Volkswagen's International Competitive Strategies: A Business Report

This report provides an in-depth analysis of Volkswagen's international business strategies, focusing on its global operations and competitive positioning. It begins with an executive summary outlining the company's objectives and strategies, specifically highlighting the 'Strategy 2025' initiative and its focus on hybrid vehicle development and market expansion. The report then delves into Volkswagen's global operating environment, examining its presence in key markets like India, Thailand, and Indonesia, and its strategic timeline. A significant portion of the report is dedicated to detailing Volkswagen's international competitive strategies, including its efforts to counter competitors like Japanese automakers, and its adoption of global measures, investment in manufacturing, and federated structures. Furthermore, it explores Volkswagen's organizational design, emphasizing its divisional structure and control mechanisms, including global hierarchy, geographical divisions, and product-based divisions. The report also covers Volkswagen's internationalization strategies, such as licensing and franchising. The report highlights key management issues, provides recommendations, and concludes with a summary of the findings and a list of references.

International business across border
International business across border
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Table of content
Executive summary…………………………………………………....... 1
Overview of the company and current operating position…………….2
Company international competitive strategies…………………………3
The existing organizational design structure………………………… 4
Control issues…………………………………………………………… 5
Operational control & supply chain management…………………… 6
Management of human resource across the border…………………. 7
Key management issues………………………………………………… 8
Recommendations……………………………………………………… 9
Conclusion……………………………………………………………… 10
References………………………………………………………………. 11

International business across border
Executive summary
The aim of every company is to make profits. Our project explain about the
Volkswagen company.Birkinshaw et al.(2011 p.45) Volkswagen is a worldwide automobile
manufacture which has more than 10 million sales of passengers cars and it manufactures
more than 6 brands of cars .The company always provide the apt vehicles to the
market .There are various brands of the vehicles that the company deals with such as
the ;Audi, Volkswagen AG,Skoda,and also the Poescher.The company operates in many
countries ranging from 25-30 countries through the world Birkinshaw et al.(2011 p.78)
argues that the company has formulated strategies such as the Strategy 2025 which addresses
the following;
Need to build trust within the company; For the company to regain on the trust for
the consumers and to improve on the quality of the brands sold it was to recommend on
factors that could promote the company’s values. Strategy 2025 of the company aims at
coming up with the values that could sustain the customers at large. Dikova et al.(2010 p.67)
focuses on coming up with appropriate campaign that will improve the stages for car
manufacturing and also the adequate steps that the company takes to satisfy their customers at
large.
Formation of the hybrid focus within the Volkswagen company. Through various
research within the company, it was noted that the hybrid market was a key factor for the
company to consider in order to move forward Verbeke (2013 p.45) noted that most of the
hybrid engines in market fetched huge profits in the market and therefore the company was to
come up with appropriate strategies that will focus in designing the hybrid products. The

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strategy was to market most of the Volkswagen products that is the hybrid vehicles and other
new brands which could give large profits once released into the market.
Overview of the company and current operating position
The company is now operating in different regions of the world .In the global
development it has tried to analyse different countries in order to come up with better results
on the most viable ones .It has been noted that the company has ventured in different
countries such as the India ,Thailand and also Indonesia which for now brings huge profits to
the company due to the presence of the adequate customers Each of this countries have
provided a potential for the Volkswagen to thrive and thus meeting its goals (Shenkar et
al,2014 PP 56-57).
On checking on the implementation timeline of the company ,it has been realised that
Volkswagen has a 10 year plan .The timeline begins from the whole procedure of designing
hybrid vehicles ,coming up with appropriate hybrid programs and increasing the
market .Volkswagen has decided to come up with the campaigns advocating for the
formation of the new branches all over the globe and also establish new strategies that also
could adjust with the local companies within the world Based on the appropriate criteria for
the success ,the company also concentrates on the Strategy of 2025 which forms a vital
procedure for the success. (Shenkar et al,2014 PP 106-107).
Company international competitive strategies.
Volkswagen company has developed global strategies and measures that can help it to
deal with their competitors. For instance, there are other companies in Japan which are
manufacturing vehicles. This companies have formed a threat to the Volkswagen company
and thus a need to devise measures and strategies to overcome them .(Binder (2016) indicates

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that Volkswagen targets to form long term strategies that will help company to step over their
competitors (Chhokar, et al,2013 p.56).Competing all over the whole world needs to
consider strategies such as ;checking on the vital projects in investments which always have
negative ROI , use of financial performances measures that change in foreign countries,
coming up with construction of various products facilities that are of either low or high
labour cost in different countries and lastly viewing the market position country to another so
as to have a wide portfolio on the fact that could determine whether to increase or decrease
the profitability (Chhokar, et al,2013 p.156).
Volkswagen according to the research it has been using the following strategies to win their
competitors all over the world.
1.Coming up with a global measure of its own.
Volkswagen have been in position to integrate all the world strategies that foster to give an
advantage over their competitors in the whole field of the cost and its effectivenss. The
company is now at a different position as compared to the time it started. This has been
facilitated by its capability to come up with the global competitive strategy which has geared
the existence of the company.According to Binder (2016 ). Currently its designing hybrid
engines of high quality than their competitors Toyota company.
2.The willingness of the Volkswagen company to invest in the manufacturing sector.
Currently the Volkswagen company management has been in position to come up with the
ideas on how to invest in the manufacturing field thus leading to the utmost exploitation in
the economies of the scale in all the sales that the company is selling globally.
3.Coming up with federated structures.

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Most of the automobile companies all over the world gain huge profits basically by meeting
the needs of their customers within the market (Binder, 2016 p.149). The company has been
in position to understand on the taste of the different drivers within the globe and thus
manufacturing more sophisticated vehicles which focuses on satisfying the customer needs. It
has been in position to construct new centres and branches which are manufacturing large
number of the vehicles daily as compared to their competitors. The whole body of the
management is allocating adequate funds necessary to purchase materials adequate for
designing improved products.
The existing organizational design structure and the control issues.
Volkswagen company is always based on different organizational design structure
over the world. As the one of the largest automobile business company, Volkswagen utilises
the strategies in the organizational structure to achieve the goals and the objectives of the
company Stahl & Tung .(2015 p.68). The company structure is also connected to other
European traditional structures used. The organizational structure is the key factor that have
helped the company to achieve for the past 50 years in business. It always describes the
Volkswagen company pattern and also the whole arrangement and usage of the resources
within the company. It indicated that the overall image of the company leads to the effective
and most efficient approach in the management sector.
The features of the Volkswagen organizational structure and the control.
In most cases the company tend to have a divisional form of the organizational structure. The
company structure is always characterised by the following factors.
1.The global hierarchy. Volkswagen always keeps the hierarchical structure regardless of the
challenges faced in their operation. Stahl & Tung. (2015 p.118) shows that today’s
organizational structure framework, Volkswagen company has been in position to apply the

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policy of the decision making within the regional administrations and also the whole business
sectors of the heads. However, the whole business decision making process has been reduced
to centralized format. This means that all the superiors in various units and organs within the
Volkswagen always give their reports to the main office or the headquarter within the
company.
2.The geographical divisions structure. Volkswagen organizational structure is formed by
different divisions all over the world. The company operates in countries such as the
America, India, Japan and also China. All the heads within these countries always report to
the headquarter of the company (Beugelsdijk and Mudambi, 2013 p.34). Through the
geographical division of the company, it has led to improve on the quality of the vehicles
manufactured depending on the needs and tastes of the different regions around the world.
3.The product based divisions organizational structure. This forms a key role in selling the
products manufactured in the company. The company has 4 subsections that is the
Volkswagen Lexus ,The Volkswagen number 1 which deals with the European countries, The
Volkswagen number 2 which controls all the branches in the rest of the world and lastly The
Core Unit Centre which operates on the quality of the engines designed ,the mode of
transmission and the rest of the operation mechanisms used. This design of the Volkswagen
company organizational structure always aims to improve the manufacturing of the quality
vehicles and other related products (Beugelsdijk & Mudambi, 2013 p.123).
However, the use of this type of the organizational structure have improved on the
levels of the flexibility within the company. This means that Volkswagen company will be in
position to adjust itself to the needs of different regions within the world thus improving on
the products. Also through the improved methods of the decision making, the company is
now able to come up with new strategies on what to deliver to the market. The structure too

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has improved the growth and the resilience of the company internationally (Beugelsdijk &
Mudambi, 2013 p.174).
The strategies used by the Volkswagen company to enter into other countries.
Internationalization is a model which have been applied nearly by all large business
enterprises. This means all businesses always seek to work in international markets. Every
business always starts within a domestic spheres and as the time goes on the enterprise starts
now to plan on how to venture into other markets outside the domestic markets Doz (2011).
The reason to go for the international markets changes from a company to the other. Most of
the company venture in international markets due to the fact that the domestic market is
inadequate hence giving small profits for the enterprise. Also the economies of the scale
within the company may not be used by the domestic market thus a need to look for new
opportunities outside home. However, we have different entry techniques that most of the
companies uses to go to the outside market. The modes are grouped into two that is the non-
equity mode which includes the contract agreements and the export while the other mode is
the equity mode in entry which always incorporates the joint and the subsidies ventures
within the business. Doz (2011) indicates that in most cases the strategy that fetches the low
market control and the risk is the export and import strategy while the mode with the highest
market control and the risk mechanism is described as the return of the investment.
Volkswagen company uses the following strategies to enter into other countries.
1.The licensing strategy. For every business to invest in foreign countries it must have a
license. Volkswagen company uses license that comprises the company’s patent rights, the
copyrights of the company, the trademark and the product to be dealing with. The production
of the licensors products is always recorded in the This helps the Volkswagen company to
market their vehicles and other related products. The company also pays the license fee and

International business across border
also the royalties connected with the sales return. Licensing is most authorised strategy which
ensures the internationalization license (Forsgren K.& Johanson 2014 p.56).
2.Use of the franchising strategy. This tend to be same as the licensing but it focuses on the
development and the whole control of the various procedures and the activities that always
take place within the business. The company uses the franchises who pay a small fee to the
main company, trade using their products in different countries all over the world. These
franchises use the Volkswagen trademark and also the company’s selling formats and
strategies to sell the products in other countries (Cambridge University Press,2013,p.27).
3.The use of the joint ventures. In most of the international enterprises, the joint ventures also
have the equity position and also the management of the firm. Volkswagen company has
partnered with the domestic country and this has facilitated to formation of a third party. By
this strategy the company is able to sell products to the different nations.
4.Through the direct investment. This involves the total agreement that is based on the whole
ownership. The Volkswagen company uses the direct investment strategy to enter to different
countries Different countries have owned different products from the Volkswagen
company(Stahl et al,2012 p.38).
5.Use of the export and the import strategy. Most of the firms uses this strategy to enter into
different countries. This involves a process of selling most of the products or services
manufactured by a company to the other countries all over the countries apart from the
domestic market. Volkswagen company uses the technique since it sells the vehicles to
almost the whole world. The company is involved in the wholly through the export and use of
urgent in selling the vehicles (Stahl et al,2012 p.98).
Operational control, production and distribution/supply chain management

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In the production level the company uses the computers which reduces the most of
errors that could be incurred during manufacture of new brands, also it reduces failures and
also leads to the uninterrupted production .By use of the computerised ideas and use of
software’s to analyse various components of the products in the Volkswagen it has facilitated
to good quality ,consistent supply of the vehicles in the market and also reducing cases of
recalls and delivery deadline within the market .The operational control of the company is all
under appropriate personel.Every department within the company is under control by the
administration (Okazaki and Taylor ,2013 p.58).
The supply chain management is mostly practised by the most of the automobile
companies. The chain management is the network for the organization since it links different
sections of the organization to the consumers. It integrates on various efforts needed by the
company for the services and products to reach their consumers. Volkswagen company uses
various supply chain management.
1.The tool management and operator model. Every worker within the company is always
awa0re of what specific component is needed to manufacture a specific car The information
within the company terminals gives a description of the important data that can be found in
various shops and also the steps to be followed in chain supply of the vehicles to their
customers. Also the data can inform most of the workers on the information to follow on
usage of the tools (Okazaki & Taylor ,2013 p.148).
2.Application of the spare parts logistics model. The whole idea of spare parts logistics is
important for supply chain management. Volkswagen company keeps adequate spares in their
stocks which are supplied to the customers at the time of need (Tian, 2016 p.50).
3.The inbound production logistic chain of supply. There is flexible manufacturing and the
availability of the sequential allocation of the various parts and components for the specific
vehicles within the company. Each logistic within the company describes the steps needed in

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production level in different manufacturing fields within the company (Cambridge University
Press,2013, p.27).
Management of human resource across the border.
The management of human resource across the borders is done through;
1.Tracing the lifeline of the company. Volkswagen company identifies those measures that
would lead to achieving of the goals. This measures would determine the lifeline of the
company across the borders (Farndale et al,2010 p.49). The integrated teams within the
human resource management check on level of competence of all the human resources within
the company.
2.By building a world database to understand the talents and skills of the human resource
personnel. Human resource management should determine the skills of every personnel
within the company. Volkswagen has database that tracks every human resource within the
company.
3.Constructing a mobility pyramid. Volkswagen company always evaluates the skills of the
managers on their willingness to move to different areas of the experience. This leads to new
opportunities within the company thus able to give various information for the company
survival hence increased economies of scale (Farndale et al,2010 p.189).
Key issue for management within the company.
The opportunities for management within the company focuses on the following.
1.Training and creating awareness about the company. Volkswagen evaluates the
effectiveness of every worker, maintain the appropriate records for all workers including their
level of education the skills and level of the experience. It provides training to human
resources across the bounders so as to increase production (Cristea, 2011 p.76).

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2.Employee motivation and the empowerment. Employee satisfaction is the key factor that
Volkswagen considers. The goal is to keep employees motivated and empowered so as to
increase production level of the company.
3.Effective management of human resource. The company obeys the principles of the human
resource management and it appreciates its importance (Cristea, 2011 p.76). The whole
process of production within the Volkswagen company revolves the ethical measures found
in human resource management. The cornerstone of the organization is within the measures
of human resource.
Recommendations to management for improvement
The following factors will assist the Volkswagen management and also other
automobile companies to improve on the products produced.
1.Using the available technology to connect with the supply chain within the company. Due
to the changing world of technology in supply chain, it is very difficult to know on what is
happening within the supply chain. Terzi (2016) shows the use of the appropriate technology
it will be easy for the company to connect to various chains thus enabling the management to
enter the relevant data regarding the product the customer is need of. Use of mobiles by the
customers will help to formation database software’s with the needs of the customers by the
management.
2.Considering on the quality of the product manufactured. Ineffectiveness and abnormalities
for the products manufactured by the company should be avoided. The company ought to
manufacture quality products with no defects. All the departments within the Volkswagen
company should focus on the quality and also form suggestions that will always aim to
improve on what is manufactured before being released into the market. This will not only
aim to meet the satisfaction of the customers but also to increase the profits for the company
(Poulis et al,2013 p.50).