Strategic Analysis and New Strategy for Volkswagen

This report presents a comprehensive analysis of Volkswagen's business strategy. It begins with an introduction to business strategy and its application within the automotive industry. The report then delves into an organizational audit of Volkswagen, utilizing SWOT analysis to assess internal strengths and weaknesses, and an environmental audit using PESTLE analysis to examine external factors. The importance of stakeholder analysis in strategy formulation is discussed, followed by a proposal for a new product development strategy for Volkswagen. The report further explores the appropriateness of alternative strategies for different market conditions, justifies the selection of the chosen strategy, and outlines the roles and responsibilities of personnel involved in strategy implementation. It also estimates resource requirements and evaluates the contribution of SMART objectives to achieve strategy implementation. The report concludes with a summary of findings and recommendations, supported by relevant references.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................1
2.1 Analysing strategic positioning of Volkswagen using organisational audit....................1
2.2 Environmental audit for VW AG.....................................................................................3
2.3 Importance of stakeholder analysis at the time of framing new strategy.........................4
2.4 Presenting a new strategy for Volkswagen......................................................................4
TASK 3............................................................................................................................................5
3.1 Appropriateness of alternative strategies for different conditions in Volkswagen .........5
3.2 Justification of the selection of chosen strategy...............................................................6
TASK 4............................................................................................................................................6
4.1 Roles and responsibilities of personnel who help in strategy implementation................6
4.2 Estimated resource requirements for implementing a new strategy.................................6
4.3 Evaluating contribution of SMART objectives to achieve strategy implementation.......7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategy is an art of management of business in which they formulate plans and
take decisions to achieve the organisational goals. Present report discusses about the way in
which goals and objectives of business help in strategic planning. Further, it discusses the factors
which are used to develop the strategic plan and effectiveness of techniques used in making
plans. The project focuses on strategic positioning of organisation and suggest a new strategy in
order to implement in the workplace of Volkswagen company. Then shows about the approaches
of strategic evaluation and also determined the measures to implement strategy formed. Apart
from this, internal and external environment of Volkswagen is analysed with the help of SWOT
and PESTEL analysis. Further, roles and responsibilities of employees in order to implement
strategy as well as resources required to execute business strategies in Volkswagen are evaluated
here. At the end of the report, SMART objectives are framed which are supportive to achieve
organisational goals.
TASK 1
Enclosed in PowerPoint Presentation
TASK 2
2.1 Analysing strategic positioning of Volkswagen using organisational audit
When an analyst is going to audit an organisation then considered different models and
approaches. In the present case scenario, Volkswagen is taken into account and for assessing its
internal environment, SWOT analysis is done which is shown as below:
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Illustration 1: SWOT Analysis
(Source: SWOT Analysis: Theory, 2017)
Strengths:
 It provides a wide range of cars due to which customers have adequate option to select a
product for purchasing.
 It allows to users or customers the higher quality of cars and luxurious as well.
 It has 350,000 workers across the globe.
 When looking at brand image then it has a huge presence across the world.
 Advertising and marketing strategies of Volkswagen are highly attractive that is another
strength of firm.
 It produces assembly cars also for users which is the key attraction point for customers
(Volkswagen SWOT Analysis, USP & Competitors, 2017).
Weaknesses:
 The major weakness of Volkswagen is related to competition with global car producers.
This particular condition creates an issue of limited market share growth in the auto-
mobile industry.
 Fraud as well as the controversy in terms of emission of cars lead to affect brand image
of Volkswagen negatively.
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Opportunities:
 Key chance Volkswagen has is that, establishment of relations with non-German car
producers up to the long period.
 Enhancing purchasing power of the employees (Scholes, 2015).
 Entering in different markets along with highly innovative and attractive cars
Threats:
 Using unique and innovative features in the cars by rivals create a negative influence on
revenue as well as market share.
 Increase in prices of fuel like petrol and diesel affect the selling of cars.
 Rules and regulations of the government are another major threat for Volkswagen.
2.2 Environmental audit for VW AG
In order to conduct environmental audit of Volkswagen, different models are available to
them where the most suitable one is PESTLE analysis. In this, various factors are included which
have either negative or positive impact on the firm as mentioned below:
 Political: As per this, when government of country makes changes in rules and
regulations of business then it creates a huge impact. For instance: if rules of exporting
cars become tough then negative impact on sales is made up to a greater level (Teece,
2010).
 Social: Under this, needs, demands, tastes and preferences of customers are involved
which has high influence on chosen company. For example: if income level of customers
will get increased then they would demand luxurious and high features of the cars. Due to
this, Volkswagen's sales, revenue and profit get affected in an adverse direction.
 Economic: It includes exchange, interest, GDP, inflation, etc. rates of an economy which
have the direct influence on the firms. According to this, if inflation rate enhances in the
country then prices increase where Volkswagen cannot make more sales and profit. Due
to this particular condition, the purchasing power of customers will decline and create
major influence on the profitability position (Astrachan, 2010).
 Technological: Due to change in the techniques, Volkswagen will be able to produce
higher quality of cars which is one kind of positive impact on business. However,
implementation of new technology imposes the cost or financial burden on firm.
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 Legal: This particular factor of external environment comprises of several aspects like
tax rate, legal laws and regulations, etc. Further, employment act, discrimination law,
employee relations act, etc. are mandatory to be followed by the firms. If Volkswagen
considers all these rules in a proper manner, then influenced up to the higher level.
 Environmental: Apart from the above all explained factors, environment also has
negative as well as positive impact in both direct and indirect way on the selected firm of
auto-mobile industry (Meskendahl, 2010).
2.3 Importance of stakeholder analysis at the time of framing new strategy
It is a technique through which an organisation is able to know the needs, wants, opinions
and values of various stakeholders like employees, customers, managers, government,
shareholders, supplier, creditors, etc. When the Volkswagen is going to formulate and use any
kind of tactic then it is necessary to analyse various stakeholders. On the basis of this,
management of Volkswagen is able to know needs and wants of customers as they are the key
assess for firm. When Volkswagen firm goes for producing new cars then use needs and
preferences of users then easily able to sale more cars in the market. Apart from this, when the
Volkswagen is going to arrange training and development programs then by evaluating views of
employees as well as their mentors, can assess specific kind of training which they required.
When looking at the shareholders of company, these are always concerned for higher dividend
and return. In context of this, if it makes any kind of changes in dividend policy, then it is
necessary to analyse their views and opinions (Verbeke, 2013). In addition to this, for assessing
the reaction of people towards Volkswagen firm also the stakeholder analysis is significant.
2.4 Presenting a new strategy for Volkswagen
Volkswagen wants to enhance value for customers along with gaining higher market share
in auto-mobile industry worldwide. In order to attract large number of car purchasers, it must
requires providing them unique products as compared to its competitors. Due to this particular
condition, management of Volkswagen should adopt product development strategy at the
workplace. According to the suggested method, chosen firm produces unique and innovative
products with high features as compared to its various rivals. Further, when the selected
company of auto-mobile sector considers this recommended technique then can be attracted
people worldwide (Campbell, Edgar and Stonehouse, 2011).
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TASK 3
3.1 Appropriateness of alternative strategies for different conditions in Volkswagen
In any kind of company, wide range of situations come into consideration where suitable
and effective strategies are adopted in the proper direction. For the basic four conditions like
market entry, retrenchment, substantive and limited growth, appropriate tactics are stated as
below:
Market entry: As per this, company wants to enter in a new market which helps to
generate huge sales along with increasing total market share. When Volkswagen is going to enter
in the potential market like German or any other than various tactics available with it. Moreover,
such methods include merger, acquisition, strategic alliance, franchising, licensing, foreign
investment export goods and services, etc.
Substantive growth: According to this specific situation, management wants to enhance
growth rate in market for long term and on a continuous basis. When Volkswagen adopts this
kind of strategy at workplace then to raise market share will become easy. Further, suitable
tactics on this condition available with Volkswagen are related and unrelated diversification as
well as horizontal and vertical integration (Oltra and Luisa Flor, 2010).
Limited growth: A business when wants to grow in industry where it performs but with
the limited edition then limited growth concept is considered. Further, these include market
penetration, market growth as well as the product development strategies.
Retrenchment: When the firm grows continuously and complete all stages of industry
life cycle then go for the using policy of retrenchment. In the present case, Volkswagen is not at
the condition of retrenchment but in the future it will come at this situation where some
techniques are available with it. Moreover, retrenchment strategies include a turnaround,
liquidation as well as divestment.
On the basis of above analysis, it can be said that when Volkswagen considers the above
presented strategies then it will be able to meet desired objectives in auto-mobile sector.
3.2 Justification of the selection of chosen strategy
In the present case study of Volkswagen, different strategies are advised which help in
fulfilling its set aim and purposes. Among them, new product development strategy proves to be
the best one which is one of the methods of Ansoff’s matrix. The reason behind recommending
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this specific strategy is that the stated auto-mobile firm has limited market share growth due to
providing innovative cars by global brands. By considering new product development plan, when
Volkswagen enterprise will offer new developed cars to the people along with high innovations
and unique features then easily able to attract them. Apart from this, it has an opportunity to tie
up or establish relations with non-German car manufacturers (Reich and Benbasat, 2013). In this,
if Volkswagen produces cars of higher features then it will be easy to attract people at large scale
across the world. Moreover, due to having objective of boost up market share, the new product
development strategy is suggested to the chosen organisation of auto-mobile industry.
TASK 4
4.1 Roles and responsibilities of personnel who help in strategy implementation
When an organisational member is going to help in the workplace of Volkswagen entity
for implementing strategies then must have some roles and accountability. Furthermore,
personnel which involved under this are like employees, team leader, manager etc. The leader
must has the ability to handle all the situations and issues which can be incurred in the
workplace. While applying any kind of strategy in the company, the manager should analyse
current business trend and scenario. The reason is that, if conditions are not in favour of the
strategy then become failure up to the larger level. Another responsibility of the team leader and
manager is to allocate the works among team members and complete own tasks as well on time
(Schrader, Freimann and Seuring, 2012). Once the strategy is implemented then evaluation and
monitoring within the specific period is highly required. Therefore, that specific manager has the
role to review the strategy that whether it works properly or not. If the manager or team leader
found that situations are sometimes going wrong, then corrective actions are to be taken.
4.2 Estimated resource requirements for implementing a new strategy
When a company is going to implement and execute any kind of strategy in the working
environment, then some resources are required which are explained as below:
 Human resource: Under this, people are needed for starting any kind of work in the
company like development on innovative cars. In this, workers, employees, managers,
etc. are included which help Volkswagen in order to make plan and design additional
features in the car. Apart from this, for operating any kind of machinery which used for
developing new product, human resources are needed up to the higher level.
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 Financial resource: This is one kind of backbone for any enterprise through which raw
materials for new product development can be purchased in the working environment
(Issa-Salwe, and et.al., 2010). In addition to this, for purchasing machinery and providing
salary to the manpowere, financial resources are needed.
 IT resource: Apart from the above stated needed resources, information technology is
one of highly required resource that support to make innovative features of cars at low
cost and in minimum period of time.
 Time and material resource: Further, time along with the material also have pivotal role
at the time of implementing new strategy or tactic at workplace of Volkswagen (Higgins,
Omer and Phillips, 2015).
4.3 Evaluating contribution of SMART objectives to achieve strategy implementation
When the firm prepares objectives considering SMART concept then it becomes able to
meet desired aim which is stated as below:
 S stands for specific which provides clear outline about the objective to all the
organisational members. For example: to enhance market share by 12.5% in next year.
 M refers to Measurable where the purpose should be measured with specific terms. For
example: To measure the framed objective market share of the last year will be
compared.
 A indicates to achievable which helps to meet aims and objectives of the firm in the
proper direction. To achieve this objective, effective marketing strategies will be used for
attractive huge customers.
 R shows to the realistic which must be real and exist able in the workplace. If it is unreal
then employees cannot complete tasks and meet desired goals (Parnell, 2010).
 T stands for timely where objective should be achievable within specific time like the
half year, one year etc. In order to meet this objective one financial year will be required.
CONCLUSION
From the above report, it can be articulated that at the time of formulating the strategic
plan, vision, mission, core competencies and objectives of the firm play a significant role. BCG
matrix is an important tool which supports to measure the effectiveness of strategic plan in an
organisation. In order to conduct internal and environment audit of Volkswagen, SWOT and
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PESTLE analysis models prove to be highly effectual. Further, stakeholder analysis has a pivotal
role in company which supports to make an effective strategic plan. It can be concluded that
there are different suitable strategies available with Volkswagen like market entry, limited
growth, retrenchment and substantive growth. Besides these, for implementing new strategy and
tactics, resources like human, financial, material, time, IT, etc. are required in the auto-mobile
firm. It can be said that Volkswagen should adopt new product development strategy which will
help to increase its market share worldwide.
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REFERENCES
Journals and Books
Astrachan, J. H., 2010. Strategy in family business: Toward a multidimensional research
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Campbell, D., Edgar, D. and Stonehouse, G., 2011. Business strategy: an introduction. Palgrave
Macmillan.
Higgins, D., Omer, T. C. and Phillips, J. D., 2015. The influence of a firm's business strategy on
its tax aggressiveness. Contemporary Accounting Research. 32(2). pp. 674-702.
Issa-Salwe, A. and et.al., 2010. Strategic information systems alignment: Alignment of IS/IT
with business strategy. JIPS. 6(1). pp. 121-128.
Meskendahl, S., 2010. The influence of business strategy on project portfolio management and
its success—a conceptual framework. International Journal of Project
Management. 28(8). pp. 807-817.
Oltra, M. J. and Luisa Flor, M., 2010. The moderating effect of business strategy on the
relationship between operations strategy and firms' results. International Journal of
Operations & Production Management. 30(6). pp. 612-638.
Parnell, J. A., 2010. Strategic clarity, business strategy and performance. Journal of Strategy and
Management. 3(4). pp. 304-324.
Reich, B. H. and Benbasat, I., 2013. 10 Measuring the Information Systems–Business Strategy
Relationship. Strategic Information Management. p. 265.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Schrader, C., Freimann, J. and Seuring, S., 2012. Business strategy at the base of the
pyramid. Business Strategy and the environment. 21(5). pp. 281-298.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range
planning. 43(2). pp. 172-194.
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Verbeke, A., 2013. International business strategy. Cambridge University Press.
Online
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<http://www.mbaskool.com/brandguide/automobiles/1527-volkswagen.html> [Accessed
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