Detailed Strategic Analysis of the Volkswagen Group: Business Report

This report presents a strategic analysis of the Volkswagen Group, beginning with a background overview and detailing its current market position as the world's second-largest automaker. The analysis incorporates Porter's Five Forces to evaluate competitive dynamics, including the bargaining power of buyers and suppliers, the threat of new entrants and substitute products, and rivalry among existing players. A resource-based view examines Volkswagen's competencies and resources, while a SWOT analysis identifies strengths, weaknesses, opportunities, and threats. Key issues such as intense competition and the 2015 diesel scandal are discussed, leading to recommendations for strategic changes, including enhanced innovation and improved promotional activities. The report concludes with a list of references, providing a comprehensive overview of Volkswagen's strategic landscape and potential future directions.

STRATEGIC
ANALYSIS OF
VOLKSWAGEN

Volkswagen Group Background
 Volkswagen was established in the year 1937 in Germany.
 Volkswagen has gained the position of the world’s second biggest
automaker and has greater than 600,000 representatives and also
manufactures greater than 28,000 vehicles a day.
 Volkswagen currently operates a total of 120 build-up plants that are
spread over more than 4 areas with most of assembling processes in
Europe and China. The vehicles of Volkswagen are offered to consumers
in 153 countries (Volkswagen.com.au, 2020).

Summarised strategies for
customers
 Best Governance - engaged, lean and reliable. The objective: The
organization has develop a structure that is engaged in nature.
 Best execution - Proficient, beneficial, maintainable. Volkswagen is
able to accept the accountability towards all the partners, society and
earth on a long term basis (Volkswagen.com.au, 2020).
 Best Brand value - Honed brands, maximum capacity.
 Outstanding Leadership - Adaptable, respectability, solid pioneer
(Volkswagen.com.au, 2020).

Vision and mission statement
 Volkswagen vision explanation is "to make this world a versatile,
maintainable spot with access to all the residents."
 The major objective of Volkswagen is based on offering the safe and
solid vehicles that have the ability to contend in an extreme and
competitive market (Volkswagen.com.au, 2020).

Strategies impact on
performance
 Organization Performance and Financial Results Current CEO Mueller
has taken the responsibility for Volkswagen within a period that is
based on high levels of susceptibility and offensive instability.
 In the letter that is provided to the investors in the Annual Report 2015,
Mueller takes note of that in spite of the €16.9 billion put in a safe spot
for "uncommon things" or the diesel-entryway embarrassment, the
company conveyed 9.9 million vehicles and developed deals income by
five percent to €213.3 billion (Bomey, 2016).

Porter Five Forces analysis - Bargaining
power of the Buyers & Competitor Analysis
 The bargaining power of the buyer is considered to be quite low
due to the factors that include switching options and the determinants
of costs as well. The force had made it quite tough for consumers to
shift to other brands like Ford, Toyota and Honda just because of
competitive prices.
 Competitor Analysis - Volkswagen Australian faces intense levels of
competition from the organizations like General Motors, Toyota, Ford,
Hyundai and BMW (Boston, 2017).

Bargaining power of the
Suppliers & Threats of new
entrants
 The bargaining power of the suppliers are considered to be quite
low as the organization procures its raw materials from the suppliers
who are specialized in development of different materials.
 Threats of entrants - The entry barriers in the automobile industry
are quite high for new organizations that aim at starting the business
operations in a new country (Bowler, 2015).

Threat from Substitute Product & Rivalry from existing players
 Threat from Substitute Product – The organizations is facing
medium levels of threat from different substitute products due to the
increment that has taken place in the prices of gas.
 Rivalry from the existing players - The competition levels that are
faced by Volkswagen in the automotive industry are considered to be
high and this has increased due to competition provided by
organizations like General Motors, Ford, BMW, Hyundai and Toyota
(BusinessTech., 2016).

Resource Based Theory
 The competencies and resources that have been gained by Volkswagen
mainly include the technological inventions, using the finances and
using the raw materials like steel, aluminium and different other metals
as well that are mainly used for manufacturing their products .
 The different competencies of Volkswagen mainly include diverse
portfolio of products, innovation and creativity (Russo-Spena, Tregua &
De Chiara, 2018).

SWOT Analysis – Strengths &
Weaknesses
 Strengths that have been gained by Volkswagen mainly include the
brand image and the strong presence on an international basis. The
organization is thereby known in the industry for the huge levels of
market presence in greater than 86 countries of the world. The
passenger based vehicles are highly in demand in the industry.
 Weakness of Volkswagen mainly includes the diesel based scandal
that had occurred in the year 2015 that had a negative impact on
reputation of the firm (Boston, 2017).

Opportunities & Threats
 Opportunities that are provided to Volkswagen in automotive industry
will thereby include the growing levels of demands for the passenger
vehicles in the Asia Pacific market.
 Threats that are faced by Volkswagen thereby include the huge levels
of competition in the automotive industry that is growing on a constant
basis and has also become more intense in nature (Bowler, 2015).

Major issues identified
 The levels of competition that are faced by Volkswagen in the
automotive industry are considered to be quite high due to the
presence of organizations like Ford, Toyota, Honda, General Motors and
Nissan.
 The diesel scandal that is faced by Volkswagen in the year 2015 has
tarnished the image and reputation of the organization and has
affected the consumer base of the firm in a negative manner (Russo-
Spena, Tregua & De Chiara, 2018).

Strategic change
 Volkswagen needs to enhance the levels of innovation in the cars for
the purpose of enhancing the differentiation that the organization has
been able to develop in the automotive industry.
 The reputation or image of Volkswagen can be improved with the help
of proper development of promotional and advertising based activities
that can help the organization to increase awareness related to the
products (BusinessTech, 2016).

Recommendations
 Volkswagen can enhance its position in the industry by proper
development of the promotional and advertising strategies in order to
reach the consumers faster.
 Volkswagen can increase the usage of technologies in the production
and manufacturing processes of the organization.

References
 Bomey, N. (2016, June 16). Volkswagen bets big on electric cars. Retrieved from https://
www.usatoday.com/story/money/cars/2016/06/16/volkswagen-electric-vehicles- mobility/85972522/
 Boston, W. (2017, January 09). Volkswagen sales rise in 2016 despite scandal. Retrieved April 02, 2017,
from http://www.marketwatch.com/story/volkswagen-sales-rise-in-2016-despite-scandal-2017-01-09
 Bowler, T. (2015, October 2). Volkswagen: From the Third Reich to emissions scandal. Retrieved January
26, 2017, from http://www.bbc.com/news/business-34358783
 BusinessTech. (2016, February 29). Friedman, G. (2017, January 18). 3 issues that will lead to trouble in
Europe in 2017. Retrieved April 2, 2017, from http://www.businessinsider.com/these-are-the-3-main-
issues-for-europe-in-2017-2017-1. Retrieved April 2, 2017, from
https://businesstech.co.za/news/general/114762/south-africas-most-serious-problems/
 Russo-Spena, T., Tregua, M. & De Chiara, A. (2018). Trends and drivers in CSR disclosure: A focus on
reporting practices in the automotive industry. Journal of Business Ethics, 151(2), pp.563-578.
 Volkswagen.com.au, (2020). Volkswagen Australia | Passenger Cars & Commercial Vehicles. [online]
Volkswagen.com.au. Available at: <https://www.volkswagen.com.au/en.html> [Accessed 17 April
2020].