Volkswagen External Analysis Report: PESTLE and Competitor Analysis

This report provides an external analysis of Volkswagen, examining the period from 2012 to 2017. The analysis is conducted using two primary models: PESTLE and Competitor Analysis. Recognizing the significant impact of the 2016 emission scandal, the report segments the PESTLE analysis into two periods: 2012-2016 and 2016-present, to accurately reflect the changing external conditions. The PESTLE analysis evaluates political, economic, social, technological, environmental, and legal factors, highlighting their impact during each period. The Competitor Analysis, based on Michael Porter's model, assesses the threat of new entry, buyer power, supplier power, threat of substitutes, and competitive rivalry, along with Volkswagen's global competitor ranking before and after the emission scandal. The report concludes with a discussion of the evolving competitive landscape and the factors shaping Volkswagen's market position.

Running Head: VOLKSWAGEN EXTERNAL ANALYSIS
Volkswagen external analysis
Student’s name
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VOLKSWAGEN EXTERNAL ANALYSIS
Volkswagen: External Analysis
The objective of this paper is to discuss the external analysis of Volkswagen in the five-
year window of 2012 to 22017 (current). The external analysis is done with two models. One is
PESTLE analysis model and the second one is Competitor Analysis model. The interesting thing
for Volkswagen is that there was a major emission scandal for VW in USA in 2016 and post that
the external conditions and impact has changed for the brand. Therefore, it would make sense to
apply the PESTLE and Competitor model in two separate windows of 2012 to 2016 and 2016 to
present. The analysis with these two models for the two windows can be discussed as:
PESTLE analysis for 2012 – 2016
The impact of each of the force can be highlighted as:
Force Impact
Political Average or Positive as government supports automobile
organizations due to employment opportunities
Economical Positive as people across the world want to invest in cars and
automobiles
Social Positive as people wants to have a good life with organizations in
the city
Technological Positive as Information Technology has made the life easy for
organizations
Environmental Negative due to the effect of pollution
Legal Average/ Moderate

VOLKSWAGEN EXTERNAL ANALYSIS
Discussion
The political factors are one of the most important external elements for any automobile
client. In Australia, the political factors are average or positive for the organizations in the
automobile sector. The organizations are under the tremendous pressure to cut down the
pollution and focus on sustainable and green sources of energy (Sierzchula, & Bakker, 2014).
The economic factors are the one that would directly impact the purchasing funnel of the cars
within the market. The social factors are also positive for the organizations in the automobile
sector. There was a time when cars and automobile were considered as the luxury product.
However, with time this positioning has changed and today car is considered as a necessity
product for Australian families. The advancements of Internet have been proven beneficial for
the organizations in the automobile sector. Therefore, it can be said that the technological factors
are positive for the operations of Volkswagen (Xu & Mathiyazhagan, 2013). In fact, it is
expected that the technology factors would further improve with the advancements of technology
and evolution of Internet. The legal factors are moderate for the organizations in the automobile
sector. The environmental factors are one such factor that is not positive for the organizations in
the automobile sector.
PESTLE analysis for 2016 – current
The impact of each of the force can be highlighted as:
Force Impact
Political Negative

VOLKSWAGEN EXTERNAL ANALYSIS
Economical Positive
Social Negative
Technological Positive
Environmental Negative
Legal Negative
Discussion
The reason for so many forces turned negative was the emission scandal. It can be said
that this scandal hit the global business of Volkswagen pretty hard. The VW cars create a lot of
pollution and environmentalists are against this pollution. It is expected that the
environmentalists’ challenges would remain tough for the organizations in the automobile sector.
There are number of legal guidelines and laws that the organizations must adhere to. It is
expected that the legal factors would remain complex, as country would continue to have new
legal guidelines to govern the operations of organizations within the country (Kohler & Schade,
2013). In the current market scenario, economic factors appear to be positive. There has been an
increase in the disposable income of consumers and it has improved the economic factors.
Competitor Analysis Model
The Michael Porter model of competitor analysis can be discussed as:
Force Impact
The threat of new entry Low to Average
The power of buyers High

VOLKSWAGEN EXTERNAL ANALYSIS
The power of suppliers Average/ Moderate
The threat of substitutes Average/ Moderate
Competitive Rivalry Very High
Global Competitor Ranking: 2012 – 2016
The competition is really high in the market and it is not easy for new players to
enter the market. Volkswagen was one of the largest automobile manufacturers in
the world. The ranking of global automobile markets till 2016 can be shown as:
Global Rank Organization
1 Volkswagen
2 Toyota
3 Ford
At the same time, company faces tough competition from other players like
Tesla (that is disrupting the industry), Maruti & Tata (local players in Indian
market), Suzuki, etc.
Global Competitor Ranking: 2016 – Current
After the emission scandal a dip was observed in the ranking of VW as
Toyota overpower Volkswagen. The global ranking after 2017 can be shown as:

VOLKSWAGEN EXTERNAL ANALYSIS
Global Competitor Ranking: 2012 – 2016
Global Rank Organization
1 Toyota
2 Volkswagen
3 Ford