Business Strategy Report: Analysis of Volkswagen's Strategic Position

This report provides a comprehensive analysis of Volkswagen's business strategy, addressing the challenges and opportunities facing the company in the wake of the diesel emission scandal. It begins with an introduction to business strategy and its importance, followed by an organizational audit u...Read More

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
COVERED IN PPT................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Strategic positioning of Volkswagen by an organisational audit.....................................1
2.2 Environmental audit for VWAG......................................................................................3
2.3 Significance of stakeholder analysis during formulating a new strategy.........................3
2.4 New strategy for VWAG..................................................................................................5
3.1 Alternative strategies for market entry, substantive growth, limited growth...................5
3.2 Justification for selected strategy.....................................................................................6
4.1 Roles and responsibilities of charged person in strategy implementation.......................7
4.2 Resource requirements for implementing new strategy...................................................7
4.3 SMART targets for VWAG for achievements of strategy...............................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
.......................................................................................................................................................11

INTRODUCTION
A business strategy is a plan which covers a long time of period to attain targeted
objectives with in time limit for an organisation (Woodcock, Green and Starkey, 2011). Each and
every corporate sector company is having a business strategy which is having all factors like
increase in profits, market share, reduce market rivalries etc. as it sets an action plan for
company so it is having a huge significance for business entity, it is drafted by board of directors
with help of other managers on the basis of needs of company. This report is having based up on
Volkswagen which is world famous German car manufacturing company. This is second largest
car seller company after Toyota in the world. In 2015, Environmental Protection Agency had
found that manufacturer is cheating and working against government policies in US.
Volkswagen had assembled Turbocharged Direct Injection diesel engine which controlled
emission during laboratory test and in real conditions it emits 40 times more Nitrogen Oxide
which was not acceptable according to Clean Air Act. So now company wants to regain trust of
their customers by providing a better car without making any cheat from government and
consumers. This report is having Internal, external and stakeholder analysis, a new business
strategy, suitable market entry, substantive growth and limited growth strategy for the company.
At last it is having content on people which are charged to implement business strategy in whole
organisation, resources to implement strategy and SMART objectives for company.
TASK 1
COVERED IN PPT
TASK 2
2.1 Strategic positioning of Volkswagen by an organisational audit
Strategic positioning means where an organisation wants to be after a particular time in
their future (Chang and Chuang, 2011). Each and every company is having a mind set where
they want to be at a position. So it is essential for VW to make a proper audit of internal
environment which can help to them to reputed position. SWOT analysis can be helpful in this to
conduct an organisational audit:
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STRENGTH:
Brand name: Volkswagen is second largest car seller company and number in German car
manufacturer, so they are having a huge brand image among people which love cars.
Experienced employees: As they are working from 1937 so they are having huge experience in
this sector. Their trusted employees can perform better as per needs of market conditions.
Technology: They are having a superior technology in car manufacturing and all
manufacturing process is done by robotic arms which creates less chance of errors while
manufacturing.
WEAKNESSES:
TDI technology: This is a technology which they used to cheat with their customers, it has
made a loophole for them (Meskendahl, 2010). It broke trust of customers so they have to
regain it by taking an appropriate action upon it.
Higher rates of car recall: They had higher car recall which is a weakness of company and it
shows that they are having a huge need of improvements.
OPPORTUNITIES:
Interest in car: New generation is having a huge interest in cars so it can be an opportunity for
them and they can make them buyers by making a superb car as their expectations.
New markets: They can make their presence where they are not working. New markets are
having a potential to provide profits and market share.
THREATS:
Market competition: Many companies like; Toyota, General Motors and Hyundai is making
huge a market rivalries for them so it is essential for them to increase their performance against
them (Astrachan, 2010).
Government regulations: After this emission scandal government is now having strict laws for
car manufacturers and they are now taking a sharp analysis of organisation.
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Fuel price: Increasing fuel prices are putting a pressure on them to make better cars with better
performance on lower consumptions of fuel.
2.2 Environmental audit for VWAG
As the company wants to regain their market position and trust of customers so they have
to make an appropriate strategy against it. Many of external factors are making an impact up on
organisation so it is essential for them to make their strategy accordingly. PESTEL analysis can
be helpful in this which is here:
Political: After this scandal, governments are having a strict attitude for them. As they have
recall 4,82,000 cars so now each country's government is having strict action against them
(Teece, 2010). Government policies regarding to pollution control is having a major role to make
a control on them. So now it is essential for them to make a proper change in their technology.
Economical: As they are having focus on general public so it is essential for them to make a car
which is having all features and affordable price range. They have to make a proper cost control
to maintain price of their cars.
Social: As company is having a policy to recruit local people in organisation to make a better
internal communication. After this scandal, people are not having a positive attitude towards
their employees also so they have to make changes accordingly.
Technological: It is essential for company to make a better change in technology because fuel
prices are regularly increasing and rivalry companies are making cars which are huge fuel
efficient as compare with VW.
Environmental: It is having huge impact on company because after global warming because of
pollution and higher emission of Nitrogen which creates an adverse effect on Ozone. One more
thing people are getting more alert for nature conservation so it is necessary for company to
make a better product accordingly.
Legal: Competition law, Consumer protection law, Intellectual property law, emission law and
taxation laws are playing a major role and it is essential for VW to follow these laws by making
changes in their cars and they have to make sure that their cars emits Nitrogen Oxide in limited
quantity as per given in law (Cinquini and Tenucci, 2010).
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2.3 Significance of stakeholder analysis during formulating a new strategy
Before making a strategy for betterment of the future of company so they have to make a
proper stakeholder analysis. It can help to company to identify stakeholders which can be useful
for them for a better formulation and implementation of strategy in actual situations. It is having
a huge significance in formulating a new strategy especially for Volkswagen which is defined
here under these points:
Identification of stakeholders: In this stage some of the major stakeholder comes which are
government, customers, Board members, Technological head of Volkswagen and
environmentalist expert (Pagani, 2013). These members are having huge importance because
company wants to make a car which is having higher pollution control in real driving conditions.
Prioritize stakeholder: In this stage, VW has to prioritize their stakeholders which are
scheduled in a list for this strategy. This is having four parts which are given under points;
 Higher power with interest
 Higher power less interest
 Low power high interest
 Low power less interest
By this, cited organisation can make list of stakeholders and they can give preference to those
which are having high power and interest in this business strategy.
Key stakeholder: Now in this stage VW has to set which are their key stakeholders for the
betterment of their position in market and develop a better car which less emission. It can be help
to them to finalize their stakeholders.
Volkswagen can find out the important stakeholders and they can prioritize them in
accordance to their significance. For example, they can explore their key stakeholders as NGOs
(Like SOS children's village, Confederation of German Trade Unions, BUND, etc.) , politics and
government agencies, Employees, Consumers and suppliers, etc. Therefore, such stakeholders
analysis informs VW strategic planning to achieve a higher grading as by doing this they can
make their strategies in accordance to the main business partners that is mentioned above. Hence,
they can successfully focus on what they should offer them in order to keep them interested
towards their deliverables and services. In addition to this, they can design their product as per
the needs and demands of users and do further modifications in accordance to that.
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Different types of promotional activities should be used by VW. They can use tools or
application of social-media like Face book, Twitter, what's app, you tube, etc. for doing
advertisement. Apart from this, they can also covey their messages by television, newspapers,
articles and many more things.
2.4 New strategy for VWAG
As Volkswagen has decreased their brand value and got a negative image in between
their consumers so it is essential for them to make a better brand image. One more things that
they have to make changes in their car which are having lesser fuel consumption and emission of
Nitrogen Oxide. A strategy is here for Volkswagen to make a better brand image and betterment
of cars:
Study of law: In the first they have to study of law which are related with pollution and
emissions (Klettner, Clarke and Boersma, 2014). They have to consult with their legal experts
and make modifications in their car manufacturing process according to needs as per laws.
Consultation with technological experts: They have to consult with their head of technology
department which can help to them to make necessary change in it. Also they can provide a
guideline to make a better car according to laws. Modifications in manufacturing process and
testing conditions can make a huge change in their cars.
Promotions: They have to make a effective promotions by suitable methods like print,
electronic and social media. They have to promote videos in their targeted customers regarding
to changes which they have made in their cars and manufacturing process after this scandal
(Oltra and Luisa Flor, 2010). This promotion process has to make in parts which can help to
them to make an impression on their targeted customers.
These steps can help to company to improve their cars as per law and by this they can
make needed changes and modifications which got highlighted after this scandal. Promotions
about changes can make a better brand image in between targeted customers.
3.1 Alternative strategies for market entry, substantive growth, limited growth
Alternative strategies for market entry are here:
Direct exporting: Company can make a direct export of their cars in those countries where they
are not having their presence. VW has to make their distributors and agents in that particular
market to convey promotions, marketing and selling activities.
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Licensing: In this, company has to transfer their rights to another enterprise which is interested
to take their licence and sale their products. purchaser of licence has to be equivalent as per
market share of seller company.
Franchising: This is a method which is useful for a unique business concept and for well known
business. Company can give their franchisee in that particular market.
Partnering: VW is able to enter in a new market but it is essential for them to have a proper
knowledge of that particular market so they can make a partnership with those companies which
are already working in this particular sector (Hsieh and Chen, 2011).
Joint venture: This is another form of partnership in which two partner companies make a third
new company like: Sony+Ericsson=Sony Ericsson.
Strategies for substantive growth of company
Horizontal integration: It is related acquisition in between those organisation which are working
in same field. By this VW can increase their market share in a new or same market.
Vertical integration: By this VW can acquire their business with those companies which are
related or not related with this sector. This one can help them to expand their business any how
in any market.
Strategies for limited growth:
Market penetration: By this a company can increase features of their products and services
which can help them to attract customers. Change in limited number of qualities and features can
improve market share and number of customers, as well as it can support organisation to reduce
market rivalries.
3.2 Justification for selected strategy
If Volkswagen wants to expand their business in a new market so they have to use
partnership model by which they can get informations of that particular market (Reinhardt and
Stavins, 2010). By this they can expand their business easily and it is having an another benefits
that they can use this partnership model for a time being after it they can actively work in this
segment. Direct exporting is also can be beneficial for company because they are having a large
manufacturing units in many countries so they are able to enhance their production to export a
near by market. So they can export their cars by Cargo plan and ships. Coming towards,
Strategies for substantive growth; in this Volkswagen can use Vertical integration because they
are having a experience and expertise of car manufacturing and marketing. They just need a
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support to increase a goodwill in that particular so they can use this in substantive growth.
Besides this as per limited growth, minimum changes in cars can help to VW to make a better
cars which is having potentials to make a better cars as per customer's expectations. Most of the
companies are using this to increaser their market share by making modifications in their
products time by time. It can help to manage interest of customers in products and motivates
them to buy a updated car.
4.1 Roles and responsibilities of charged person in strategy implementation
Now as VW wants to make modification in their cars so it is essential for them to make a
list which are charged to implement this strategy in actual conditions (Verreynne and Meyer,
2010). As well as it is also required for cited company to identify roles and responsibilities of
those people which are charged to implement this strategy. So roles and responsibilities with
charged person is here:
 High level authorities : They are liable to design strategies as per the current need of
users so that they can attract large number of consumers towards their innovative
products or services.
 Middle level officers : This includes managers, leaders and others who are responsible to
convey that planning to all the workers so that they can start their work in accordance
with that.
 Communicator: Marketing and production line managers are having charge in this role
because this strategy is mainly based on them. As company wants to improve their brand
image so they have to make an effective marketing on it so they have to communicate
plan in between their subordinates.
 Monitoring: Head of technological teams are having charged to monitor emission of a
huge sample of cars in different road conditions which can help them to make better car
after this scandal.
4.2 Resource requirements for implementing new strategy
Volkswagen has to identify those resources which are required to make a successful
implementation of strategy in actual situation so they have to make a proper list of these
(Nordqvist and Melin, 2010). These are some requirement which can help to VW to make a
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better car with less pollution and by this they can make a better brand image in actual conditions.
Some points are here which are required for this:
Finance: As company wants to improve their cars so it is having a huge needs of funds to make
a better monitoring system of each and every car and they are having necessary changes in car
manufacturing process. To make a better brand image they have to make new advertisements and
videos so they also have to allocate a sufficient amount for this.
Human resources: To make a better brand image among targeted market so it is essential for
cited organisation to make a team for marketing activities and they have to use experienced
people in it to collect right informations from targeted market.
Technologies: Now it is essential for VW to make a better technology in car by which they can
reduce emissions of Nitrogen Oxide.
4.3 SMART targets for VWAG for achievements of strategy
SMART objectives of VW are here for this business strategy to make their performance
better to achieve these,
Specific: After this scandal company has huge decrease in their car sale so they have to increase
their sales by 10% in a year (Hoejmose, Brammer and Millington, 2013). It can help them to
make proper actions according to these targets.
Measurable: Objectives have to be measurable by leaders which can help to them to analyse
their performance as per their targets. As they are having a target to increase their sales by 10%
so this one can help them to measure where they are in current position.
Attainable: Their objectives has to be achievable if not attainable target can be spread a
demotivation among employees which are working under this business strategy. 10% increase in
sales is attainable if company members will collectively.
Relevant: As VW is suffering from negative image among their targeted customers so they have
to make a proper target which are relevant according to their needs. Increase in sales by 10% is
relevant with their business strategy (Parnell and et. al., 2012).
Timely: As company wants to increase sales in a year so now it is essential for leaders and
managers to make adjust their performance as per their needs.
Action plan :
Objectives Resources to be
employed
Roles and
responsibilities for
Time frame
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execution
To determine the
current needs of
consumers
Interviews, Surveys
and other research
activities
Managers and
investigation team
3 Months
To provide training
and development
programmes to
employees
Leaders, Employers,
Funds, relevant
instruments, etc.
Leaders as well as
HRM department
6 Months
To find out the risks
associated with
designed products and
services
Risk analyser
instruments, pollution
detector machine, etc.
Team leaders,
managers, risk
analysing team
4 Months
Manufacturing
deliverables as per the
needs of clients
Workers, different raw
materials, machineries,
funding, etc.
Manager, Leader,
Employees, etc.
10 Months
CONCLUSION
Above present report has been concluded about the Volkswagen which made a cheat with
government and customers related with pollutions. Internal organisational audit is having a
potential to make a better business strategy as per strength and weakness. By this they can create
a better strategy to work on their loopholes. Business strategy can help to organisation to make a
better change in their products and brand image. Different market entry strategies are available
for company but it is essential how a VW wants to enter in that particular market.
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