Business Report: Volkswagen Group Expansion in Switzerland Analysis

This business report examines the Volkswagen Group's potential for expansion in Switzerland, focusing on increasing sales of the Volkswagen Golf. The report provides a detailed background on Volkswagen, including its history, global presence, and key competitors. It then delves into the Swiss business environment using a PESTEL analysis, evaluating political, economic, social, technological, environmental, and legal factors. The report also assesses the impact of opportunities and threats, considering factors such as purchasing power, competition, government regulations, and the diesel scandal. The report concludes with an analysis of the market's attractiveness for Volkswagen, offering insights into the company's strategic positioning in the Swiss market. The report uses data from 2016-2019.

Running head: BUSINESS REPORT OF VOLKSWAGEN
Business organisation report of Volkswagen Group (2016-2019)
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BUSINESS REPORT OF VOLKSWAGEN
Table of Contents
Introduction..........................................................................................................................2
Background information of Volkswagen.............................................................................2
Discussion on the business environment in Switzerland.....................................................2
PESTEL Analysis of the business scenario.........................................................................7
Impact of opportunities and threats.................................................................................7
Attractiveness of the market............................................................................................8
Conclusion.........................................................................................................................10
Reference list.....................................................................................................................11

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Introduction
This report is going to address on the scope for the expansion of Volkswagen group in
Switzerland and increasing the sale of Volkswagen Golf. PESTLE and Porter’s five forces model
will be used for the analysis of the report.
Background information of Volkswagen
Volkswagen is an automobile industry which is situated in Germany. It was established in 1937
by Ferdinand Porsche (Crête 2016). The Headquarter of Volkswagen is situated in Wolfsburg,
Germany. Volkswagen is a German word which stands for “people’s car” and the present slogan
of Volkswagen is “Das Auto” (Crête 2016). At present the chairman of the company is Martin
Winterkorn. The top three best selling cars globally are: Volkswagen Golf, Volkswagen Passat,
and Volkswagen Beetle (Oldenkamp,van Zelm and Huijbregts 2016). The company comprises of
an approximate 3658500 employees and the company’s revenue is 94.7 billion euro
(Oldenkamp,van Zelm and Huijbregts 2016). It is considered to be one of the top car
manufacturers globally. Volkswagen owns many automobile companies like Audi, Lamborghini,
Bugatti, Porsche, Bentley and Skoda. Volkswagen has delivered a total of 998,900 vehicles
worldwide to customers which is a decline of 4.3 percent as compared to the results of March
2018. More customers took Volkswagen cars in Europe and North America as compared to the
Asia pacific region and South America (Blackwelder 2016). The increase in the percentage of
sale of 4.3 percent in Europe and North America could not compensate for the steep decline of
sale of 20.1 percent in the Asia pacific region and South America (Blackwelder 2016). Some of
the major competitors of the Volkswagen are: Toyota, General Motors, Ford, Renault Nissan,
Hyundai, Daimler, BMW, Chevrolet, Honda, Subaru and KIA (Rhodes 2016).
Discussion on the business environment in Switzerland
PESTEL analysis

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Political factors
Political factors in the business premises has grown to a great extent in the 21st century.
In case of international business the political forces plays an important role. Starting from
international relationships in trade to the foreign supply chains everything is dependent upon the
global political atmosphere in many regions which in turn effects the probable as well as the
performance of the business. Companies like Volkswagen with their spread all around the world
have their source and their system distribution all over the world. The stock chain of Volkswagen
is situated in various markets due to which the political turmoil can hamper the business of
Volkswagen so the political stability in regions is very important to run the business successfully
(Rhodes 2016). Switzerland is among the top three countries which is considered to be politically
stable at present. It is a great market opportunity for Volkswagen to increase its business in
Switzerland.
Economic factors
Economic factors play a significant role in the growth of a business in a particular
country. The variation in the financial development or a deterioration in the economic activities
leads to a decrease in the loss and demand in the sales. During the decrease in the economy the
request for the vehicles in the market decreases drastically which effects the revenue of the huge
brands like Volkswagen. During these periods of decline in the economic the number of
employees gradually decreases which causes fluctuation in the profit of Volkswagen.
Volkswagen endured from the huge setback from the diesel scandal and it have backed up again
in the next year. Volkswagen Golf has been leading the charts in sales in Switzerland for huge
span of 23 years (Siano et al.,2017). Since 1993, Golf has been defeated in the top position only
twice by Opel Astra in 1993 and Skoda Octavia in 2017 (Siano et al.,2017). This clearly the

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shows the stronghold of the brand in the country. The last 3 years annual GDP growth of the
company is shown in the following table:
Year Annual GDP GDP Growth (%)
2018 705,501M $ 2.5%
2017 679,011M $ 1.6%
2016 670,247M $ 1.6%
The per capita GDP of Volkswagen in Germany is $ 41,106 (Charles Jr,Schmidheiny 2017).
After the emission scandal in 2015 Volkswagen announced to cut down the number of
employees by 30,000 in the following five years (Muratovski 2015). According to the statement
of VW this is due to the movement of the company towards the digital mobility and introduction
of electric vehicles. There has been a rise on the inflation in Volkswagen and the workers has
received a considerable rise in their salary. The standard rate for new cars of Volkswagen
Finance Private Limited is 9-10 percent per annum and for used cars it is 13 to 14 percent per
annum (Hair Jr et al.,2015). Volkswagen expects the exchange rate of euro to be stable against
the US dollar.

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Social factors
In the 21st century the social factors plays a crucial role in the development of a business
industry. The buying habits and the preferences of customers depends on the sociocultural
factors of a country. The sociocultural effects both the sales and the marketing of a company.
This is the reason different brands needs to create the sales and marketing strategies in advance
to meet the needs and differences in the market cultures. Due to the change in the market sales
strategies the trend in the sales has to be changed consequently. Nowadays people have more
interest in purchasing the maintainable products due to which the trades of electronic vehicles
has been growing up. Volkswagen Golf has been the perfect family car for a normal household
due to which there has been a huge sale of the car in Switzerland in past years (Goel 2015). As a
whole the rise in the social-cultural factors in a business industry has kept on rising.
Technological factors:
In the automobile industry technology plays a vital role. The success rate of an
automobile industry is always reliant on how technologically progressive the company is. From
the emergence of AI to programmed driving, the locomotive marques are in a constant
competition with each other. Volkswagen has acquired the stake in the German Research Centre
for Artificial Intelligence. At the Audi Business innovation centre the company focusses on
emerging different concepts for the metropolitan agility for the upcoming (Hanouz,Geiger and
Doherty 2014). Aside from all the improvements the company is bringing into its brands and
commercial sections the brand is also capitalising in the revolution for better client gratification.
The company is capitalising more and more for the introduction of recyclable and the harmless
rides into the marketplace. The company has also participated in efficient technological
industrial and delivery process than its rivals. Overall in the automotive industry the role of

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technology is has become the central area where the companies must invest for determining the
level of their success.
Environmental factors
The pollution all over the world has reached a high level forcing the governments to
implement different policies on the pollution emitted by the vehicles which has to be met the
automobile industries. Environmental factors is a major factor which plays a vital role in the
motorized industry. In some markets of the world large penalties are implemented on the
companies who cannot abide by the rules. In 2015, Volkswagen recalled millions of its cars
because the company did not meet the emission standards. This ensued in a huge harm of the
company in billions. The Swiss customer protection group trailed a right on the request of 6,000
car owners who wanted to get damage during the emission scandal (Kompalla and Kopia 2015).
But still the company was able in holding its ground by next year. All around the word the laws
have ben toughened on the environment emissions especially in the developed countries which
has made it obligatory for leading brand like Volkswagen to centre on implementing the replicas
which are more atmosphere welcoming.
Legal factors
The legal and the regulatory framework of different countries including Switzerland has
become more and more tighter which has led the brands to face huge risks for compliance
ranging from the fields of labour to environment as well the safety of the driver. Volkswagen has
already lost a lot of its money in the diesel scandal due to which millions of models of
Volkswagen has been recalled and billions of fines were paid by the company. A lot of
Volkswagen Golf has been called off during the scandal which resulted the company in losing

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the spot for leading car sales in Switzerland for a span of 23 years (Kompalla and Kopia 2015).
Volkswagen was found consuming the defeat devices for avoidance of the emission tests.
Governments globally as well their laws are tightening on the emission control and are detecting
even the smallest factors for preventing the overlook of the laws which are conducted by the
different automobile industries. Thus the part of legal issues in the automobile industry cannot be
neglected.
PESTEL Analysis of the business scenario
Impact of opportunities and threats
Opportunities Threats
 Purchasing power is increasing
 Possibility of expansion
 Increase in the fuel efficiency
 Modern and innovative design
 Introduction of fuel efficient cars
 Upset of brand reputation
 Increase in competition
 Government regulation
 Emission issues
The main compensations of Volkswagen is quiet comparable to different car brands
which is the increase in the purchase of automobiles every year. Owing to the several structures
which are tossed by the vehicle bands the purchase of cars for consumers has become a necessity
rather than being an expensing thing to own in the past years. The demand will always be rising
with the GDP along with the rise in the need of the product (Okkonen et al.,2013). Looking at
the past sale of Volkswagen Golf it is safe to say that the more the company taps in the
opportunities of the increased demand of the car the more profitable it will be. Volkswagen also
needs to learn more and more about the local market of Switzerland and alter their product as per
the interest of the local market. Introduction of electric cars in the market by Volkswagen will be

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keeping the company in the growing competition of the body. Since the brand has faced a
scandal like of the diesel scandal in the past so it is very important for the company to come up
with new ideas to stay in the market by producing some great products which will be fuel
efficient and will attract more customers. Designs are always considered to be the main attraction
of an automobile. Hence bringing some changes in the designs of the Golf might attract a good
deal of customers.
One of the main threat which can be faced by the company is the major hit the company
took on its reputation during the emission scandal in 2015 (Mačaitytė and Virbašiūtė 2018).
Once the clients had to give back their cars they were not assured enough to purchase products
from the same company anymore. Volkswagen has to expend huge amounts of money on its
board members for building up their brand strength. The competition from different companies
will keep on being one of the major threat factor for Volkswagen. The regulations of government
policies for fuel emissions in different countries is one of the challenging factors for the
company since the government will always want to protect and to support the car companies of
their own countries over the international car manufacturers since the government will always
want to keep the profit to be kept within the country. With the change in different government
policies every year it will be a challenge for the company tom keep up with the policies as they
will have to change their own policies to abide by the guidelines (Holland et al.,2016).
Introduction of hybrid cars by other companies regularly can pose a threat for Volkswagen as
they might fall back in the competition (Muheki et al.,2014). The change in the emission laws
can be fatal for the company since they are already in the radar of the emission laws and the cars
of Volkswagen will always be scrutinised strictly and a minor fault will cost the company by a
huge margin.

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Attractiveness of the market
Porters five force analysis
Bargaining powers of the consumers (low)
The negotiating command of the group of Volkswagen suppliers collection is little
because of the scattering of Volkswagen suppliers throughout the world and even the suppliers as
well as the subcontractors has to follow the rules which has been made by the company. The
negotiating power of the suppliers is also small since the company will be able to switch to other
suppliers. Other than training its suppliers the company even prizes only the very finest amongst
them.
Bargaining power of consumers (high)
In the 21st era the brokering powers of the consumers has enlarged significantly because
of many features like the presence of many alternative varieties in the bazaar and the consumer
of the 21st period us a up-to-date consumer as compared to previous times since the consumer
will justify all the areas before buying a product like the quality, safety, environment friendliness
as well the fuel efficiency (Johansson,Christiernin and Pejryd 2016). Volkswagen has to adapt
itself for handling these kind of problems to stay as one of the leaders in the automotive market.
The prices of the vehicles need to be at par with the competitors as well as the specifications
must be attractive for the customers so that they tend on the company’s product rather than on its
rivals. Other than the magnitude of the specific procurement the overall bargaining power of the
consumers is remaining high in the automotive industry right now (Verschoor 2016).
Threat of substitute products (moderate)

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There is a high rivalry in the marketplace due to the presence of various other companies
in the automobile industry. Apart from other option which act as a substitute for the Volkswagen
vehicles is the public transport. The things that helps the company in overcoming these threats is
its brand name and the financial strength. Due to the presence of its stylish products as well as
good quality product Volkswagen can easily fight with this threats. The complete risk of
substitute product is moderate for the company.
Threat of New Entrants (low)
The peril for Volkswagen in this segment is very little due the barriers which makes it
nearly impossible for any other brand to arrive the market. The complete threats from fresh
brands is basically tiny.
Intensity of rivalry in the industry (high)
The power of the opposition in a locomotive business is always very high since the
number of competing brand is always very high and many provides identical products with the
same level of excellence and proficiency (Hunke and Prause 2014). Volkswagen has to spend
more in marketing to stand apart from its rivals and provide more than average products
experience to its customers. Overall the intensity of the threat from the rivals is very high.
Conclusion
Being one of the important competitors in the vehicle trade Volkswagen has a lot of
places where it can expand its business in Switzerland. Volkswagen Golf is the most sold cars in
the history of the country (Kaiser,Stocker and Viscusi 2017). After the scandal of the emission
the company has picked itself up which shows that the company is capable of maintaining its

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grounds. In the competitive market of automobile industry Volkswagen has been a good leader
and a tough competitor for the other companies.

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