HND Business Strategy Report: Volkswagen Organisational Analysis

This report provides a comprehensive analysis of Volkswagen's business strategy, addressing key aspects such as organizational and environmental audits. The report begins with an introduction to business strategy, highlighting its importance in achieving organizational goals and objectives. A detailed organizational audit of Volkswagen is conducted using SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. An environmental audit is then performed using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors influencing Volkswagen. The significance of stakeholder analysis is assessed, emphasizing the impact of various stakeholders on the organization. Furthermore, the report explores the development of a new strategy, focusing on limited growth strategy and Porter's generic model. The report justifies the selection of a new strategy and discusses the roles, responsibilities, and resource requirements involved in strategic implementation, including the contribution of SMART targets. The report concludes with a summary of findings and recommendations for Volkswagen's future strategic direction.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Conduct an organisational audit of Volkswagen..................................................................1
2.2 Environmental audit..............................................................................................................3
2.3 Significance of stakeholder analysis.....................................................................................4
2.4 Develop a new strategy.........................................................................................................5
TASK 3............................................................................................................................................7
3.1 Alternative strategies related to market growth entry, substantive and limited growth........7
3.2 Justify the selection of new strategy.....................................................................................8
TASK 4............................................................................................................................................8
4.1 Roles and responsibilities of the person who are involved in strategic implementation......8
4.2 Resources requirements in the strategic implementation......................................................9
4.3 Contribution of SMART targets in strategic implementation.............................................10
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Business strategy is defined as firm's plan in order to reach particular goals and objectives
in a certain time period. A company's policies and strategies will be succeed only if they lead in
an effective manner. In addition, it also helps managers to gain growth, vitality and higher
competitive advantage from target market. Business strategies works as a working plan of a firm
which describes how firm will attain its vision and mission; it also gives some information about
competitors strength and weakness. In competitive market, each commercial entity chooses a
strategy so as to exploit itself (Acquaah, 2013). Volkswagen is the chosen organisations in this
present report; it is a German auto maker company that was founded on 28th May 1937. The firm
has total revenue of €105.651 billion; its main objective is to fulfil corporate social
responsibilities so as to gain higher customer satisfaction level. Apart from this, the present
report will be discuss the role of vision, mission, goals and objectives in strategic planning.
There are some factors that could be involved in developing various business strategies.
Organisational audit and environmental audit will be conduct by SWOT and PESTLE analysis of
the firm. The report will also states that managers have to develop a new strategy so as to attain
high competitive advantages.
TASK 1
Covered in PPT
TASK 2
2.1 Conduct an organisational audit of Volkswagen
It is essential for every firm to manipulate an organisational audit; it will helps it to
analyse internal factors that would affect firm's growth and vitality. It is a consulting and
objective assurance activity which adds value in operations and activities of the firm.
Organisational audit is a disciplined approach that reduces the chances of risk and uncertainties;
it also helps managers to achieve goals and objectives in the best possible manner. Along with
this, organisational audit identify firm's strength, weakness, future opportunities and threats. Itv
can be done through SWOT analysis of the company. Below mentioned SWOT analysis of
Volkswagen: -
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STRENGTH
 Volkswagen operates its services
between more than 160 nations; it is
widely spread in Germany, China,
Brazil and Asian countries. The firm
manufacture its cars at there and sell
them in whole world. VW was built in
1938, it is having 120 plants currently
across the globe.
 The car manufacturing company spend
a lot of amount on research and
development unit so as to know market
trends and customers' needs (Astrachan,
2010). Through which, it can easily
work as per public demand and attain
business objectives. VW research costs
is increasing 3.8% year by year.
 There are over 593480 employees are
presently working with Volkswagen. It
shows that the business organisation
spend huge amount on providing
training and development assistance of
staff members. In addition, the
company has well qualified and
technical persons who are liable to
design innovative products and
services. VW owns has 16 brands, i.e. Audi,
Bugatti, Porsche, Lamborghini,
Neoplan, SEAT, Skoda, etc. By having
a large variety of cars, the firm has
WEAKNESSES
 Volkswagen is possessing only certain
countries, it has only 3% share in Asian
automotive market. Although the firm
has modern facilities of production, but
that is not enough to grab large vehicle
markets.
 Mostly cars of Volkswagen are not eco-
friendly. Lamborghini, Bugatti and
Porsche emits high carbon-dioxide. If
UK government will take any action; it
would ruin VW's market position
drastically.
 Volkswagen is not having a good brand
image like Toyota because its produces
only luxurious cars, that are not a cup
of tea of middle class people (Auzair,
2011). In UK, a wide range of
population belongs from middle class,
so that it is biggest weakness of
Volkswagen in UK market.
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strong brand image in international
market.
OPPORTUNITIES
 Now VW is focusing on recover its
market image. It adopt some effective
tools and techniques for better
production. It develops environmental
friendly cars; that gives a company to
create an strong market image. China and India are high populated as
well as developing cities. There
customers are wanted luxurious cars; its
government also promote foreign
investment. It would be helpful to
maximise Volkswagen's sales and
profitability.
THREATS
 Due to decreasing in fuel prices, it will
impact the demand of hybrid cars and
sales of VW will also going down.
 Economic downward would be decline
sales and profits of Volkswagen.
 Strong market competition.
2.2 Environmental audit
In this global environment, there are many factors that would impact upon organisation's
productivity and performance. So that, managers of Volkswagen have to conduct a external
environmental analyse for examining all such factors. It can be done trough PESTLE analysis of
the company. There is a brief description of PESTLE analysis of Volkswagen that is described as
under: -
Political factors UK, government has continuously take up initiative actions in order to
change fiscal debt, taxation rates etc. This could impact upon firm's
sales and profits. Political factors involves tariffs on international
trade and enhancing rules or regulations, duties, subsidies, tax rate
etc. Therefore, it is too difficult for Volkswagen to perform in other
countries in an effective manner (Azar, 2011).
Economical factors It helps in determining economic performance of a product in target
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market. It involves unemployment, lower income, poverty, bank and
interest rates. United Kingdom was hit by economic recession in 2007
and still it is effecting sales and profit of their industries. Because, due
to financial crisis there people are not able to spend more amount on
luxurious products and services.
Social factors These factors includes changes in demographic, life style and fashion,
income distribution, social mobility etc. For Volkswagen, social
factors seems as opportunities as well as threats. Cause, over the last
years, UK's people are moved their interest from large to small
vehicles. They need fuel efficient products and services.
Technological factors Modification in information and mobile technology also effects sales
and profits of a firm. Rate of technological transfer of products is so
high, therefore many automotive companies cannot sell their trades in
international market (Barberá and et. al., 2012). Apart from this,
customers also want new and innovative products; so that it is
essential for Volkswagen is to improve the speed of technological
obsolescence.
Legal factors It involves various tax policies, employment laws, safety and
competition regulations etc. There are several legal laws and
legislations that must followed by Volkswagen.
Environmental factors UK government has made a law for environmental protection and it is
also necessary for business entities to follow the same. Volkswagen is
now tend towards producing eco-friendly cars.
2.3 Significance of stakeholder analysis
Before knowing stakeholders' analysis, it is essential for readers to understand the
stakeholders. They put a huge impact on day to day working activities and business decisions in
direct or indirect manner. Customers, creditors, shareholders, government, employees, suppliers,
media, society etc. are the main stakeholders of Volkswagen. Therefore, it is required for
managers to conduct a stakeholder analysis so as to know their needs and wants. For example –
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customers are one of the important stakeholder of Volkswagen they must be delivered qualitative
products and services (Bharadwaj and et. al., 2013). Employees are another stakeholders of firm,
they have to be provided a healthy and positive working environment.
Impact of different stakeholders on organisation: -
 Owners/stakeholders – They have a big say in how the aims of the business are decided,
but other groups also have an influence over decision making. For example, the directors
of Volkswagen who manage the day-to-day affairs of a company may decide to make
make higher sales a top priority rather than profits.
 Managers – they influence a business everyday by the decisions they make. Managers
implement company policy and formulate strategy which affects the running and profit-
making ability of a business.
 Employees- They can influence the success of an organisation by their productivity and
efficiency in the job, duties and tasks they do everyday.
 Suppliers – Suppliers can change credit terms which may have cash flow issues for a
company and they could decide whether or not to allow discounts for bulk orders or loyal
customers.
 Government - It can influence a firm by introducing new laws that can affect operations
such as the National Minimum Wage, or they can raise Corporation Tax which would eat
into a firm's profits.
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(Source: Stakeholder mapping, 2014)
Apart from this, stakeholder management is very critical for growth and success of every
project. If forces managers to to implement right people at right people for gaining better
strategic results. While formulating any strategies at workplace, managers need to keep in mind
the interest of all stakeholders. It is really accessible in achieving strategic goals and objectives
from competitive market.
2.4 Develop a new strategy
In order to gain high competitive advantages and market expansion, it is essential for
manufacturing industries to limited growth strategy. It helps Volkswagen to application and
maximum utilisation of available resources. Limited growth strategy focuses on market
expansion and advancement of the company. As Volkswagen wants to establish itself in new
market by producing new products; so as firm has to adopt a new strategy in order to enhance
market sales. In addition, it is also helpful in successfully implementation and commercialisation
of new products (Bharadwaj and et. al., 2013). Limited growth strategy is able to expand,
enhance and optimise production facilities of the firm. It is divided into four parts, such as - Market penetration – In this, business organisations serve their products in current
market to their existing customers. The market penetration strategy emphasis on
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Illustration 1: Stakeholder analysis

maximising sales revenue by promoting products among target market. However, there
is no changed in products and customers' demand. Market development – Here, firm choose a new market so as to sell its existing products
and services. In other words, in market development strategy products remain same but it
is going to sell to new buyers. Along with this, it also refers the alternation so as to boost
effectiveness of new sections. Product development – In this, Volkswagen makes a plan so as to expand its products
and services by replacing other ones. Afterwards, new products are marketed to existing
buyers for enhancing sales and profits of the automotive industries.
 Diversification – It consists to change the overall business plans so as to gain high
market growth and success from competitive market.
Apart from this, porter's generic model is also helpful for Volkswagen to gain high
competitive advantage over rivals by providing greater and valuable products to customers.
These strategies are able to extend the scope of business activities and differentiate firm's
products to other competitors (Burlton, 2010). Porter's generic model is classified in four
categories, such as: - Cost leadership – The prime motive of this strategy is to produce lowest cost products
over the industry in order to attain high number of customers. Cost leadership is the
traditional methods that enables a firm to exploits itself in economics of scale. Cost focus – Here, Volkswagen can take lower cost benefits but in small market
segmentation. Such products are as similar to branded and high rates products Differentiation focus – It is the aim of business to differentiate their products than others
in a small market. Differentiation focus is known as classic niche marketing strategy
which helps business to establish themselves in small market segmentations and gaining
higher competitive advantage.
 Differentiation leadership – The business strategy refers to select one or more criteria for
buyers in target market.
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TASK 3
3.1 Alternative strategies related to market growth entry, substantive and limited growth
Below mentioned some alternative strategies that can used by Volkswagen for expand
itself in competitive market: -
Market entry strategies -
Organic growth – It objective is to grow as well as diversify in market by building
capabilities and abilities. Likewise, Volkswagen regularly develop innovative cars by having
effective models or designs (Campbell, Edgar and Stonehouse, 2011). The strategy is adopted
by those business organisations where technical products are produce and serve.
Merger or acquisition – In merger, two companies are joint together and their functions
also so as to perform effectively in target market whereas in acquisition a company overtake
another one. In addition, merger and acquisition are strong strategic approaches in order to attain
and retain specific goals and objectives of the firm.
Substantive growth strategies -
Horizontal integration – It occurs when a company merge with another in order to add
value in itself. It seems that two strong business organisations can well appeal or respond quickly
towards market actions.
Vertical integration – It seems as the situation when a company has its own supplier and
distributor. Vertical integration protect resources and serve products at very lower rates than its
rivals.
Diversification – It seems as when a firm decided to make fully new products and sell
them in new target market. There are two types of diversification, such as- related or unrelated
(Chang and Chuang, 2011).
Limited growth strategy
The strategy is considered when a firm has limited market share but it wants to expand its
market share by producing new and innovative products. Apart from this, limited growth strategy
is divided in four parts, such as -
 Market penetration – Existing products will be sale in current target market by adopt new
promoting techniques.
 Market development – Existing trades will be served in new market or new customers.
 Product development – It involves new products are going to be sell in existing market.
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 Innovation – Producing new products for new market.
3.2 Justify the selection of new strategy
The strategy that is pick up for Volkswagen can be evaluated on three parameters, that
are able to identify the success of business strategy: - Suitability – It can analyse the best strategy for Volkswagen and also assesses the current
issues that are being faced by Volkswagen. The new strategy is appropriate for the
company because it helps in reducing further challenges while establishing a brand image
and downward revenue trends etc. Feasibility – It is accessible in recognising the competencies and abilities of a company
so as to deliver new strategy. There are three types of feasibility, such as –
implementation of strategy, financial feasibility and resource assessment (Cinquini and
Tenucci, 2010).
 Acceptability – It helps in examining the accurate performance of the strategy whether it
will be succeed or failure in target market. With the assistance of acceptability, managers
can monitor that the strategy is capable to meet needs and wants of the stakeholders of
the firm.
TASK 4
4.1 Roles and responsibilities of the person who are involved in strategic implementation
In business environment, the success of the process of strategic implementation is totally
pivots on effective leadership. Managers, leaders, employees etc. are responsible for managing
each and every activities of strategic planning. Such persons also provides certain ideas in order
to gain market expansion or prosperity in a minimum time period. Below mentioned the roles
and liabilities of persons those who are chargeable for strategic implementation process: - CEO – Chief Executive Officer of Volkswagen has an authority to implement or refuse
strategic plans. He is known as head of the business family who can adequately run its
functions and activities. The person assign roles and responsibilities accordingly the plan
so as to complete all activities in a systematic manner (Coad, 2011). Along with this,
CEO also assesses employees' performances and productivity; he organise necessary
training sessions for employees as per the requirement of strategic plan. Senior managers - It involves the category of middle level persons. It the liability of
senior managers to respond quickly towards the process of the strategic implementation.
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These people consult future plans and policies with CEO or top management and follows
their directions. Therefore, it can be said that, “Middle level managers do justice with
strategic implementation”. Senior managers are worked as a communicator between low
and top level management. In addition, while formulating any strategy, managers gives
various guidances and feedbacks for essential rectifications. Lower level employees – The area of low level staff members is highly noticed.
Employees are liable to fulfil all activities and operations of a strategic plan in a
systematic manner. Due to their hard work and dedication, any company can achieve its
goals and objectives. Lower level employees also helps in proper alignment of strategic
operations by their full contribution.
 Experts and Specialists – Several business entities take help of some experts in order to
make a strong business strategy. For this purpose, they are charged a certain amount. The
role of these specialists is to examine future market condition and give appropriate
suggestions to deal with them.
4.2 Resources requirements in the strategic implementation
There are required various resources in strategic implementation within workplace. There
is given some major resources of Volkswagen that helps it to make effective strategic plans and
policies: - Human resources – It is necessary for efficient utilisation of human resources so as to
make an impressive business strategy. For this purpose, managers have to provide
training and development to their staff members to improvising their abilities and current
skills. Business owners also have to know needs and wants to their employees and trying
to fulfil them in the best possible way (Dong-Hun, 2010). This will help in attaining and
retaining workers for a long term period. Physical resources – In this modern era, there are various tools and techniques are
evolving day by day. It is must for managers to have strong machinery for better
production.
 Financial resources – Strong financial is required in order to promote strategic
operations and activities around the globe. Any company can generate finance for good
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