Strategic Analysis: Volkswagen Group's Global Expansion Strategies

This report provides a detailed analysis of the Volkswagen Group's global expansion strategies. It begins with an introduction to globalization and its relevance in the business context, followed by an overview of the company's strategic management approach. The main body of the report examines the strategies and tactics employed by Volkswagen, including differentiation strategies and the application of Porter's Five Forces model to analyze the competitive landscape. The report also discusses the company's internationalization efforts, value chain analysis, and marketing strategies. The conclusion summarizes the key findings, emphasizing the complexity of global expansion and the importance of effective strategic management. The report highlights how Volkswagen has leveraged various strategies to achieve a significant market share and sustain its business operations in the global market. The report also examines the company's approach to product development, market segmentation, and employee management.

BUSINESS STUDIES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Globalization represents the above global information of the international trade,
investment, information technology as well as cultures. In the global business context, it implies
to the interdependence of international business enterprise over each other business activities
(Sharma, Chrisman and Chua, 2012). Present report is based on analysis of global expansion
strategies and tactics which are effective and applied by the Volkswagen Group. There are
various important theories and models have been taken in to consideration in order to develop an
understanding of strategic management. Volkswagen group is analysed as a German
multinational automotive manufacturing organization, having there headquarter in Wolfsburg,
lower Saxony, Germany. They are responsible for designing, manufacturing and distribution of
passengers and the commercial vehicles, motorcycles, engines and turbomachinery etc.
MAIN BODY
Strategic management is the considered as the plan of action which is designed by the
enterprise in order to reach and accomplish a specific objective. According To Maital and
Seshadri, (2012), Strategic plan always seeks to win the position of competitive advantage by
VW over its competitors in terms of better exploitation of the potential which is available and the
employment optimization. Expansion of business operations at global level is complex task for
every multinational business enterprise because it requires implementation effective business
strategies that lead to success in business operations (Arquero and Romero-Frías, 2013).
Volkswagen group has formulates and applied different strategies and tactics which has provided
them support in their business expansion. Volkswagen Europe has tried to achieve excellence by
maintain the increased quality of production that it provide their customers in the form of
products and services. The organization further believes in management of this challenge
through integration, in relation to its customers, following the team work which is analysed as
excellent always have been responsible in the autonomy as well as following a notion that
outline by the excellent skills of leadership as well as the commitment in the workers of
Volkswagen (Majaro, 2013). Moreover, the company has started its business with an aim to
produce the productivity through providing an appropriate quality products and service to their
target customers and infrastructure that will be flexible is the desire in order to make the
employees skilled. Research is visionary, innovation scout and strategic partner for the important
brands in the important group-with an enormous band width
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As per the analysis of porter generic strategies, it has been analysed that Volkswagen has
applied differentiation strategy for expansion of business operations. In order to increase the
profitability and market share, company has decided to decrease its production cost by
introducing the product costs workshops within the production departments in order to interact
cost targets and produce the costs (Zander, McDougall-Covin and Rose, 2015). Moreover,
globalization is considered as important process by organization which implies global economic,
political, cultural integration. It is also playing an increase role in the developing countries.
Product development process of Volkswagen has to lead to the emergence of the four major
brands such as Volkswagen, Audi, Seat and Skoda which has been successfully covered the
overall 20% market share of the automobile sector.
In addition to this, porter five force models have been applied in the following direction by
Volkswagen. It involves five competitive strategies that lead to success in business operations of
organization. First are barriers to entry in automobile sector which is considered as market in
which the competitors are huge (Stahl and Tung, 2015). VW has ensured to invest in only those
markets at the initial stages of production which are less occupied. For expansion of global
business operation, VW aims at releasing its models in those countries where the competition to
new entrants is less so that the growth of sales will increase and proportion will remain less.
Volkswagen group is taking a proactive approach to designing the mobile world of tomorrow
through group research. Internationalization has been considered as one of the major strategies
which is being used by most executives to reduce the most of operations (Kotabe and Helsen,
2014). The decision of VW of to internationalize it is business operations is one of the strategic
decisions that have a fundamental effect on its business and all its internal and external business
operations. It has equally affected the management of Volkswagen. In the present context, the
rate at which the organization operates outside their domestic market has significantly increased.
Second force of porter model is threat of substitutes in automobile sector. In global business
expansion, VW has always makes sure that it will only protect the business from the threats of
substitute product in market. It also ensure that the new model is placed will be the location
where individuals are potential to purchase the products. If the cost of regulating the business
operation in automobile sector is high, the clients will take a step back and purchase other range
of products which will be differ from the Volkswagen product. To achieve success in this regard,
VW had moved its focus on the time, place, money and preference of the customers as well as
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their convenience. Moreover, the competitive rivalry is also important force which implies that
automobile sector is high competitive in which the return on learning is very low as the cost of
competition is very high. In this context, the company has analysed the fact that industry is
governed by the oligopoly which implies to the market situation in which there are fewer number
of sellers and thus the actions of the any of those would result directly on the market situation
(Johnson, 2016). Company has mainly incorporates this section in the porter’ model well in their
strategy by not paying attention to the payoffs that its new designs which will they can offer to
their customers in the long run VW has analysed the current preposition in the market and
important ration of their major rivals and then it will take the action in the current situation.
Apart from this, another important force of porter model is bargaining power of suppliers which
states that there are major fragmentations within the supply business of Volkswagen (Expansion
strategies, 2017). It relies of various other organizations for the production of its detailed parts.
Further, the parts which are used by the VW are those which remain operational throughout the
average life of their vehicles. This will demands the less cost that will be paid to the suppliers.
Moreover, through this analysis it is understood that the bargaining power of suppliers in the
automobiles sector is less because there are number of suppliers are available which will provide
the high quality inputs to the organization at competitive or low prices (Peng, 2012). The major
competitive force of this model is barging power of customers which tends to increase when
there are large number of organizations are available in the relevant business. As per the
analysis, VW also understood that the bargaining power of customers for its vehicles is
considered as unchallenging as it believes in the quality and this what it offers to their clients
(Wolfsburg, 2017). It is considered as the positive aspect for the automobile industry and
company as well because the consumers will consider the products which are unique and
contains all the features. Moreover, the organization believes in developing that and so not
matter if the scale of the products range will be high as compared to the rivals in the market, the
customers will understood that the is VW.
Moreover, value chain analysis of the Volkswagen is considered which states that the most of the
vehicles which are produced by the organization will differentiate its business from the rivals.
Management of VW has applied the differentiation strategy to expand its business operations in
global market across the countries they have developed effective, innovative and excellent
products and service so that it will be able to attract the customers across the countries.
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Moreover, company has established its various brands in different countries and subcontinents
where there will be every plant is responsible to manufacture for the market domestically. Major
reason behind this strategy of VW is to reduce the cost of operations and shipping from different
parts of countries and also to support the economy on a local level (Verbeke, 2013). The major
outlets of company are following the value chain of the manufacturing various important models
in the similar time duration offering unique products to the customers. Moreover, it is also
analysed that the assembly line of organization in automobile sector in comparison to the other
existing organizations in the automobile companies is longest.
According to Dögl, Holtbrügge and Schuster, (2012), companies will be able to expand their
business operations effective through implementation of effective marketing techniques and
communication channels in order to provide information to the customers. In order to expand the
sales and profitability in market VW groups has adopted a latest and unique marketing strategy
in which they will focus the new market segmentation and using the effective channels of
communication like social media, digital advertisement, E commerce, digital marketing and
product differentiation etc.
As an international business enterprise VW has taken many steps in order to evaluate the sales
potential for their vehicles in the US. Moreover, company has examined present imports policies
of other countries and finding out the vehicles which are now being purchased from overseas
nations. In accordance with this, VW group has also needs to determine the local production and
must examine the major demographic change which have taken place in the country. Moreover,
the important efforts have supported the Volkswagen to deliver significant information regarding
the current products supply.
As per the case study, VW AG group needs to make some modifications in their manufactured
vehicles in terms of styling and engineering because the vehicles have become a mature products
and it is understood that the maturity stage of any product requires the modification for the
continuation of business operations in market (Bharadwaj and et.al. 2013). For development new
and unique products and services there is a requirement highly qualified employees at workplace.
Many international business enterprises have support in development of successful strategies
within the emerging. Organization in the will usually take for granted usually plays an important
role in execution of business problem within global markets. Thus, in the above business
strategies it can be said that the continued expansion of business operations at international level
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requires the organization to increase their quality of products and services through
implementation of various important and unique features. Before hiring of qualified employees,
company needs to screen the large number of candidates themselves as they are not many search
firms that will perform the job for them. Moreover, the organization corporate level strategy
involves the portfolio decisions that extent to diversity along with the management and control of
various important subsidiaries (Grant, 2016). Next level will be the thought in terms of business
unit strategy of global expansion which implies to the ways for achievement of success in
competitive market. As compared to others, expansion strategy of VW group involves the
sustainability, competitive advantage strategy as well as strategies the hyper competitive
situations. Finally the direction of business and the methods of development involve the new
market development, product development, diversification, acquisitions alliance as well as the
critical success criteria.
CONCLUSION
From the above report, it is analysed that global expansion of business operations is
complex tasks as it requires development and implementation of various effective strategies.
Strategic management is the considered as the plan of action which is designed by the enterprise
in order to reach and accomplish a specific objective. Product development process of
Volkswagen has to lead to the emergence of the four major brands such as Volkswagen, Audi,
Seat and Skoda which has been successfully covered the overall 20% market share of the
automobile sector. Moreover, with effective implementation of differentiation strategy, VW will
be able to sustain its business operations at global level.
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REFERENCES
Books and Journals
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Bharadwaj, A. and et.al., 2013. Digital business strategy: toward a next generation of insights.
Dögl, C., Holtbrügge, D. and Schuster, T., 2012. Competitive advantage of German renewable
energy firms in India and China: An empirical study based on Porter's
diamond. International Journal of Emerging Markets. 7(2). pp.191-214.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Kotabe, M. and Helsen, K., 2014. Global marketing management.
Maital, S. and Seshadri, D.V.R., 2012. Innovation management: strategies, concepts and tools
for growth and profit. SAGE Publications India.
Majaro, S., 2013. International Marketing (RLE International Business): A Strategic Approach
to World Markets. Routledge.
Peng, M.W., 2012. The global strategy of emerging multinationals from China. Global Strategy
Journal. 2(2). pp.97-107.
Peng, M.W., 2016. Global business. Cengage learning.
Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing Sustainable
Business (pp. 327-350). Springer, Dordrecht.
Sharma, P., Chrisman, J.J. and Chua, J.H. eds., 2012. A review and annotated bibliography of
family business studies. Springer Science & Business Media.
Stahl, G.K. and Tung, R.L., 2015. Towards a more balanced treatment of culture in international
business studies: The need for positive cross-cultural scholarship. Journal of International
Business Studies. 46(4). pp.391-414.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Zander, I., McDougall-Covin, P. and Rose, E.L., 2015. Born globals and international business:
Evolution of a field of research. Journal of International Business Studies. 46(1). pp.27-35.
Online
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Wolfsburg, 2017, “The future is created through research – Volkswagen Group Research is
designing tomorrow's world”. [Online] Available through:< https://www.volkswagen-
media-services.com/en/detailpage/-/detail/The-future-is-created-through-research--
Volkswagen-Group-Research-is-designing-tomorrows-world/view/
5256012/980ddfab13f5ab2e336f49dca00b1df?p_p_auth=F0v5UkzG>
Expansion strategies, 2017 [Online] Available through :<
https://www.cf-sn.ca/business/business_expansion/expansion.php>
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