Strategic Management Report: Volkswagen vs General Motors Analysis

This report provides a comprehensive analysis of the global strategic management practices of Volkswagen and General Motors. It begins by comparing the two companies based on their external business environments and dynamic capabilities, utilizing PEST and VRIO models to assess political, economic, social, and technological factors, as well as infrastructure, brand image, and R&D. The report then critically examines the current CSR initiatives and social and environmental innovations of both companies, highlighting their approaches to corporate social responsibility. Finally, it assesses potential CSR strategies that could enhance organizational success, offering insights into how these companies can improve their competitive positions within the automotive industry. The report underscores the importance of globalization and strategic planning in achieving sustainable business outcomes.

GLOBAL
STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Comparison of two organisations on the basis of external business environment and dynamic
capabilities..............................................................................................................................1
TASK 2............................................................................................................................................6
Critically analyse the current CSR initiatives, social and environmental innovations...........6
TASK 3..........................................................................................................................................10
Assess the current potential CSR strategies which enhance organisational success............10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
.......................................................................................................................................................14

INTRODUCTION
The term global strategic management has emerged from the concept of globalization as
well as its implications on the organisational world. Today, with development of technology and
rise of globalisation, landscape of corporate business have changed drastically (Roh, Hong and
Min, 2014). In order to gain competitive advantages, companies now tend to recruit best talent
employees, change operating models and seek to take business on global level. This report is
going to compare and contrast two companies on the basis of opportunities for developing CSR
initiatives and innovations. For this process, Volkswagen and General Motors is chosen that deal
in automotive industry sector. Both companies are served auto-mobile and commercial vehicles
as well as giving a tough competition to each other. In this regard, present assignment highlights
current CSR initiatives and global strategies of both organisations for enhancing success of
business.
TASK 1
Comparison of two organisations on the basis of external business environment and dynamic
capabilities
Global strategy can be defined as process by which a company can take its business on
international market. This concept guide organisations for introducing globalisation within
business and allow to sell products on global level (Berry, 2014) . In other terms, corporations
employ such strategic management to reap opportunities of trading in other countries. For this
process, it assists companies to operate business in a mixed set of economies and design effective
strategies which encompasses all of them. It shows that goals of business are needed to reflect
the market potential and growth rates as well as aligned the same with overall vision also. In
context with Volkswagen, it is an automaker company of UK which has established in 1937. It is
considered as the largest organisation in auto-mobile industry in terms of sales that serve vans,
trucks and buses etc. in many countries. Currently, it has near about 120,000 employees who are
higly skilled and experienced in giving out best production output. This corporation is known for
its highly innovative commercial and auto-mobile products which give high satisfaction to
customers.
But due to high competition in automaker industries where many companies dealing in
same marketplace with same products, sales performance of Volkswagen also decreases. It has
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various competitors in this field who have launched amazing vehicles in same marketplace to
avail profitability. It includes BMW, General Motors Ltd., Audi and more, which are considered
as largest organisations of UK in auto-mobile manufacturing sector. Among these companies,
General Motors Ltd refers to one of the biggest competitor of Volkswagen. This corporation has
found its business in 1908 and serve products in more than 37 countries. In terms of sales, in
2017 it has sell near about 10 million vehicles through which high profitability has gained by this
company. Along with this, approximate 180,000 number of employees are currently working in
its near about 396 locations. Therefore, it shows that this corporation gives a tough competition
to Volkswagen which adversely its sales performance.
For introducing globalisation within business, it is required by organisations to develop
effective strategies. They should design proper business plan which include policies, resources
and procedures to take company in international marketplace (Peng and et. al., 2017). Both
companies viz. Volkswagen and General Motors Ltd. operate their businesses in many countries
and gain high profitability. There are many factors present in business environment which impact
on operational activities of international organisations. It includes political stability, economical
fluctuations, environmental laws, social concern and more. Thus, a comparison is made below
that describes dynamic capabilities of Volkswagen and General Motors Ltd to deal with such
situations:-
PEST analysis: It helps in analysing the factors of external environment of a particular
company which impact on operational activities. Generally, there are four key factors that affect
business organisations – Political, Economical, Social and Technologies.
Basis of comparison Volkswagen General Motors Ltd.
Political Factors In today's 21st century, political
factors have played an
important role in expansion of
business. As Volkswagen
operate business in many
countries therefore, it gets
various opportunities in
manufacturing in best
competitive manner and on
GM conduct its business
mainly in developing countries
where political factors like
trading policies, taxation and
more, are seemed to be
unstable (Cerdin and Brewster,
2014). This would impact on
its business strategies in high
manner. For example: At
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less cost. For example: In
Canada, there is a political
stability which give chance to
Volkswagen to make its brand
more competitive.
present business of GM's
products like Chevrolet has
came to a diminish level in
India.
Economical Factor This factor shows per capita
income and purchasing power
of people. Since economy of
Germany is quite stable where
people are always awaiting to
get luxurious and innovative
cars (Volkswagen PEST
Analysis, 2018). So, it gives
advantage to this company in
increasing its sales
performance by manufacturing
innovative cars. For example:
Average GDP per capita
income of UK marketplace as
compared to other nations is
stable which increases demand
of luxury cars at marketplace.
But due to fluctuation in
taxation policy of provincial
government, business of GM
has adversely affected.
Social Factor Today people concern more on
getting fuel efficiency car
which produce less smoke and
pollution (Young and et. al.,
2014). For this process,
Volkswagen has launched
fuel-efficient vehicles such as
VW's XLI to gain attention of
people. This car has 1litre twin
cylinder diesel engine which
consumes 2.0l/100km. This
would aid to increase its sales
performance.
Similarly, to gain competitive
advantages, GM has also
launched an affordable electric
car like Chevrolet Bolt EV. It
has given commitment to
manufacture at least 20 new
electronic and innovative cars
by 2023.
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Technological Factor In order to response of
globalisation and market, this
factor give advantage to
Volkswagen to develop
creativity in its commercial
and luxury vehicles. By
introducing high technological
features in cars like
sophisticated 3D scanning
camera in conjunctions with a
GPS system, fuel-efficiency,
twin cylinder and more,
Volkswagen has given a tough
fight to its competitors. For
responding towards
globalisation, this company
has made partnership with
approx. 30 other
manufacturing companies to
arrange resources and reduce
cost of production.
In context with GM, its
manufacturing process has
shown the lowest carbon
footprint in production. It
introduces latest technologies
in business to reduce energy,
water, carbon and waste
intensity. It concerns more on
realizing the better, safer and
sustainable development in
production (Strategic Analysis
of General Motors, 2018). In
order to respond towards
globalisation and market of
technology, GM has developed
effective relationship with its
stakeholders and investors to
get their support in creating
innovation in vehicles.
VRIO Model of Volkswagen and General Motors: VRIO framework is generally measure
performance of company on the basis of value, rarity, immitigability and organisation. In context
with automobile companies, this model defines these components in terms of infrastructure,
brand image, product portfolio and R&D capabilities as shown below:-
Basis of comparison Volkswagen General Motors
Infrastructure It has developed and
maintained the largest
production infrastructure. As
per survey, this company has
GM also has created a largest
production infrastructure. It
has evaluated that demand of
vehicles of GM in 2016 has
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launched more than 10
millions number of vehicles in
2017 (Strategic Analysis of
Volkswagen, 2018). In this
regard, competitive design of
its production at global scale
is considered as its main
strength.
raise to approximate 17.9
million sales. This has given a
tough competition to
Volkswagen.
Brand Image and Global
presence
It has maintained a large
global scale and brand image
in all over the world. But due
to some scandal, this company
has adopted in public that it
has made a fraud machine in
car vehicles. This device helps
in passing the testing criteria
of low pollution by showing
that cars emit less smoke.
Thus, it creates a large impact
on brand image in negative
manner.
In terms of global presence,
GM’s presence is majorly
grown in Asian and European
Countries only. While
Volkswagen is launched its
products in all over the world.
R&D Capabilities It has evaluated that
Volkswagen has invested near
about 13.13 Billion Euros in
2017 on R&D for increasing
its capabilities.
For developing more features
in vehicles, GM also made a
huge investment in increasing
capabilities of R&D.
Product Portfolio Its product portfolio includes
12 major brands such as
Ducati, Lamborghini, Bugatti,
Bentley and more.
Product portfolio of General
Motors is mainly emphasised
on four main brands that are
Chevrolet, Buick, GMC and
Cadillac. Thus, in fails to give
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tough competition of
Volkswagen in this era.
TASK 2
Critically analyse the current CSR initiatives, social and environmental innovations
According to Collings (2014), Corporate social responsibilities refers to an business
model that makes an organisation socially responsible toward its stakeholders and its public
(Wang and et. al., 2016). It can also be defined as a name given to a corporate initiative taken by
corporate firms or companies to evaluate the effects of an organisation's working on environment
and role company can undertake for welfare and protection of environment.'' A few examples of
CSR activities include eradication of hunger, poverty and malnutrition, providing proper
healthcare and sanitation facilities. Volkswagen Group is committed to fair and responsible
corporate governance which is implemented at almost all levels. It has a group of members in
board of management known as sustainability board for effective CSR working and activities.
Principles followed while initiating CSR projects include:
 Projects should always address a specific important issue.
 Diversity of social environment and its implementation in CSR activities.
The Volkswagen group supports arts and culture, education, health and sports in
numerous projects. It works on principles humanity, public spirit of welfare and development
and responsibility. It aims at providing sound, balanced and social development of employees as
well as environment. Its main motive is to help German red cross society in its rescuing services.
Volkswagen works on the principle of helping together and providing food and shelter services
to refugees who come to Europe and Germany. In this context, the CSR initiatives taken by
Volkswagen and General Motors are:
CSR Initiatives Volkswagen General Motors
Infrastructure Road safety training: The
chosen organisation also
provide adequate road safety
training to its citizens which
will helps in creating
Autonomous future: The rise
of autonomous vehicles has
many benefits towards society
like it will help in increasing
road safety (Stead and Stead,
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awareness in a society about
the importance of helmets and
seatbelts in driving a vehicle.
It is essential for citizens to be
aware of road rules and
regulation which will helps
them in creating a safe
environment.
2014). These vehicles also
helps in reducing traffic
related issues arises in most of
the areas through technologies
like platooning and adaptive
cruise control (General Motors
Corporate Responsibility
Newsletter- February 2017,
2017). Through this, the
chosen organisation General
Motors will bring a enormous
change towards environment
as they are limiting their use of
natural resources.
Social Responsibility Supportive towards
government policies: They
also act as a supporting pillar
for government policies and
initiatives and helps
government in creating
awareness about new policies
for water conservation,
regarding pollution etc. It
helps them in creating a strong
bond to government which
will helps them at the time of
uncertain events
(Sustainability and CSR at
Volkswagen India, 2018).
Waste reduction: In this
context, General Motors
recycles the most waste arises
from manufacturing as
compared to other auto-maker
industries. Its employees
always works with a motive of
recycling waste into useful
products. It is essential for an
organisation as it ensures
optimum use of natural
resources. It helps an
organisation in cutting their
total waste almost by 40%
which will make them more
competitive in a business
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environment.
Environment Protection Eco-friendly: In this context,
Volkswagen makes
environment friendly products
like electric cars instead of fuel
cars (Cavusgil and Knight,
2015). From this, it creates
awareness among its
customers about the
advantages of using E- cars
rather than fuel cars which will
helps in achieving a
sustainable environment. It
helps an organisation in
restricting the use of natural
resources as much as possible.
Going green: In this context,
the chosen organisation
General Motors has taken an
green initiative which will
prove to be very beneficial for
their organisation, it generally
means company is not using
any type of natural oils in their
manufacturing process. Its
main motive is to retain natural
environment for a longer run.
It will helps an organisation in
fulfilment of corporate
responsibilities which leads in
building a effective brand
image.
Critical Analysis as per Triple Botton Line:
The Triple Bottom Line is considered as an accounting framework which classified into
three main aspects- Social, Environmental and Financial. To enhance business value and
evaluate own performance, corporations adopt TBL framework. As per opinion of Collings,
(2014), it has been analysed that both organisations Volkswagen and General Motors are taking
crucial efforts in bringing sustainability at environment, economy and social aspects. It surely
helps these companies in gaining an competitive advantage in a dynamic business environment.
As per above discussion, for protecting environment from harmful effects of industrial
production and pollution emit from vehicles, both companies have made various initiatives. It
includes innovation of electric vehicles which reduce pollution effects, autonomous vehicles,
waste reduction and more. In this regard, Volkswagen has run eco-friendly operation and
General Motors runs going-green programs. Process of both CSR initiatives are different but
motive is same i.e. to protect ecosystem. For social improvement, Volkswagen donate its cars to
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various universities and educational institutions to educate and empower youth. It will helps
students of auto-mobile in understanding technicalities required to manufacture a car. It is great
initiative of Volkswagen as it makes them socially responsible which leads to improve their
brand image in a business environment. It will also helps students in improving their skills and
practical knowledge regarding their particular subject. Along with this, it also support
governmental bodies in running social-protected campaign and policies. In this manner,
contribution of General Motors is in reducing wastage from production. Thus, CSR initiatives of
both companies help in enhancing value of their operations.
(Source: Three Bottom Line Framework, 2018)
Role of stakeholders in creating sustainability:
Stakeholders play a crucial role in getting sustainability of business in a company.
According to Freeman's stakeholders theory, all associated people whose cooperation and
decisions help in running business successfully, are considered as stakeholders. It includes
employees, customers, political action groups, media, suppliers, governmental bodies etc.
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Illustration 1: Three Bottom Line Framework

Therefore, Volkswagen and General Motors concern on providing benefits to their stakeholders
and include their participation in every decision-making process.
TASK 3
Assess the current potential CSR strategies which enhance organisational success
Today, free international trade has given opportunities to organisations to sell their
products at global level. It also leads to growth of global economies. On the one hand,
corporations and government have explored as well as defined effective global strategies in order
to ensure that they can develop and sustain a high competitive advantage which works for them.
While on the other hand, territorial boundaries have broaden up and challenges also, which have
increased multi-fold. Thus, it highlights the concept of global strategic management that how it
actually emerged in today's marketplace. According to Rugman and Verbeke (2017), with
increasing demand of innovative and creative products, corporations are adapting to changes in
fast manner. It will enhance chance of getting greatest possibilities for survival in marketplace.
In this regard, innovation is considered as a key factor for their success, that is critical for
sustaining satisfied customers, decreasing costs as well as enhancing competitiveness for long
term profitability. Innovation with this assistance, can be defined as adding such features in
products and services that prevent ecosystem from harmful effects. Therefore, CSR i.e.
Corporate Social Responsibility can be considered itself as an innovation for corporations. CSR
practices assist automotive industries to produce innovative vehicles which create less smoke and
fuel efficiencies also. Hence, Volkswagen need to adopt formalized CSR practices as well as
establish tools and procedures which are aligned with corporate strategy. Corporate social
responsibility refers to a idea where companies incorporate environmental and social concern in
their business operations in consideration with there shareholders.
According to Goetsch and Davis (2014), it has analysed that CSR significantly contribute
to competitiveness in organisation. It brings various advantages to companies in terms of
customer relationships, risk management, access to capital, cost savings, human resource
management and more. With this assistance, for enhancing organisational success in long
profitable manner, there are some potential ways by which Volkswagen can encourage
innovation:
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