner, Ü. and Laugier, C., 2016. Intelligent vehicles.
In Springer Handbook of Robotics (pp. 1627-1656). Springer, Cham.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Denning, A., 2015. The People's Car: A Global History of the Volkswagen Beetle by
Bernhard Rieger. German Studies Review, 38(1), pp.206-208.
Doppelt, B., 2017. Leading change toward sustainability: A change-management guide
for business, government and civil society. Routledge.
Financial Times (2018). Volkswagen doubles profits but forecast underwhelms analysts
| Financial Times. [online] Ft.com. Available at: https://www.ft.com/content/d5a3b0b8-
18c0-11e8-9376-4a6390addb44 [Accessed 2018].
Jaques, E., 2017. Requisite organization: A total system for effective managerial
organization and managerial leadership for the 21st century. Routledge.
Miravete, E.J., Moral, M.J. and Thurk, J., 2015. Innovation, emissions policy, and
competitive advantage in the diffusion of European diesel automobiles.
Steger, M.B., 2017. Globalization: A very short introduction(Vol. 86). Oxford University
Press.
Volkswagen (2018). Volkswagen - market share in the EU 2018 | Statistic. [online]
Statista. Available at: https://www.statista.com/statistics/276300/market-share-of-
volkswagen-based-on-new-car-registrations-in-the-eu/ [Accessed 2018].
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Volkswagen Group (2018). VW - global market share of passenger car production 2016
| Statistic. [online] Statista. Available at:
https://www.statista.com/statistics/277069/global-market-share-of-passenger-cars-
produced-by-volkswagen/ [Accessed 2018].
Wolte, F. and Georg, A.L., 2015. Steering a Corporate Brand in the Automobile Industry
to Differentiation: The Brand Personality Wheel.
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