Volkswagen's Innovation Strategies in the Automotive Industry Report

This report presents an in-depth analysis of Volkswagen's entrepreneurial ecosystem, focusing on its innovation strategies within the automotive industry. The study examines Volkswagen's history of innovation, highlighting its adaptation to changing market demands, technological advancements, and legal challenges. The report provides an overview of the company's operations, market position, and competitive landscape, including key competitors such as Toyota and General Motors. It delves into the factors driving innovation at Volkswagen, such as legal issues related to emissions and evolving customer preferences. The analysis incorporates various models, including PESTLE and Porter's Five Forces, to assess the political, economic, social, technological, legal, and environmental factors affecting the company, as well as the competitive dynamics within the industry. Furthermore, the report utilizes SWOT analysis to evaluate Volkswagen's strengths, weaknesses, opportunities, and threats. The findings showcase the company's innovation performance, capabilities, and key performance indicators, emphasizing the role of technology and skilled workforce in achieving business success. The report concludes with a comprehensive understanding of Volkswagen's strategic approach to maintain its position in the competitive automotive market and explores the company's future prospects.

ENTREPRENEURIAL
ECOSYSTEMS

Executive Summary
Present report is based on analysis on Automotive sector brand Volkswagen which has its
business operations at global level. Overview of company is provided in which it is clearly
determined that the organisation mainly deals in manufacturing luxurious and high quality
vehicles and has established its plants in different countries across the world. Research was
conducted with an aim to provide understanding to learner about the strategies applied by
organization to achieve growth and expansion of business operations. Findings of research
provides information that company has achieved the highest growth in market as compared to
competition due to its high quality products and services. Executives of Volkswagen was
targeted and they have provided information that company and its management believes in
innovation. The organisation has been ranked among top ten 10 companies in terms of its sales.
It has been determined that Volkswagen is expected to cross approx. 99 million unit sales by the
year 2019. Various important theories and models was used by scholar which has provided
understanding about factor that affects business growth. Company is also facing intense
competition in Automotive sector because there are various substitutes brands available in
market. In order to sustain its business, company will apply effective remove all its weaknesses
and sustaining its growth in market.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
OVERVIEW OF INDUSTRY AND COMPANY .........................................................................1
Company Overview....................................................................................................................2
INNOVATION HISTORY OF VOLKSWAGEN ..........................................................................2
REFERENCES................................................................................................................................8

INTRODUCTION
Entrepreneurial ecosystem is defined as economic as well as social factors in the business
environment which influence or effect entrepreneurship. It also refers to the combination of
interdependent variables which are coordinated in such a manner that allow entrepreneur to
become more productive by conducting new activities. This activity drives entrepreneur as well
as firm towards the achievement of success. Innovation is defined as the creative thinking which
helps entrepreneur in resolving several business problems. This strategy is adopted by an
organisation that can bring tremendous as well as positive improvement within an enterprise.
Innovation is used as a tool by the entrepreneur in order to gain strategic advantage.
The objective of project is to develop understanding about concept of innovation and its
importance within business. Assignment also focuses on analysing the impact of innovation on
business in context of Volkswagen.
OVERVIEW OF INDUSTRY AND COMPANY
Volkswagen is operating business in auto mobile industry which is at a very big. This
sector is contributing a lot towards economic development of nation as well as generation of
employment in the country. Favourable economic, legal as well as political condition in nation
has provided business entity a chance to manufacture car and deliver the same at reasonable
price to customers. The organisation has been ranked among top ten 10 companies in terms of its
sales. It has been determined that Volkswagen is expected to cross approx. 99 million unit sales
by the year 2019. Increase in profits, sales and skilled as well as talented workforce has
encouraged business entity to facilitate innovation and take risk of developing new products. The
major issues faced by firm is regarding managing market transition.
Due to change in demands of customers and change in market situation, an enterprise is
facing difficulty in maintaining balance between demand and supply. As the company was
earlier using the traditional technology, due to which business entity has to face the clients'
complaint regarding the quality of products or services. Due to high emissions of cars, the
business venture has to face legal issues. As emission from has negative effect on the
environment as well as on heath of people in society. The major competitors of Volkswagen are
Toyota, General motors, Ford, Nissan, etc. This company has been selected has Volkswagen has
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adopted the various new techniques for selling the cars at reasonable price (Van Lancker,
Wauters and Van Huylenbroeck, 2016)
Company Overview
Volkswagen is considered as the leading organisation dealing in auto mobile industry.
Business entity designs, manufactures and distributes commercial as well as passenger vehicles.
An organisation is originally operated by German Labour Front.
INNOVATION HISTORY OF VOLKSWAGEN
Volkswagen is a Multinational Corporation operating in automobile industry. Business
entity has been ranked at third position in terms of the largest vehicle manufacturers across
world. Several drivers such as change in demand of customers, social trends and advancement in
technology has encouraged firm to develop new products. In other words, innovation skills have
provided business venture an opportunity to increase sales and profitability. It has also provided
firm a chance to attract new customers and develop a strong relationship with them. But changes
in social, economic, environmental and political factors in business environment has created big
hurdles in implementing the innovation procedure. Volkswagen started manufacturing cars
during 19th century.
Company has planned to expand business in 1950. Their first car which was
manufactured by Volkswagen was Benttle. After getting successful, Volkswagen made many
modifications in benttle. The business entity then formed rear engines with modular design and
engineering. During 1970, Volkswagen has planned to pull out from rear engines replacing them
with front wheel drive engines. Innovation is the factor which has allowed firm to expand
business operations. In 1994, Volkswagen has introduced the new concept that is one car. The
design of vehicle was same but it was completely a different car which was based on golf model
(Tootling, 2017)
During 20th century, changes in technological and legal has forced company to adopt new
techniques for manufacturing car. The business entity in order to eliminate legal issues has
planned to adopt advanced technology and new methods for improving the performance of
vehicles and development of new models of cars. Marketing team in Volkswagen has conducted
research in order to analyse the demand of customers. This factor has supported the firm in
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identifying area of improvement and need for product development. These strategies have
allowed company to become leading manufacturer in auto mobile sector.
In the present scenario, an organisation has focus on manufacturing hybrid cars. The legal
issues which have to be faced by the firm due to emission from the cars has forced an enterprise
to produce new cars or make modification in existing vehicles. Now, the entrepreneur in
Volkswagen is planning to implement innovation in their operational activities.
Factors which has driven firm towards innovation
The first factor which has forced Volkswagen to facilitate innovation is legal issues
which has to be faced by company due to emission from vehicles which has an adverse effect on
the society as well as on environment. Other factors which have encouraged business entity to
facilitate innovation are changes in social factors such as increase in unique demand by
customers, trends, etc.
Engaging with dimensions of Innovation Space and associating this with form of
Innovation strategies
There are mainly four Ps in innovation space model such as position, paradigm, product
and procedure.
Procedure - The process includes techniques used by firm for manufacturing of product or
services. Volkswagen has made major changes in production process to bring improvement in
the quality of products. Volkswagen company has adopted proactive strategy.
Product - New models of cars have been introduced by Volkswagen to attract new customers
and retain relationship with existing clients. Passive innovation strategy has been adopted by
company which has enabled firm to identify needs of customers and fulfil the same.
Position - Volkswagen has focus on increasing the market share. Innovation of new products has
allowed business entity to achieve the leading position in industry.
Paradigm - It provides guidelines related to the implementation of innovation in procedures.
Business venture emphasizes on the operational activities (Johnson, 2016)
PESTLE analysis
Political forces: These variables have majors effect on business operations, plans and policies.
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Legal factors: These forces have direct impact on the business performance and reputation of
organisation. Volkswagen has adopted the strategy for fulfilling corporate social responsibility
and eliminating legal issues.
Environmental factors: These variables have become an important issue and increased the risk
of legal obligations on companies dealing in auto mobile industry. As rigid regulation has been
developed by legal authority considering the health of people and in to protect environment from
degradation.
Social factors: Volkswagen is participating in social, cultural and other activities with the
intention to promote products or services and generate brand awareness.
Technological factors: Volkswagen has implemented new technology at workplace which has
supported business entity in increasing productivity and improving the quality of goods.
Economic factors: The changes in economic condition of country have sometime proved to be
beneficial as well as biggest challenge for an organisation. Due to changes in economic
condition, company has been forced to reduce the profit margin as well as lower the prices of
products or services.
Porter’s five forces model
This is a useful tool to analyse the attractiveness of industry in which company is
operating.
Bargaining power of buyer - This is low as company is already offering good quality products at
reasonable price to customers.
Bargaining power of supplier - The supplier has low bargaining power as Volkswagen is
manufacturing their own products. But business entity is dependent on suppliers for obtaining the
raw material.
Threat of new entrants - There is less chances of entry of new companies. As Volkswagen is
operating in big industry which requires huge capital investment which will be not possible for
small firm to do so.
Threat of substitute product - There is high chances of substitution. As there are big companies
in the auto mobile companies which can produce substitute products. In auto mobile sector
customer can use two vehicles as substitute.
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Competitive rivalry - There is high level of competition in the industry. It will continue to
increase in the future as well due to advancement in technology.
Volkswagen innovation performance and Capabilities
Business entity is growing at very high rate in the industry. An organisation has adopted
the advance technology for developing new products. These new techniques have supported firm
in bringing improvement in the quality of products, policies, procedures and other business
system. Research and innovations are the two activities which have enabled enterprise to
improve the business performance. It has also aided firm in controlling the cost of production
and minimising wastage of resources. These factors have also enabled the business venture to
deliver high quality products at reasonable price to customers. Technology has provided
cooperation and opportunity to gain competitive advantage. Besides this, macro as well as micro
environmental factors have affected the performance and capabilities of Volkswagen for
facilitating innovation (Schulze, 2015)
Swot analysis Strengths -Volkswagen has strong brand image as well as reputation in the market.
Company is offering wide range and variety of goods or services. Skilled and talented
workforce. Effective management system. Offering products as well as services at low
price. Weaknesses - One of its weaknesses is scandal that highly affected its brand image.
Defects in the vehicles. Ineffective production system. Inappropriate marketing strategy.
Low market share. Threats: Increase in intensity of competition. Amendment in government norms.
Changes in the prices of products or economic condition of country.
 Opportunities: Business entity has an opportunity to expand business. Volkswagen has a
chance to develop hybrid cars or new model of vehicles. Company can utilise renewable
resources in production procedure.
Key performance indicators
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Highly talented and skilled workforce has supported firm in achieving success and
accomplishing desired goals. Technology has enabled firm to increase productivity and working
efficiency. It has also provided business venture an opportunity to gain competitive advantage.
These are some factors which have enabled firm to gain popularity and achieve leading position
in the industry. An organisation has also utilised the process and risk model which has aided
business entity in identifying the threat as well as opportunities when planning for innovation.
This model assists the entrepreneur in transforming ideas quickly into products. It also offers
variety of solutions related to innovation in goods, accountability. Every phase in this hypothesis
is designed to gather information about the activities which are required to be executed to
continue project in a smooth way. This model has been applied by Volkswagen in operational
activities which has supported company in eliminating defeats in goods. It has also helped
business entity in maintaining quality of products and reduction in wastage.
Value chain analysis
The Volkswagen company manufactures vehicles which have innovative features. this
has been possible due to the availability of resources. Volkswagen is very much concerned about
introducing new features in products rather than attracting the customers by lowering the prices
of cars. The purpose of an organisation behind innovation is to earn higher profit and increasing
sales. Moreover, their value chain activities are based on the location of business (Murthy, 2017)
Automobile industry in 2017
It has been identified that Volkswagen is performing well in the industry and able to
achieve leading position in market. Business venture has planned several strategies to bring
improvement in business activities, plans, policies and procedures. New innovations like
autonomous driving and electrification in the car will be introduced. In the year 2017, there will
be a big change in the automotive industry as there are number of variables that has been
innovated in the market by several brands. While, on the other hand, there are diverse events that
might create hindrance in the growth of UK’s auto mobile industry in 2017. As of 2017, some
big innovations in auto mobile industry that could took place include introduction of smart
vehicles, Google driver less cars, Technology for Pre-Collision etc. Due to continuous
innovation in products, Volkswagen has able to capture wide market share and has foster growth.
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Volkswagen and several other companies in Auto mobile industry are taking high initiative to
provide good driving experience to customer (Rudzinski, 2014).
CONCLUSION
In this report, it is concluded that Automotive sector brands are facing intense
competition in UK due to increase in growth opportunities and availability of substitute brand in
market. Volkswagen is a leading brand in Automotive sector which has achieved growth in
business operations. For achievement of growth in business operations company mainly led its
emphasis on application of new and innovative ideas in development of products and services.
Innovation skills have provided business venture an opportunity to increase sales and
profitability. It has also provided firm a chance to attract new customers and develop a strong
relationship with them. Company has also applied various important business strategies to
differentiate their Vehicles in market as compared to competitor. External environment analysis
of company was conducted which has provided understanding that company's decisions are
highly influenced by policies of government related employment, Emission , interest rates and
other political decisions. After emission Scandle, company has changed its policies towards
regulation of green business.
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REFERENCES
Books and Journals
Schulze, A., 2015. Introduction: knowledge generation and innovation diffusion in the global
automotive industry—change and stability during turbulent times. Industrial and
corporate change. 24(3). pp.603-611
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Tootling, F., 2017. Networking and project organization in the Styrian automotive
industry. Proximity, Distance and Diversity: Issues on Economic Interaction and Local
Development. p.89.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy.90.pp.60-69.
Murthy, J.J., 2017. Managing Innovation and Developing Intellectual Property Strategies for
Firms. SIES Journal of Management.13(1).
Rudzinski, C. V., 2014. Volkswagen: Open Foresight at the Front End of Research Innovation.
In Management of the Fuzzy Front End of Innovation. (pp. 295-299). Springer, Cham.
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