Volkswagen: Strategic Management, CSR, and Financial Performance

This report provides a detailed analysis of Volkswagen's approach to Corporate Social Responsibility (CSR) and sustainability, examining its strategic decisions and their implementation. It explores the company's use of the Triple Bottom Line framework and its vision and mission statements in relation to sustainability. The report investigates Volkswagen's response to crises, its financial performance, including cash flow and net liquidity, and the impact of its strategic choices on its competitive advantage. Furthermore, it delves into the company's sustainability agenda, focusing on quantifiable goals, social media engagement, and its integration of CSR into its overall strategy. The report concludes by summarizing the key findings regarding Volkswagen's strategic management and its commitment to sustainability in a competitive environment.

Strategic Management For
Competitive Advantage

Table of Contents
INTRODUCTION...........................................................................................................................1
Corporate Social Responsibility (CSR) & Sustainable development..............................................1
Triple Bottom Line..........................................................................................................................1
Sustainability & CSR of Volkswagen..............................................................................................3
Financial Performance and future impact of expectation................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7
APPENDIX......................................................................................................................................8

INTRODUCTION
Organisation sustainability refers to the existence of an organisation in the Industry. It
includes all the approaches and strategic framework used by the enterprise for setting a
benchmark in the industry before its competitors. Here, the chosen organisation is Volkswagen.
The assignment will include the strategic decision and its implementation by Volkswagen for its
sustainability agenda along with the fulfilment of the Corporate Social Responsibility. And
finally, the report will focus on the financial performance of Volkswagen (Ahmad, Bosua &
Scheepers, 2014).
Corporate Social Responsibility (CSR) & Sustainable development
Corporate Governance refers to a responsible; transparent management done by the
corporates and their supervision that, aims to add a long term value in their overall growth
career. A good corporate governance plays a key role in strengthening the trust of shareholders
of the Volkswagen. The very first and foremost thing is, it all begins with the development of the
life cycle of the product. It refers to a situation when the product is at a very initial stage and it
starts taking birth; then the growth of the product takes place and then, gradually, product
manufactured by the organisation for meeting the needs and demands of ultimate consumer
reaches at the maturity stage (Ahmad Bosua & Scheepers, 2014). When, Volkswagen was
experiencing the crisis, that were not related to the stage in which products get obsolete or out of
the market. In that case, Volkswagen was still surviving and was in the situation where it can,
either take a rebirth or enter in to death stage. Secondly, after any sort of scandal or fraud, there
is a sudden change in the dynamics of firm in both the ways:- internally and externally. The top
level managers of Volkswagen are playing an important role in recovering the lost reputation of
the company also to gain the trust of investors and the stakeholders once again (Albrecht & et.al.,
2015).
Triple Bottom Line
It is first created by Elkington and it a traditional way to measure people, earth and
company's profit. It also helps corporate to take a long term point of view so that people will
understand the extent of an enterprise in order to contribute the firm through TBL.
The strategies used by the Volkswagen group are unique and different from the other
market players in the auto mobile industry. The strategic framework of Volkswagen includes:-
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 Vision:- This renowned brand is having a very crystal clear vision in the respect of
becoming the market leader along with serving its customers by providing them, fully
automatic and super techno oriented vehicles that are helpful in making its customers
loyal towards this brand. The brand is looking and making its efforts in respect of
becoming a globally leading provider of sustainable mobility (Albrecht & et.al., 2015).
 Mission:- The Volkswagen group is aimed towards offering the perfect tailor made
mobility solutions to its customers. The organisation is working in the industry with its
activities that are focused on building up reliability in the mind of customers so, as to
have a perfect grip on them and making them loyal towards the services and the products
being offered.
Further the organisation is working on the modern approach in the industry, and is
considering the system of exchange as equal (Dunning, 2015). The organisation is seeking the
need of cooperation at the workplace from the employees with whom its working. The main
things on which the organisation is laying focus are:-
 Together:- This renowned brand is sustaining in the organisation because of the unity
among its brands. The brands that are working under the flagship of Volkswagen are:-
Audi; Bentley; Skoda; Lamborghini; Porsche; Bugatti and SEAT. Not only this, there are
a lot of bikes and trucks that are working under the flagship of this notable brand.
 Synergy:- The main crisp behind the success of this brand is related to the interaction
with each other. Making interaction with each other by establishing a proper
communication is really helpful in marking a conceivable advantage for this group over
the competitors that are working in the industry (Morden, 2016).
 Success:- Being successful and moving ahead continuously together with the other
brands under its flagship depends only upon the following traits:-
1. The group is completely genuine with each other.
2. There is mutual trust among them at the workplace.
3. The group members are completely straight forward to each other and thinking is
open minded.
Sustainability & CSR of Volkswagen
Sustainability refers to pursuing/moving continuously in the economy for the attainment
of the social and ecological objectives by making equal efforts and energy towards it. The aim of
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Volkswagen here is to create lasting values by offering good working conditions to its employees
and also provide its customers the best in the auto-mobile that they, want. Now, when the issues
in the respect of emission arises, then, there is a question mark on the sustainability of the
organisation (Saeidi & et.al., 2015). So, to resolve such type of issues, the organisation has
worked on some sort of strategies. The strategic decision taken by Volkswagen are as follows:-
 Clear Social Media Engagement Or Crisis Management Strategy:- Volkswagen made a
tweet in respect of apologising the people for the issues that had arisen because of some
reason. Now, the organisation made an engagement to the social media by replying
quickly and effectively to the customers by offering them the best possible solutions.
 Corporate Values As A Strategic Factor :- Like other multinational; corporates in the
field of auto-mobile sector Volkswagen is focusing officially on promoting the
commendable values. Sustainability, in respect of Volkswagen refers to the way,
members of this group are performing the activities in terms of long term and short term
basis (Trigeorgis& Reuer, 2017). Now, following the corporate values is completely a
different thing and to implement them on all the levels is quite another thing.
Volkswagen, has also received an award at International Level in respect of the
sustainability by the world forum. The organisation has received the award for the activities that
are being performed by the organisation in field of sustainability and also to fulfil the Corporate
Social Responsibility on its part. The sustainability agenda / objectives of Volkswagen group are
as follows:-
 Quantifiable Goals:- The organisation has set completely specific; firm and measurable
targets for itself with the motive of compete and sustain in the industry. The organisation
has improved its performance by reducing the usage of water up-to 25% and using the
renewable sources of energy.
 Blend Sustainability With The Corporate Social Responsibility:- Think Blue programme
initiated by Volkswagen is performing more than the corporate responsibility towards the
society. Although, these activities are not contributing to the fulfilment of its
responsibility in the society in a traditional sense (West, Ford & Ibrahim, 2015).
Financial Performance and future impact of expectation
The financial position of Volkswagen is very good. The Gross cash flow of this group
amounted to 32.7 billion Euro in the year 2017. As compared to the previous year it had
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increased by 25.5%. The investing activities of the Volkswagen group has attributed to the
operating activities. The profit achieved from these activities has increased by 8.5% to 18.2
billion Euro as compared to that of previous year. The cash flow that was generated from the
financial activities amounted to 17.6 billion Euro. The issue and redemption of bonds and other
financial liabilities are included here (Dunning, 2015). Finally, the cash and the cash equivalent
that amounted to 18 billion Euro. Now, the financial position (cash flow) of the automotive
division in the year 2017 was around 23.4 billion Euro. An increase in the operating profit
because of the special items and a continuous decline in it had a positive effect on the working of
Volkswagen. As per the expectation, more and more of cash outflow in the form of expenses
were related to the issue of diesel. The flow of cash from the operating activities that was
amounted to 11.7 billion Euro in the year 2016. Negative impact of some special items was
found in the fiscal year 2017 along with the gross cash flow and completely positive impact on
the working capital that was invested. The ratio of capital expenditure to that of sales revenue
declined to 6.4% due to primarily increase in the sales revenue.
In the year 2017 net liquidity of the firm was at its apex level i.e. 22.4 billion Euro was
earned by Volkswagen as compared to that of 2016. Net liquidity represents a total of 9.7% of
sales revenue as total in the financial year of Volkswagen. The business run by Volkswagen, has
generated a gross cash flow of 3.7 billion Euro (Morden, 2016).
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Illustration 1: Statement Showing Financial Position Of Volkswagen
Source:- Financial Position Of Volkswagen, 2018
CONCLUSION
The project report concludes by laying its focus on the strategies and the modern
approaches that are used for sustainability in the competitive environment. The assignment
further talks about the steps that are taken by Volkswagen in respect of the responsibilities that
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an organisation is having towards the society in which its getting operated. The report is talking
about the strategic decisions and the implementation of those decisions in respect of the
sustainability agenda.
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REFERENCES
Books And Journals
Ahmad, A., Bosua, R., & Scheepers, R. (2014). Protecting organizational competitive advantage:
A knowledge leakage perspective. Computers & Security.42.27-39.
Albrecht, S. L., & et.al., (2015). Employee engagement, human resource management practices
and competitive advantage: An integrated approach. Journal of Organizational
Effectiveness: People and Performance.2(1).7-35.
Dunning, J. H. (2015). Reappraising the eclectic paradigm in an age of alliance capitalism.
In The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan, London.
Morden, T. (2016). Principles of strategic management. Routledge.
Saeidi, S. P., & et.al., (2015). How does corporate social responsibility contribute to firm
financial performance? The mediating role of competitive advantage, reputation, and
customer satisfaction.Journal of business research. 68(2).341-350.
Trigeorgis, L., & Reuer, J. J. (2017). Real options theory in strategic management. Strategic
Management Journal.38(1).42-63.
West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive
advantage. Oxford University Press, USA.
Online:
Financial Performance Of Volkswagen. 2018. [Online]. Available Through:
<http://annualreport2017.volkswagenag.com/group-management-report/financial-position.html>.
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APPENDIX
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