Strategic Planning of Volkswagen: Issues, Changes, and Recommendations

This report provides a comprehensive analysis of Volkswagen's strategic planning within the automotive industry. It begins by identifying major issues faced by the company, including intense competition from industry leaders like Ford, Toyota, and Honda, as well as the negative impact of the 2015 diesel scandal. The report also highlights challenges related to declining operating profits and insufficient investment in research and development. Subsequently, it proposes strategic changes, such as enhancing innovation, implementing a combined differentiation and focus strategy, and improving its brand image through effective marketing and advertising. The report also suggests cost reduction strategies through supply chain improvements and increased investment in R&D to strengthen its competitive advantage. Finally, the report offers key recommendations for Volkswagen to maintain profitability, including enhanced promotional strategies, increased technology adoption in manufacturing, and improved supplier relationships for lower raw material costs. The report emphasizes the importance of strategic changes and effective implementation for Volkswagen's continued success in the competitive automotive market.

Running head: STRATEGIC PLANNING OF VOLKSWAGEN
STRATEGIC PLANNING OF VOLKSWAGEN
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Table of Contents
3. Project C – Identification of the issues that the organization is facing while implementing the
following,.........................................................................................................................................2
Major issues identified.................................................................................................................2
Strategic change...........................................................................................................................3
Recommendations........................................................................................................................4
References........................................................................................................................................6

2STRATEGIC PLANNING OF VOLKSWAGEN
3. Project C – Identification of the issues that the organization is facing while
implementing the following,
Major issues identified
The major issues that are faced by Volkswagen based on its processes in the automotive
industry are as follows,
The levels of competition that are faced by Volkswagen in the automotive
industry are considered to be quite high due to the presence of organizations like
Ford, Toyota, Honda, General Motors and Nissan.
The diesel scandal that is faced by Volkswagen in the year 2015 has tarnished the
image and reputation of the organization and has affected the consumer base of
the firm in a negative manner (Bloomfield 2017).
Volkswagen has been facing major issues related to the reduction in operating
profits due to the enhanced levels of compliance issues in the automotive
industry.
The lack of investment made by Volkswagen in the research and development
based activities has been a major strategic issue that the organization has faced
(Clibborn, Lansbury and Wright 2016).
The issues that have been faced by Volkswagen in the automotive industry are able to
influence the operations of the firm and its position in the sector as well. The effectiveness of the
strategies of Volkswagen is also affected by the competition that is faced in the industry. The
reputation of the firm has also been influenced in a negative manner by the compliance based
issues that it has faced in the last few years. The lack of proper research and development has a

3STRATEGIC PLANNING OF VOLKSWAGEN
major impact on the products that are offered to consumers (Russo-Spena, Tregua and De Chiara
2018).
Strategic change
The changes that can be applied by Volkswagen in order to mitigate the issues that are
faced by the organization are as follows,
Volkswagen needs to enhance the levels of innovation in the cars for the purpose
of enhancing the differentiation that the organization has been able to develop in
the automotive industry. The implementation of a combination of broad
differentiation based strategy and focus strategy in order to maintain its position
in the automotive industry (Lockrey 2017).
The reputation or image of Volkswagen can be improved with the help of proper
development of promotional and advertising based activities that can help the
organization to increase awareness related to the products (Volkswagen.com.au,
2020).
The enhancement of operating profits of Volkswagen will be based on the proper
reduction of the production and manufacturing related costs that have to be
incurred by the organization. The production costs can be reduced by Volkswagen
with the proper improvement of supply chain of the firm. The company can aim at
developing relationships with the suppliers for the purpose sourcing raw materials
at lower prices (Masoumi, Kazemi and Abdul-Rashid 2019).
Volkswagen can enhance its competitive advantage in the automotive industry by
increasing the levels of investments in the research and development process of
the organization. The proper improvement of research and development based

4STRATEGIC PLANNING OF VOLKSWAGEN
activities can influence the organization and its operations in a huge manner
(Russo-Spena, Tregua and De Chiara 2018).
The strategic changes that can be implemented by Volkswagen will play a major role in
proper enhancement of its position in the automobile industry. The reputation that has been
formed by Volkswagen in the automotive industry will also be influenced in a huge way by the
promotions that have been developed by the organization. Volkswagen will also be able to
enhance the operating profits in an effective manner with the support that is provided by proper
reduction of the costs based on production (Russo-Spena, Tregua and De Chiara 2018). The
implementation of strategic changes is considered to be important for the organization in order to
maintain its position in the highly competitive automotive industry. The profitability levels of
Volkswagen will also be enhanced in an effective manner with the help of proper
implementation of strategic changes. Volkswagen can also maintain its successful position in the
automotive sector by enhancing the customer base with the help of proper communication and
promotional strategies of the organization (Masoumi, Kazemi and Abdul-Rashid 2019).
Recommendations
The key recommendations that can be proved to Volkswagen so that the organization can
maintain its profitability in the industry in its future operations are as follows,
Volkswagen can enhance its position in the industry by proper development of the
promotional and advertising strategies in order to reach the consumers faster.
Volkswagen can increase the usage of technologies in the production and
manufacturing processes of the organization.

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Volkswagen needs to enhance the relationships that have been established with
the suppliers in order to procure the raw materials at lower prices. This will be
able to reduce the production costs of the organization.

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References
Bloomfield, G.T., 2017. The world automotive industry in transition. In Restructuring the global
automobile industry (pp. 19-60). Routledge.
Clibborn, S., Lansbury, R.D. and Wright, C.F., 2016. Who killed the Australian automotive
industry: The employers, government or trade unions?. Economic Papers: A journal of applied
economics and policy, 35(1), pp.2-15.
Lockrey, S., 2017. Temporal ripples-Automotive industry influence on contemporary Australian
design practice. In AHA 2016 Automotive Histories: Driving Futures (pp. 1-16). Automotive
Historians Australia.
Masoumi, S.M., Kazemi, N. and Abdul-Rashid, S.H., 2019. Sustainable supply chain
management in the automotive industry: A process-oriented review. Sustainability, 11(14),
p.3945.
Russo-Spena, T., Tregua, M. and De Chiara, A., 2018. Trends and drivers in CSR disclosure: A
focus on reporting practices in the automotive industry. Journal of Business Ethics, 151(2),
pp.563-578.
Volkswagen.com.au, 2020. Volkswagen Australia | Passenger Cars & Commercial Vehicles.
[online] Volkswagen.com.au. Available at: <https://www.volkswagen.com.au/en.html>
[Accessed 17 April 2020].