Volkswagen: Innovativeness and Entrepreneurial Initiatives Report

This report provides an in-depth analysis of innovation and entrepreneurial activities at Volkswagen. It examines how the company, a global leader in the automotive industry, approaches corporate venturing to maintain its competitive edge. The report explores Volkswagen's initiatives in technology development, R&D, and the introduction of innovative features in its vehicles, highlighting the importance of innovation in a dynamic market. It analyzes the company's entrepreneurial intensity, including risk-taking initiatives, and assesses the climate for corporate entrepreneurship within the organization. The analysis draws on secondary data from various reliable sources, including annual reports, peer-reviewed journals, and the company's official website, to evaluate Volkswagen's strategies for sustainable growth and market leadership. The report discusses innovation in technology and R&D, its application in the development of electric vehicles, and the challenges of low-cost models. It also looks into the company's vision to be the most successful and sustainable car manufacturer in the world.

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Executive Summary
This following report includes an in-depth analysis of how innovation and entrepreneurial
activities are applied and maintained at Volkswagen. Volkswagen is running a global
operation penetrating in more than 150 nations; thereby, the business lacks innovation and
corporate entrepreneurship, the sustainability remains as the challenge. So, it is important to
conduct a report to learn the current initiatives of business operation with respect to
innovativeness and entrepreneurship. The purpose of the report is to evaluate innovativeness
and entrepreneurial initiatives in Volkswagens operation. To conduct the analysis, reliable
secondary data has ben used and taken from valid data sources. The findings indicates that to
remain sustainable and competitive in the global environment, Volkswagen pays a significant
attention to technology development to include more innovative features and produce more
vehicles in the shortest possible time. So, the innovation has only been applied to technology
and R&D.

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Table of Content
1. Introduction and company overview......................................................................................4
1.1 Introduction......................................................................................................................4
1.2 Company overview..........................................................................................................4
2. Theoretical Concept...............................................................................................................6
3. Research Approach................................................................................................................7
4. Data Analysis and Discussion................................................................................................8
4.1 Part-A Entrepreneurial intensity......................................................................................8
Risk taking initiative..............................................................................................................9
4.2 Climate for Corporate Entrepreneurship........................................................................10
5. Conclusion............................................................................................................................11
References................................................................................................................................12

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1. Introduction and company overview
1.1 Introduction
This report provides a detailed analysis of frequency and innovativeness in
Volkswagen’s operation as well as assesses how culture and structure of Volkswagen support
innovation and entrepreneurship. Innovation is certainly required in business as the market
environment in each industry has become dynamic. The purpose of the report is to assess
innovation and entrepreneurial activities of Volkswagen with theoretical underpinning. The
current market of automobile sector indicates that customer needs and expectations are
changing, high demands of vehicles causing the entry of new organizations in the sector;
consequently, marketers observe a long-lasting competition among the organization.
Therefore, the organizations are in the need of bringing innovation to the business, which
would help to differentiate themselves from others and provide a set of competitive
advantages. So, this report discusses how innovation and entrepreneurial activities are
introduced and managed in Volkswagen. In order to derive an authentic outcome from the
analysis, the data has been collected from the reliable sources.
1.2 Company overview
The Volkswagen brand is known as world’s most successful volume vehicle
manufacturer. The major brand of the organization maintains the facilities in 14 nations based
on which, the brand produces vehicles for customers in more than 150 nations. Particularly,
in 2013, the brand produced 6.23 million cars (Volkswagen.co.in 2018).
Volkswagen Mission: Volkswagen does not have any official or proper mission statement
but there is a closet statement known as VW’s group and its mission is associated with
company’s overall gaols

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“The goal is to provide attractive, safe and environmentally sound vehicle which could
compete in an increasingly tough market and develop global standards in their respective
class”
Vision Statement
The major focus on positioning the Volkswagen Group as a global economic and
environmental leader among the automobile producers. Volkswagen has four goals that
intend to make Volkswagen the most successful and sustainable car manufacturer in the
world by 2018.
The major purpose of VW’s operation is to serve the world with a product that change
people’s personality and way of living and to meet this purpose, the firm applies innovation
to all its functions and operation. When it comes to innovation, the brand VW receives
multiple accolades for innovation as the aspect of plus X award. The Plus X award remains as
the most leading innovative award in the global environment for technology, and lifestyle
(Volkswagen.co.in. 2018). This particular fact implies that the organization pays a significant
attention to innovation. The innovation is helping the brand to lead in; for example, the
efficient technologies encompassed by VW Blue Motion Concept helps the users to minimize
the consumption and emission. On the other side, it is identified that entrepreneurship is at
the core of Volkswagen because organization’s goals are inspiring the other brand to join the
mission. The CEO of Volkswagen in the recent time have mentioned that entrepreneurship
remains as the persistent progression towards an innovative solution to the key concern.
According to Teece (2014), entrepreneurship is about imagining new ways to resolve
problems and generate values. Therefore, Volkswagen is determined to balance its vision
with the intention to embrace the change.

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2. Theoretical Concept
As put forward by Agarwal and Shah (2014), the significant outgrowth of new global
force taking shape is an increased focus within the sector on the Research and Development.
It is identified that such increased focus is appearing in almost every sector as put forward by
the recent survey. Therefore, the innovation is highly considered as the crucial aspect of R&
D at Volkswagen (Volkswagen.co.in 2018). The following figure demonstrates the process of
applying innovation into the operation.
Figure 1: Innovation at Volkswagen
(Source: Lin, Chen and Huang 2014)
The figure indicates how technology and market assessment has been generated by
incorporating innovation and collecting the responses from the innovation. Then, the
development of technology and their execution has been conducted on the basis of the
responses of the market. However, the figure does not indicate another three operational
aspects associated with the process of innovation such as managing R&D, emphasising on
innovation and integrating technology planning with the business strategy. It is identified that
the new innovation process was introduced to Volkswagen to revive within the operation.

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The entire process is particular based on the sense respond and learn approach, which is not
similar to the “forecast-make-sell” (Kale 2017).
The business mode that has conventionally been used in the sector. Hence, the
intention of the innovation technique is to make sure that a steady stream of product and
technology option is formed based on organization’s sense of where the sector is headed.
These options are certainly potential responses that Volkswagen use to capitalize swiftly on
the emerging opportunities. The technique is designed to be dynamic, with the new
information as well as ideas moving persistently through the system. Each time Volkswagen
goes through an innovative cycle, they discover new knowledge and ways to apply them to
the subsequent product and technology aspects.
3. Research Approach
As the report is determined to gain an authentic outcome, the data has been collected
from the validated and reliable data sources. The analysis has been done by collecting the
secondary data, the sources of data that have been used in the analysis is annual reports
Volkswagen, Blog reports, peer-reviewed journals and official corporate website of
Volkswagen and newsletter.
Self- Reporting- Volkswagen reveals its internal information such as operation
functions status, innovative programs, entrepreneurship initiatives on the official annual
report, corporate sustainability report and Volkswagen blogs.
External commentary- Unlike collecting information through self-reporting process,
the information has also been collected from external commentary such as the industry
survey report conducted by group of automobile manufacturer, the commentators of the
market, and press conference data of business analysts and some other relevant data sources.

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Apart from the collection process of the data, the analysis has been performed by
comparing the information with the theories. The facts and findings of peer reviewed journals
have been compared to each other to find out the reliability of the findings. More specifically,
it can be mentioned that the analysis has been performed by considering the mission, vision
and goals of the organizations.
4. Data Analysis and Discussion
4.1 Part-A Entrepreneurial intensity
Innovation and Pro-activeness
When it comes to innovation, Miravete, Moral and Thurk (2015) mentioned that
Volkswagen is always determined to offer people that they have never experienced before.
According to the annual report, it can be mentioned that Volkswagen wishes to shape the
current phase of technological transformation in the automotive sector. Thus, the organization
is trying to develop a new generation, which is fully networked electric vehicle on the basis
of “Modular Electrification Toolkit”. Hence, the MEB concept car I.D.BUZZ brings the
legendary VW camper van feeling right up to date (Rodríguez-Ferradas and Alfaro-Tanco
2016). On the other side, Baier, Rammer and Schubert (2015) performed an analysis and
found that exclusivity as well as the social acceptance, innovation, tradition, performance,
usability, design and functionality; all these are the brand values of luxury car manufacturer
Volkswagen.
As the initiative of innovation, Volkswagen continues to move towards the emission-
free urban mobility as well as logistic in the fiscal year of 2017. For example, the e-crafter is
presently in the eventual stage of real-world testing and deliveries and production tend to hit
new heights of the reporting year. On the contrary, to speed up the process of innovation and
broaden the product cycle, the commercial vehicles of Volkswagen could stand for superior

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mobility with its fundamental values such as reliability, profitability as well as partnership.
The new Crafter produced by Volkswagen have observed a successful marker launch in the
last year because the vehicle has completely been redesigned on the basis of customer
requirements and provide a user-friendly functionality and real worked solutions for the
drivers as the transportation needs.
According to Studeny et al. (2017), as Volkswagen is globally running its operation, it
maintains a frequent modification in the products and innovation in products is applied
through the mediation process. Most of the products of VW have been redesigned by
incorporating innovation into the products. Recchia and Kleeberger (2016) mentioned that to
hold innovation at its core, the organization has delivered almost 498 vehicles in the past
fiscal year with the increase of 2.6% compared with 2016. Conversely, the overall sales in
European nations have increased by 4.1%. VW observed a continuous growth in its
commercial vehicle because in 2017 the commercial vehicle brand increased by 16.0% in
2017 and the figure reached 490 with the inclusion of the vehicle crafter (Volkswagen.co.in
2018).
Risk taking initiative
In 2015, almost 10% of all vehicles in Europe, India and China could be low cost cars
with the sales price of between EUR 3000, and EUR 7000. Certainty, this segment is under
growing cost pressure and provide a small amount of profit. Nonetheless, Siano et al. (2017)
mentioned that most of OEMs could want to have a low-design in their portfolio to serve the
market as an “entry model” and low large organizations are working on the low cost models.
So, R&D in all new low cost model could never pay with respect to regained sales profits but
it holds tremendous promise probably never pay with respect to regained sales profits. This is
a risky initiative of VW because the low cost model of vehicles could create a negative
market impression if the products are not embraced by the customers in its chosen market.

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Moreover, the chosen market has the maximum records of inflation, continuous downturn in
the economy. For example, demonetization in the last year in India and Economic Volatility
have a strong impact on the global economy; as the consequence of downturn, most of the
suppliers dealers and suppliers refused to come into the deal for long period; thus, running a
low cost mode of operation holds as set of risks.
On the other side, Ferrell et al. (2016) mentioned that even though the low cost
models of operation brings about the financial risks but conversely the organization gains
advantages because customers may receive some unique features such as minimizing the
metal content to save on raw material costs, foamed lightweight structure, integrated small-
engine power-train concepts and coated polymer windows.
4.2 Climate for Corporate Entrepreneurship
According to Hsu et al. (2014), innovation and entrepreneurial activities can be
brought in place when the organizations have sufficient capability with respect to integration,
structure and culture. Particularly, a large organization of all size certainly need
entrepreneurial behaviour to survive and perform operation in a competitive environment.
Furthermore, Behram and Özdemirci (2014) also mentioned it is easy for a large firm to
apply innovation to business because the large firm has the ability to bear the possible risks of
initiatives. Volkswagen developed a flat organizational structure with the multiple layers of
management in each segment of operation. A different set of activities in a large start-up
venture as well as the management of new small firms by an organization with large size in
its fundamental business are very significant segment of corporate entrepreneurship.
Therefore, the “Volkswagen Group” was appropriate enough to deal with and apply
innovation to business. For example, with the launch of FAST initiative (Future Automotive
Supply Tracks) is to work together to apply technical innovation rapidly than before to
understand vehicle project more efficiently (Volkswagen.co.in 2018).

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However, Audretsch and Lehmann and Wright (2014) mentioned that the execution of
an entrepreneurial as well as innovative culture could be separated in three different distinct
steps; for instance, the assessment of present safety for the entrepreneurial activity and
execution of an entrepreneurial climate, the control and assessment of corporate
entrepreneurship. Thus, VW is very concerned about its entrepreneurial activities; so, the
structure and culture is often redesigned to meet the external needs. Volkswagen relied on the
corporate entrepreneurship based on the readiness of the workforce to assume the
entrepreneurial behaviour and maintain a bureaucratic culture to resolve different barriers to
manufacturing of new products and services.
5. Conclusion
In conclusion, it can be stated that innovation is the key to Volkswagen and to apply
innovation in a continuous way, the organization had to come under the collaboration with
the other brands. A significant fact derived from the analysis is that maintaining the
entrepreneurial activity and applying innovation to business becomes easy when the
organization has flat structure with the multiple segment. This means if innovation is applied
to one particular segment, the possible implementation rusk only resides in that particular
segment. However, to embrace innovation throughout the business process, the organization
bureaucratic organizational culture will help to generate the support from the workforce.
Lastly, it can be mentioned that the collaboration with other brands will certainly strengthen
the market position of the organization in the sector and apply innovation to lead ahead.

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References
Agarwal, R. and Shah, S.K., 2014. Knowledge sources of entrepreneurship: Firm formation
by academic, user and employee innovators. Research Policy, 43(7), pp.1109-1133.
Audretsch, D.B., Lehmann, E.E. and Wright, M., 2014. Technology transfer in a global
economy. The Journal of Technology Transfer, 39(3), pp.301-312.
Baier, E., Rammer, C. and Schubert, T., 2015. The impact of captive innovation offshoring
on the effectiveness of organizational adaptation. Journal of International
Management, 21(2), pp.150-165.
Behram, N.K. and Özdemirci, A., 2014. The empirical link between environmental
conditions, organizational culture, corporate entrepreneurship and performance: The
mediating role of corporate entrepreneurship. International Journal of Business and Social
Science, 5(2).
Ferrell, A., Ondracek, J., Saeed, M. and Bertsch, A., 2016. Failed Decision-making at
Volkswagen. In Annual Eurasian Business Research Conference. Manila, Philippines.
Hsu, C.C., Tan, K.C., Jayaram, J. and Laosirihongthong, T., 2014. Corporate
entrepreneurship, operations core competency and innovation in emerging
economies. International Journal of Production Research, 52(18), pp.5467-5483.
Kale, D., 2017. Sources of innovation and technology capability development in the Indian
automobile industry. Institutions and Economies, pp.121-150.
Lin, R.J., Chen, R.H. and Huang, F.H., 2014. Green innovation in the automobile
industry. Industrial Management & Data Systems, 114(6), pp.886-903.
Miravete, E.J., Moral, M.J. and Thurk, J., 2015. Innovation, emissions policy, and
competitive advantage in the diffusion of european diesel automobiles.