Contemporary Business: Volkswagen's External Influences and CSR

This report provides a comprehensive analysis of Volkswagen's operations, focusing on the external factors influencing its business and its corporate social responsibility (CSR) practices. The report begins with an overview of various external influences, including political, economic, social, technological, legal, and environmental factors, and their significance to the automotive industry. It then delves into Volkswagen's CSR initiatives, evaluating their impact on the company's policies and decision-making processes. The analysis highlights the importance of CSR in enhancing the company's brand image, stakeholder relations, and operational efficiency. The report further assesses the effectiveness of Volkswagen's responses to these external pressures, offering insights into areas where the company can improve its strategies. Overall, the report underscores the significance of adapting to external changes and integrating CSR into business operations for long-term sustainability and success within a competitive global market. The report is contributed by a student to be published on the website Desklib.

Contemporary Developments in
Business and Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Overview of an external influences towards which an entity is subjected to and explaining
relevant significance of each and every external influence to an enterprise................................3
TASK 2............................................................................................................................................6
a. Analysing significance of CSR practices and its influence on policies and process of
decision making in company.......................................................................................................6
b. Evaluating effectiveness of an organizations response............................................................8
c. Demonstrating some areas of improvement with response to an entity ...............................10
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Contemporary development in a business organization relates with making an analysis of
an external factors that influences functioning of company and importance of sustainability
practices for an organization operating in a highly competitive world and industry. This report is
based on Volkswagen group, a biggest Auto-mobile manufacturer, headquartered in Germany.
Volkswagen has been founded by German government in the year 1937 and is been rewarded for
producing a mass low priced car for People. Furthermore, this study presents an impact of
external factors on business operations of company. Moreover, it also highlighted major CSR
practices adopted by the firm and specifying an areas in which an organization need to make
further improvements.
TASK 1
Overview of an external influences towards which an entity is subjected to and explaining
relevant significance of each and every external influence to an enterprise
Volkswagen is counted as an international Auto-mobile corporation of UK. Therefore it
is impacted by several external influences in operating within Auto-mobile Business that are as
follows-
Political factors- It is a major factor that plays an important role and has a great impact
on profitability of an automotive industry. It relates to government regulations along with the
stability and instability of government within a country (External factors, 2018). Overall, there
exist several political factors that directly affects an auto-mobile industry that involves changing
regimes of the government in addition with political market regulation that causes favourable or
an unfavourable fluctuations within a time frame. This factor seems as crucial in internal
business area that is starting from an international trade relations to foreign supply chain and a
manufacturing partnerships.
Volkswagen having their own supply and a distribution network across the globe. Supply
chain of company is located over the several market and regions in which political stability is
counted as essential for Volkswagen in running its operations in a successful manner. However,
political state of an Asian markets seen as good during recent years that leads to the faster
growth of an automotive brands. This results in rising demand pertaining to Volkswagen
products within these regions. an other political changes such as Brexit created an uncertainty
situation that gives rise to difficulties for Volkswagen.

Economic factors- This type of factor has a great effect on business as it includes
fluctuations in currency rates, changes in disposable income of a consumers which results to
increase and decrease in demand of Volkswagen products. The world had seen recession period,
in which demand towards vehicles had been declined and as a major brands under auto-mobile
industry had to go for a bailed out by government so that they do not faces bankruptcy.
Economic fluctuations in various markets & currency fluctuations resulted a toll on the revenue
and net profits of an organization.
Therefore, due to this, operating revenue or sales of Volkswagen has largely affected
because demand for its vehicles had declined (Zinovieva and et.al., 2016). As an economy
returned or overcome from the recession, revenue and sales of an entity had grown, however,
currency fluctuations highly affected to profitability. Volkswagen survived blow from a diesel
scandal which resulted to surging of the sales again. Higher level of an economic activity in
majority of markets had played an important role for Volkswagen in achieving higher profits
and the sales.
Social factors- At present, scenario of market is highly influenced by social factors with
respect to evolving lifestyle of people, changing trends and preferences of customers etc.
Therefore, in auto-mobile industry, every year, a new models are been released by keeping the
preferences of people as priority. Moreover, particular styles are been preferred in various
cultures as in some of the markets, SUVs are higher in demand while, in other market sedan
may be preferred. Social forces plays a significant role in growth of business industry in 21st
century.
Volkswagen group is having various brands that are well perceived that involves
Lamborghini, Porsche, Audi, Buggati. On other note, there are some of Volkswagen brands
which seems as less appealing to Customers like Seat, Skoda. This indicates that because of the
change in the trend, it is important for Volkswagen to update its sales strategies in relation to its
brands that are seen as very less appealing for Customers. Now-a-days people are very much
interested in the sustainable products and sales of an electric vehicles tends to be kept as rising.
Moreover, disposable income of Customers also has a great impact on the demand of
Volkswagen's product as presently, an income of the consumers is low so this poses an adverse
effect on the sales of company. This in turn leads to lower profitability and as company is

operating its business in the fiercely competitive environment so, it also leads Volkswagen
towards a struggle within an entire Auto-mobile industry.
Technological change- A greatest trend in technology is faced by VW is development in
relation to self driving cars. The cars of company are designed by using an advancements in
artificial intelligence, mapping cameras, terrain sensors, radar technology and data analytic
fittings referring to easy navigations. An autonomous driving technology is representing as
number one or biggest threat as it challenges driving methods of company and the concepts of
vehicle ownerships. As per KPMG survey executives revealed that 60% believes that ownership
of the cars will be declining by 2025. Threat relating to autonomous driving technology not only
drives down an ownerships of cars but also results in particularly transforming urban mobility
as an emphasis would be shifting over mobility as service. Under this, consumers could summon
for services of car same as the Uber services but the need of customers will be constantly
increasing and not declining. Advancements in technologies are required to be undertaken by an
organisations by making huge investments in research and developments for the purpose of
developing environment friendly technology. It should adopt and innovate technologies that do
not emit carbon pollutants.
Legal issues- It is a factor that acquired a huge importance in 21st century in which the
legal and a regulatory framework has been grown as tighter and this brand has faced a huge
compliance related risks in all areas starting from labour to an environment and a safety of the
driver. It has been announced that Volkswagen cheated intentionally in a test of the diesel engine
emission. Million of Volkswagen vehicles had been produced in middle of year 2009 to 2015
which were built by using the software which temporarily reduced an emissions during the
testing but had failed in meeting with appropriate regulatory requirements in making its use on
daily or routine basis. The scandal has resulted in numerous legal related cases that leads to
charging of fines and the damages which causes a huge loss to firm and in turn decreases market
value of shares and sales margin of Volkswagen. On a global level, governments are making use
of the stringent laws in order to preventing people from any type of the fraud made by an auto-
motive brands and from the company that are working in non-compliance of the laws. Thus, its is
very important for Volkswagen to focus on all types of legal laws and must work in compliance
with all legal rules so that it does not have to indulge in any kind of the petition or duties.

Environmental- It also acts as a major factor in an automotive industry. This reflects
reviewing of pollution laws that have grown as more and more stringent around world and in
some markets that includes large penalties for the brands. As Volkswagen has greatly impacted
by theses factors in terms that it forces in recalling million of the cars as in relation to their
inability for meeting an emission standards (Vatharkar, Gao and Fomin, 2018). This resulted to
loss of huge amount of billions so for overcoming such issues, brand is emphasizing on
developing of more and more hybrids and an electric vehicles for gaining back the trust of their
customers. For this, Volkswagen developed green technologies like batteries, hydrogen fuel,
electric motors is not just as a technological matter but also as an environmental. On other state,
green alternatives to the traditional auto-mobile engines had offered a great benefits to all
consumers. The main reason for which it is being developed for satisfying an environmental
concerns of both the consumers and the governments. In order to remain stable and sustainable,
it is essential for Volkswagen group to adapt all kinds of the shifts in automotive industry.
TASK 2
Theme : Corporate Social responsibility and sustainability
a. Analysing significance of CSR practices and its influence on policies and process of decision
making in company
Corporate social responsibility comprises within an organization states reconciling
economic aims of an entity with respect to human progress and a sustainable growth. Although
each and every corporation is having its own approach referring to value oriented management of
company (Forkel and et. al., 2016). Such approach is based on various established concepts
regarding citizenship of corporate and CSR practices focusing on an entity's willingness in
assuming social responsibility and involving an elements like attitude towards the human rights,
needs and wants of an employees, suppliers and commitment towards a social issues.
CSR practices are found as very much relevant to an organization in terms of the society,
customers and the environment. CSR gives a chance to all employees within an organization in
contributing towards society, country and an environment. It acts as a great tool in strengthening
position of Volkswagen in an overall Auto-mobile industry and market. It presents ethical as
well as positive corporate image within the local community. Ethics within a firm comes up
directly from an idea of a corporate social responsibility and a sustainable development.
Responsible and a sustainable targets of company involves the standards into a strategy and in

using them in the conscious ways (Sousa and et. al., 2015). Through making use of the CSR
practices, Volkswagen could improve the relations with its stakeholders and could also improve
an operational efficiency as by way of legitimate actions.
It has also been depicted that application of different CSR practices helps in improving
brand image of an enterprise. Also, it is an essential motivation that includes moral and an ethical
actions that aimed in achieving an intended activities in the CSR. It enables an organization in
improving its profitability and the market value by introducing of an energy efficiencies projects
and avoiding the wastage benefits in an overall environment. CSR increases an accountability
and transparency of Volkswagen with an investment analyst and a media, local communities and
the shareholders. It in turn enhances reputation of Volkswagen among the investors like mutual
funds which integrates CSR into selection of their stock. The result is virtuous circle where a
stock value of company increases and its access towards an investment capital gets eased. CSR
could help Volkswagen in creating a visibility of its ethical and sustainable practices on the
social media. This assist the firm in creating positive branding environment and is also seen as
great way in connecting with large audience on a deeper level that goes beyond the services and
products.
Public relations acts as a patent tool in shaping perception of all consumers and in
creating positioning with respect to brand image of Volkswagen. Moreover, focusing on
practices relating to CSR, Volkswagen could have an easier experience while dealing with
several politicians and regulating authorities like government. The major factor which reflects
that CSR is seen as most important measure in building a positive environment within the
workplace. This in turn builds a sense of belongingness and harmony that brings each and every
person in an organization together and results in productive and the happier employees.
Furthermore, CSR practices directly influences the policies and procedures of an
organization in terms of developing effective strategies that contributes towards society and a
well being of internal and an external stakeholders. The decision making of company is also
made in consideration with the ethical and sustainability aspects of an entity (Chan and
Parhankangas, 2017). Thus, CSR plays an essential role for Volkswagen in attaining growing
success and in making suitable decisions with respect to further expansion. It helps in framing
the policies and strategies of an entity in an appropriate manner so that goals can be achieved
effectively.

b. Evaluating effectiveness of an organizations response
Volkswagen group is seen as committed towards more transparent and as responsible
brand with respect to corporate governance. Executing this across all the levels and each step of
value chain is counted as challenging in consideration with more than twelve brands, higher than
610000 employees, 119 production locations (Cai and et. al., 2016). For Volkswagen,
sustainability referred as simultaneously striving for the social, environmental and an economic
goals in the way which provides an equal priority. They seek for creating an enduring value,
providing good working state and handling an environment and the resources with utmost care.
In respect of CSR practices, Volkswagen group created clear structure of management in
coordinating sustainability. The highest committee of company involves Sustainability Board of
the management. It has been regularly informed by a board group and the steering group of
sustainability on an issues of the corporate and the sustainability responsibility to all employees.
A board of CSR and sustainability supports all steering group and their duty involve coordinating
all types of sustainability activities in the brands and a group but also coordinating dialogue of
all stakeholders at the group level (Ambati and et.al., 2017). The team of CSR in Volkswagen
mainly works on business areas like stakeholder management, sustainability in the supplier
relationship, reporting. This working structure and the coordination is largely established across
brands and is expanding consistently.
The CSR philosophy of Volkswagen is stated as increasing corporate value, is counted as
only way in achieving a social responsibility. On an other side, sustainable success of a corporate
could be safeguarded by way of social responsibility. It has always been seen as main pillar of
the corporate culture in assuming strategies relating to social responsibility in each and every
areas.
The stakeholders of company includes groups, organization, individual who are
influenced by way within which group reaches to its corporate decisions and an implication of
the decisions. Their customers and the employees are counted as the key stakeholders within
their stakeholder network. Around this, company had identified 8 further groups of the
stakeholder groups of an equal importance based on their annual assessment. For Volkswagen,
stakeholder management refers to interacting with the major stakeholder group in line with the
future programs.

In 2016, Volkswagen group set an international sustainability council in providing the
support relating to strategic sustainability problems. Renowned experts from an industry,
science, civil society and politics as an independent advisors to group management board,
facilitating advice on sustainability mobility and an environmental protection, integrity, social
responsibility and digitalization. Council provided management board with the specific
recommendations relating to cultural, technological and political change. In 2018, sustainability
council carried out projects that were approved in year 2017 and seeks various initiatives that
involves project flanking strategic focus of sustainability report at an enterprise, setting guest
professorship for an open labs and a cultural change at an Einstein centre of the digital future in
Berlin.
In a reporting period, Volkswagen successfully changed sustainability reporting process
that contains new global initiative for reporting standards that had been binding since a year
2018. In year 2017 as a reporting period, same is been applies to requirements of CSR in relation
to disclosure of the non-financial information. Volkswagen group had identified 18 areas where
actions need to be taken as regards to their strategic importance for a strategy and relevance of
their stakeholder. company analysed demand, attitude and expectation of their stakeholders
regarding to action areas as the part of its research project that took into consideration more than
40 international and the national stakeholder groups.
In year 2018, Volkswagen expanded materiality procedure with an aim of looking
sustainability in more comprehensive manner from company's perspective, in eyes of their
stakeholders with regards to their economic, social and ecological impact. In 2017, implications
of the CSR and new standards of GRI were been discussed with reference to brand
representatives of brands and a corporate functions in mainly four workshops and reconciled
with their divisional strategies. In 2018, Volkswagen included decarbonization as its value
creation stage, executing roadmap, digitalization and vision zero in avoiding the traffic accidents
in addition with an employee satisfaction and attractiveness of employer.
Thus, in context of corporate social responsibility, in different areas, different measures
had been taken by Volkswagen that includes integrity and following compliance with respect to
which Volkswagen has adopted Multilingual training for an employees, global key performance
indicator for an integrity etc. In a sustainability management, company had made additional
investment in the sites for improving energy efficiencies, conserving resources and using

renewable sources. Coming up to global sustainability, it emphasizes decarbonization and the
carbon footprint for passenger car sector. It created a public positioning on an issues of transport
policy such as emissions, carbon pricing and energy revolution. Volkswagen developed
sustainable products by executing a roadmap for E electrification policy with a huge amount of
investments. The group gets into the partnership with new city in developing an intermodal
transport in the urban areas with launching of the MOIA in the Hanover (CSR practices of
Volkswagen, 2018). Referring to sustainability communication and participation of stakeholder,
Volkswagen created a sustainability group council by expending panel of the group stakeholder
and further development of a global stakeholder survey. It had also continued for a shift in the
sustainability magazine and has numerous opportunities for dialogue of groups, regions and the
brands.
Furthermore, it had developed sustainability in relation to a supplier relationship concept
and developing the compliance system of management in checking for a global compliance with
due diligence regarding standards of human rights. The group is also enabling in educating
young people for a digital future by way of “xstarters” program. It is an online platform that aims
at showing young people that aged between 14 to 19 years, a digital world and an opportunities
that is offered by it which helps in building digital skills and in encouraging them in coming up
with new ideas towards social and the digital innovations.
c. Demonstrating some areas of improvement with response to an entity
Presently, as an automotive industry is been facing greatest an upheavals in the history.
Alternatively the drive systems, digitization of an entire value system of the company rapidly
changing the global demand of Customers. With response to this, Volkswagen must seek for
launching the future track program around all the regions and the brands throughout an entire
group. An entity must focus on driving the technologies, networking and digitization of the
production and the products. It must opt for a leading role in influencing and shaping a new
world that describes mobility.
CSR practices of the business are focused towards stakeholders of company. It is required
by the company to make effective steps towards its improvement. For building effective
relationship company can give society new innovations that are environment friendly. It can
make more safe and secure cars for the customers. It should review the concerns of customers by
effective feedback process.

Corporate social responsibility is self regulated business model helping company to be
socially accountable towards the stakeholders and public. The CSR practice makes company
conscious about the impact it is having on aspects of the society like social, economic and
environmental. CSR deals with engaging company in the ways which will be enhancing the
environment and society.
Volkswagen is following the practice from years to improve the relationships with its
stakeholders. It is laying emphasis over creating value for the stakeholders. The practice
portrays a positive image of company both inside and outside of company it is essential for the
business to make further improvements in the existing practices being followed. Along with the
stakeholders, it should also focus over other aspects that are equally important for company. It
should also move its focus towards the society and environment (Mohan, Murthy and Somani,
2019). Auto-mobile is largely dependent over the resources that are essential for the growth of
company.
It should focus over the code of conduct being followed in company. Code of conduct
and ethical issues had became significant part of the compliance for most of the companies, they
cannot have a positive image when the ethical issues and policies of a company are weak. It
should lay strong policies and procedures for the business. Further steps are required to be taken
by company towards CSR. It undertakes very less part in the public welfare programmes. It
should conduct public welfare programs for the benefits of society this will also help in
promoting company.
Since it is a auto-mobile company its first focus should be at reducing the pollutions in
the environment. It should adopt for technologies by conducting research and developments for
minimising the emission of pollution from its vehicles. It should adopt for environment friendly
vehicles that will reduce the pollution. This is the responsibility to least harm the environment. If
companies do not take necessary steps for improving the existing products. It should conduct
programmes for protecting the environment by creating awareness about the importance of
natural resources. This helps in making strong bond between the society and company that
enhance their growth rate.
CSR practices have been made compulsory to corporations. They are required to do for
the welfare of society. They cannot avoid the concept of CSR as society has become more
vigilant and aware about the companies who are active in CSR. It is helping them to create new

customer base with an adoption of these techniques (Duncan and et.al., 2020). They should
provide for the education of poor children who have interest in studies but are lacking because of
money. They should conduct programmes and donate for the treatment of poor people. It should
also take considerable steps for saving the environmental resources and energy resources. This
will help company to achieve success and growth in the business.
In respect of an emission issue, Volkswagen failed in meeting with their own standards in
number of ways. An irregularities in handling emissions figures are considered as contrary
towards everything for which Volkswagen stands. After this consequences, they deeply regret as
they disappointed their stakeholders. Therefore, company needs to focus on ensuring that this
things does not happen. For this company had prepared for their won standards and in restoring
society's and the confidence of Customers. They should seek for revising their sustainability
concept and policies. This can be done by them through recognising the development and the
risk opportunities within an areas of an environment, governance and the society along with
value chain. In such way, CSR activities would contribute in permanently boosting reputation
and value creation of Volkswagen in long term.
CONCLUSION
From an above report, it had been concluded that there are several external factors which
has a direct impact on working of an enterpris in terms of political, technological and legal
influences. Corporate social responsibility plays an important role in creating value for
stakeholders and in boosting morale of an employee which in turn leads to higher productivity
within organizational workforce. It also helps in achieving goals efficiently and increases brand
reputation of a company in an overall industry.