Strategic Analysis and Implementation for Volkswagen AG

This report presents a comprehensive strategic analysis of Volkswagen AG, examining its mission, vision, objectives, and core competencies. It assesses the link between strategic planning and these elements, exploring factors considered during strategic plan implementation and evaluating the effectiveness of techniques like the BCG growth share matrix and PIMS. The report conducts an organizational and environmental audit of Volkswagen AG, analyzes its strategic positioning, and assesses the significance of stakeholder analysis in formulating new strategies. It also explores approaches to strategy evaluation, analyzes alternative strategies for market entry, growth, and retrenchment, and justifies the selection of a specific strategy. Finally, the report discusses the implementation of the chosen strategy, outlining job responsibilities, resource requirements, and the evaluation of SMART targets.

Table of Contents
Task 1..........................................................................................................................................................3
1.0 Introduction...........................................................................................................................................3
1.1 Assessment of the link among strategic planning and business missions, visions, objectives, goals
and core competencies.............................................................................................................................4
1.2 Factors considered while implementing strategic plan.......................................................................5
1.3 Effectiveness of techniques incorporated while developing strategic plan........................................6
Task 2..........................................................................................................................................................8
2.1 Analysis of the strategic positioning of Volkswagen AG by carrying out an organizational audit....8
2.2 Environment audit for VW AG........................................................................................................11
2.3 Assess the significance of stakeholder analysis when formulating new strategy for VW AG..........13
2.4 Presenting new strategy for VW AG...............................................................................................15
3.0 Understand the approaches to strategy evaluation...............................................................................16
3.1 Analyse the appropriateness of alternative strategies relating to market entry, substantive growth,
limited growth or retrenchment for VW AG..........................................................................................16
3.2 Justification of the selection of a strategy........................................................................................17
4.0 Understanding the implementation of a chosen strategy......................................................................18
4.1 Job responsibilities of VW personnel who is charged with strategy implementation.......................18
4.2 Analysis of the estimated resource requirements to implement new strategy..................................19
4.3 Evaluation of SMART targets to strategy implementation..............................................................20
Conclusion.................................................................................................................................................21
Bibliography..............................................................................................................................................22
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Task 1
1.0 Introduction
Strategic planning signifies the managerial processes and the activities of any enterprise that is
incorporated to prioritize the business operations, concentrate on business resources, strengthen
the business activities, taking care of the aspect that the aims and the objectives set by the
company is in alignment with the different stakeholdersincluding the employees, adapting the
enterprise’s behaviour with that to the changing environment. Strategic planning refers to the
calculative steps initiated to sketch the business decisions thus rendering shape to the company,
determining the company’s services, performance while concentrating on certain future
objectives. It is evident that any business enterprise requires an effective business plan framed
with the help of strategic planning. In this following task, the significance of strategic planning
thus highlighting certain points will be addressed, the points being; business missions, visions,
objectives and core competencies influence strategic planning, factors considered while
formulating strategic plan, techniques incorporated while developing plans (Poister, 2010).
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1.1 Assessment of the link among strategic planning and business missions, visions,
objectives, goals and core competencies
Strategic planning often initiates change that seems hard to incorporate in many instances. Thus
it is observed in most of the cases, that the mission and the vision statements of the companies
reflect the sort of change which is desired by the company. Therefore, the vision as well as the
mission statement of the company articulates the mechanics of strategic planning. Nonetheless,
this sort of articulation as well as repetition of the positive mechanics thus initiating change
within the enterprise influence the employees stay involved, concentrated and motivated
pertaining to the entire system opined Goetsch& Davis, (2014). The mission and the vision of the
company must always align with that to the strategic planning process thus resonating the present
situation and the positive drive incorporated by the company. The goals as well as the objectives
are considered to be significant as they help in transforming the vision as well as the mission of
the company to specific calculated targets. Goals and objectives are the “outcome statements”
that actually implements strategic planning while deriving the outcomes. Corecompetencies on
the other hand signifyspecific skills and unique competencies that add to the internal processes of
the company thereby helping it earn its competitive advantage in the respective market. Hence, it
is essential that the strategicplanning remains informed and aligned with the core competencies
of the company (Johnson et al., 2008).
In this case, the mission statement of Volkswagen states that, they will offer attractive and safe
vehicles to their customers, which will have market leadership features and will create new
standard in the market. Thus, from their mission statement it can be concluded that, the daily
operational activities are being clearly and precisely being communicated. This is due to the
reason that, it is being stated in their mission statement that they will offer safe and attractive
vehicles for their customers. Thus, their core activities of providing top quality vehicles to the
customers is being effectively communicated through the mission statement.
On the other hand, the vision statement of Volkswagen states that, they want to be the global
market and business leader in providing safe and sound vehicles to the customers. Thus, they
want to gain the market leadership status in the global automobile scenario. Moreover, it is also
being stated in their vision statement that, they want to be the most sustainable and profitable
automobile organization in the world. Thus, from the above discussion of the vision statement of
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Volkswagen, it can be concluded that, the vision statement of them is stating their future goals
and objectives effectively. Moreover, the vision statement of them is effective due to the fact that
it is being stated in the vision statement that, they want to be a sustainable organization in the
automobile market. Thus, with the current scenario of having issues with the environment, it is
important for the automobile manufacturers to have the sustainable approach in producing new
vehicles. This will help them to gain competitive advantages in the future. Thus, both the mission
and vision statement of Volkswagen are being effective in communicating the business policies
of them.
One of the key goals of Volkswagen is to initiate the use of innovations and technologies in
meeting the customer requirements and expectations. This is due to the reason that, in the current
business scenario, customer satisfaction is one of the key measures that should be maintained by
the business organizations in order to gain competitive advantages in the market. Thus, using of
the innovative ideas and newer technologies in providing the customer service will help them in
enhancing the customer satisfaction level and loyalty.
Another goal of Volkswagen is to increase their sale turnover in the global market. This is due to
the reason that, currently they are trailing behind Toyota in the global market. Thus they are the
second largest car manufacturer in the world. Thus, they have targeted to sell more than 10
million cars in a year. This will help to enhance their market share in the global market along
with overtaking Toyota in having the market leadership status in terms of sale volume.
Another goal that they have initiated for their internal management is to be the most attractive
employer in the world. This will also have positive implications on the business performance of
them. According to the strategy of Volkswagen, they aim to have the best employees in their
organization with having the best in the business facilities for the employees in terms of the
providence of training and other facilities. Thus, this will help them in attracting and retaining
the best quality employees in the organization. This will in turn help them to gain more
competitive advantages in the market.
The core competencies of Volkswagen include the age long experience in automobile
manufacturing along with having the worldwide goodwill and reputation for their products.
Thus, it is helping them in initiating the new technologies in the automobile manufacturing and
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to stay ahead in the competition. Moreover, the global goodwill and reputation being gained by
them across the world is helping them to further penetrate in the new market along with
attracting the new customers around the world. Another core competency being possessed by
them is the worldwide market presence. Due to this advantage of them, it is easy for them to
introduce new products in the market along with having the effective distribution system for
them.
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1.2 Factors considered while implementing strategic plan
The factors considered while implementing the strategic plan are the industry, competition as
well as the strength and weakness. During the process of strategic planning, determination of the
industry appears to be mandatoryincluding the aspects such as the “market size, potential growth,
new market entrants, future threats and others”. Secondly, evaluation of the market position of its
competitors requires to be performed. Thirdly, the company must assess its own strengths,
weaknesses, opportunities and threats in the market byconducting a SWOT analysis. These steps
aid in formulating an effectivestrategic planning in businesses (Cassidy, 2016).
Strengths
One of the key strengths of Volkswagen includes the huge and diversified product portfolio. The
product portfolio of Volkswagen ranges from pickup trucks and luxury sedans along with having
the luxury brands and sports car brands. Thus, due to having the diversified product portfolio by
them, Volkswagen can offer different products for different requirement of the customers from
different regions. Thus, the business risk associated is lees in the case of them. Another key
strength of them is the goodwill and reputation being gained by them. Various other
organizations in this sector cannot compete with them due to the reason of the goodwill gained
by them. It helps them in effectively attracting the new customers.
Weakness
The key weakness of them is the scandal, which is also known as diesel gate being faced
by them. It caused huge loss in terms of goodwill and reputation in the market. Moreover,
another weakness is less market share and innovation in the electric vehicle market.
Opportunities
Entering in the electric market will have huge opportunities for them due to the increase
in the customer preferences in this sector. Moreover, the demand for various utility vehicles are
showing positive trend in the market.
Threat
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Increase in the price of fuel is de-motivating the customers to opt for new vehicles. Thus, the
market for the automobile is gradually reducing. Moreover, the increase in the number of the
government regulations regarding the automobile emission is also creating threat for them.
1.3 Effectiveness of techniques incorporated while developing strategic plan
There are two techniques that might be implemented in developing strategic plan. They are the
BCG growth share matrix and Profit Impact of Market Strategy (PIMS). BCG growth share
matrix calls for four situations such as Stars, Cash cows, Dogs, Question marks. Stars
signifyboth high growth as well as market share. The enterprise would require high amount of
finances to formulate decision in maintain growth and high market share. Cash cows signify
elevated market share and low growth. High market share helps in generating revenue
irrespective of low growth faced by the enterprise. Dog signifies both low growth as well as
market share thus allowing the company to curtail its needless expenditures. Question marks
highlight small market share but good growth which appears risky due to the loss faced by the
company. Thus BCG matrix provides assistance in comprehending when to invest, to release
earning concerning markets section, to evaluate present portfolio balance of the firm and to
strategize for future action (Nippa et al., 2011).
PIMS aids in maintaining the competitive advantage through the providence of evidence thus
pinpointingthe policies. This technique helps in determining business environment, the overall
framework of production system, competitive position of the business, budget allocation and
operational processes of the businesses (Aaker&McLoughlin, 2009).
BCG matrix of Volkswagen
In order to conduct the BCG growth matrix on the Volkswagen group it can be stated that
this can fall under four major aspects. The stars for this company states that they extremely
popular brands in the Europe and USA. They have delivered certain innovative products that
have catered to their market growth. They try to deliver new innovative products every year with
the release of their new models. They sell most units of the VW brands.
Their products are very costly and user friendly as well. This falls in their cash cows. So
they get the most returns from their customers. There are certain question marks that can be
stated as a major fact in their market. They have some environmental and social factors that can
hamper their product sale. The dogs that belong to their BCG matrix is the fact that their product
quality is very high but the market is indeed very low.
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PIMS of Volkswagen
Volkswagen is a globally acknowledged car company who has been producing cars of the
exemplary quality over the years. They have announced their ‘Strategy 2015’ that will focus on
the greener future for the world. They want to produce certain energy efficient cars that will look
after the environment as well. They have been pushing for manufacturing electric vehicles that
will be very much effective to build a healthier environment and earth. They want to get a
profitable growth that will be a long-term process. The emissions scandal has been on the
horizon for Volkswagen for a long time now. They want to produce certain cars that will be
enough to secure the environment and attract the customers more. The pricing strategy of the car
will be a matter of concern indeed. They will put more focus on the cleaner technologies that will
have a bigger impact on the environment.
www.smartdraw.com/growth-share-matrix/
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www.malik-management.com/en/malik-solutions/malik-tools-and-methods/malik-pims
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Task 2
2.1 Analysis of the strategic positioning of Volkswagen AG by carrying out an
organizational audit
The emission scandals concerning Volkswagen has been considered as one of the notable and
infamous illustration in regards to the illegal and unethical practices conducted by the
associations that harms the environment. Undoubtedly, it is knownthat the business enterprise
operates globally under brands like Bugatti, Lamborghini, Audi, Porsche, Skoda and others.
Nonetheless, it was observed that the businessenterprise picked up the scandal as a significant
event thus rendering it the utmost importance while implementing diverse methodologies to
overcome the situation (Blackwelder et al., 2016). The reason is that not only it faced legal as
well as economical consequences but also felt responsible for the damage that has been caused to
the environment. Moreover the business enterprise nurtured a vision of being the globe’s most
well known car manufacturer by 2018. However due to the emission scandal, the company lost
almost one third market cap which urged the business enterprise to apologise on the global
platform thus ordering the voluntary recall where the CEO Martin Winterkorn along with some
other senior officials resigned (Rhodes, 2016).
The company confronts a robust and stiffly competitive global automotive market.So far the
business enterprise has been confronting the fights with its diversified line of products as well as
brands that it created over the years. Currently the automaker has been witnessing sturdy growth
both in countries like China and North America. As far as its competitors are concerned, it is
observed that Toyota along with Lexus is giving hard times to Volkswagen in the global
platform opined Zhang et al., (2016).
There are also other car manufacturers such as the Ford, General Motors and so on that has been
performing well in the global market. Therefore, in order to face the stiff competition and lead in
the market, it is evident that the car makers invest in forming their updated research and
development cell thereby bringing out innovation and creativity to its utmost thus considering
factors like style, design and technology. Though Volkswagen considered all these discussed
factors thus implementing its innovative strategies to construct its global brand image, it was the
act of designing and using the defeat device that showed fake emission level of gases from
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Volkswagen cars which placed the company in an unstable situation. It is further noted that the
capital expenditure of the German business enterprise inflated from € 5.7 billion as recorded
during 2010 to € 13 billion by 2015 while the labour costs magnified almost by ninety percent
from less than € 20 billion to greater than € 36 billion considering the similar time period like
capital expenditure (Lyon & Maxwell, 2011).
Though there is the tint of theemission scandal, VW AG has been witnessed to perform
successfully in China where sales increased 10.3 percent annually. There were around 138900
premium Audi AG vehicles that were sold in China which exhibited an increase of 5 percent in
2017 while compared to the previous year. It is not only in the Chinese market that the sales of
Audi have increased but also in markets like USA and Germany have observed almost similar
growth rates. It was an increase of 2.8 percent of Audi cars in USA while in Germany the growth
rate was 6.7 % (Jung et al., 2017). Through the strategic positioning of the company and its
organizational audit, it is evident that the company is very sensitive about its brand image where
it visualizes itselfas the leading automaker in the globe and thus comes up with innumerable
innovative strategies so that it remains successful in maintaining its relationship with the global
consumers through the incorporation of innovativeness, updated technology, creativity, unique
design and others. Recently it launched “Strategy 2025” which is looked upon as the landmark or
the living change process. Strategy 2025 comes with sustainable mobility thus harmonizing
factors like knowledge, experience as well as vision nurtured by the German carmaker and its
stakeholders (McGee, 2016).
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http://home.bt.com/news/news-extra/3-charts-to-help-explain-the-volkswagen-emissions-
scandal-11364006408331
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