Comprehensive Business Strategy Report: VW AG Case Study Analysis

This report provides a comprehensive analysis of the business strategy of Volkswagen AG (VW AG). It begins with an introduction to strategic planning and its importance for business success. Task 1 delves into the core elements of a business plan, including mission, vision, goals, and objectives, using Sainsbury plc as a case study. It explores strategic planning components like industry analysis, competition analysis, and SWOT analysis. The report also examines the effectiveness of the BCG growth-share matrix in developing strategic plans. Task 2 focuses on VW AG's strategic positioning, providing a detailed SWOT analysis that highlights the company's strengths, weaknesses, opportunities, and threats. It then presents a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors affecting VW AG. The report concludes with a discussion of the Diesel Deception Scandal and its impact on VW AG's brand image. The report offers valuable insights into strategic planning, market analysis, and the factors that influence business performance in the automotive industry.

STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1...........................................................................................................................................1
1.2...........................................................................................................................................2
1.3...........................................................................................................................................3
TASK 2............................................................................................................................................4
2.1...........................................................................................................................................4
2.2...........................................................................................................................................6
2.3...........................................................................................................................................7
2.4...........................................................................................................................................9
TASK 3............................................................................................................................................9
3.1...........................................................................................................................................9
3.2.........................................................................................................................................10
TASK 4..........................................................................................................................................10
4.1.........................................................................................................................................10
4.2.........................................................................................................................................11
4.3.........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategy is the foremost requirement for any business in order to achieve companies pre-
set objectives. Business strategy is the perfect outline which is mostly determined by the top
level authority in the firm so that the firm can do effective performance (Sprengel and Busch,
2011). This is the most important part in any company by which company makes ways for
reaching to its targets. In this competitive world, no one can survive without framing effective
strategy. Strategy formulation is not an easy task for the company. In this report, business
strategy of the VW AG is made after gone through an extensive analysis via internal and external
tools. Marketing plans are made here.
TASK 1
1.1
Business plan is the most effective tool which is used by each firm for gaining finance for the
firm. Under this various strategy are covered which can be used by the firm for achieving its pre-
set objectives.
Mission: This is the set of aim which a firm intends to attain shareholders’ desires. This
assists to determine how firm operates, their customer, different goods and services and their
service quality to customer. This is the main tool which are used by the firm for making business
objectives of the Dragon Den. Mission statement of Sainsbury plc that the strategic planning are:
 To form value for their precious customer.
 To gain loyalty.
 To spread out market share.
Vision: This statement determines future outlook of a firm. This assists to determine
possible revenue and growth of the firm. Vision statement of Sainsbury plc. uses:
 To be highly valued by the consumers, employees and shareholders.
 To be development company.
 To be a modern and innovative firm.
 To implement their service internationally.
Goals and objectives: Goals and objectives are normal guidelines which a firm to attain
under a particular period of time. Objectives are the stages to attain goals. Objectives means to
short term plans means to long term plans of the firm.
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Sainsbury plc objectives are:
 To be a renowned retailer.
 To expend the core firm.
 To emerge retailing services.
Core competencies: These are the most powerful skills and qualities which assist the
firm to gain their sales targets. These are the skills and qualities which is unique in itself. This
assists to form a brand image for customers and gain their blind trust on the firm.
The core competencies of the Sainsbury plc in its retail network that assist to attain its core aim
in a successful manner.
1.2
Strategic planning is the procedure under which a firm could identify could its strategy
and form decisions about how to assign its resources to achieves this strategy. This likewise
renders guidelines to use this strategy.
Three components are needed to be considered while making strategic planning. They are:
Industry: The overall industry is needed for evaluation. The market size, previous and possible
growth, advanced market entrance, competitive profitability and forthcoming threats must be
adopted while evaluating industry. The varying in these components might have effective impact
on the activities of a firm.
Competition: There is a need to know and assess competitors’ analysis so that they could form
strategic planning. There is strong need to know about the rivals so that Sainsbury can make
strategy for gaining effective strategy. Sainsbury needs to identify the strengths and weakness of
its rivals and find out the way under which competitors satiate the requirement of their
consumers.
Strengths and weaknesses: SWOT analysis is an important tool which are required for making
the strategic planning. Strengths and weakness is an inner factors and opportunities and threats
are external issues of the firm. A firm need to identify its inner strengths and try to enhance these
strengths. On the other hand, this is essential to determine its weakness. By determining its
weaknesses, the firm can take effective improvement and could limit its weakness.
1.3
Effectiveness of the techniques are used here for developing strategic plans of Sainsbury
plc. by using BCG growth share matrix. This is done as under:
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BCG growth share matrix:
This is the matrix which is made into four dimensions by Sainsbury plc is going to face.
As per BCG matrix, Sainsbury is going to face going to face four kinds of situations:
1. Stars: Under this, more growth and more market share are covered. Under this
circumstances, firm makes more money for formulating decisions about how to continue
growth in the market so that high market shares can achieved.
2. Cash cows: This covers low growth and high market share. In cash cow, company might
face low growth in the market but during similar time. Under this higher level of market
share are there via which higher growth can be produced.
3. Dog: This is the segment under which low growth and low market share stick. Under this,
company take appropriate actions for cutting the costs. When goods stops to form profits,
the firm needs to close its business and bring an advance one.
4. Question marks: Under this situation, market share is low and the growth rate is high.
Under this situation, risk covered as low market share covers loss to the firm. This
reflects newly made goods in the market.
Benefits of the BCG matrix:
This matrix assists firm to assess about where to invest, when to divest earning from market
segment, when to concentrate on an advance business.
Other benefits of BCG matrix are:
 This assists to analyse firm's existing portfolio balance.
 This is easy model and easy to follow.
 This assists for forming decision about future actions.
Disadvantages of BCG matrix:
The main drawback of BCG matrix are mentioned:
 This refuse synergies effect among business units.
 Prosperity of the firm cannot only be demonstrated by the higher market share. This
likewise based on other issues.
 Market growth is not the only factor which demonstrates market attractiveness.
 Market growth is not the only component which reflects by the higher market share. This
likewise based on the other issues.
 This is not an easy thing to get data about market growth and market share.
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 Overall proper position cannot be analysed on the basis of these factors.
 In this situation, this can be seen that dogs can have higher money even more than the
cash cows.
 Sometimes, this is seen that a market with the high share reflects lower gain.
 Sometimes lower market share could reflect more profitability.
TASK 2
2.1
Strategic positioning is the activities done by VW which is different from their
competitors or doing similar activities in different manner. With the help of this, VW is become
one of the superior industry performer. The VW AG manufactures passengers’ cars such as
Bentley, Bugatti, Lamborghini etc. as well as motorbikes under the Ducati brand which make
them different from others. They mainly focus on providing comfortableness to the customers by
offering various features in their vehicles and this will create a positive image in customer's
mind.
SWOT Analysis:
It helps in identifying strength, weaknesses, opportunities and threats fo company
through which company able to manage threats effectively and take suitable actions to convert
opportunities into positive outcomes.
Strengths:
 Presence across worldwide: VW AG carry string brand image operating their business in
more than 153 countries across worldwide and become the third largest auto mobile
manufacturer industry in 2012.
 Strong R&D: The company attains strong R&D section through which they make
innovative changes and inventions in their vehicles. This will help company in achieving
growth of company day by day.
 The number of employees: There are over 592,586 employees who worked for VW AG
to make strong brand.
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 String Diversified Portfolio: The VW AG manufactures passengers’ cars such as
Bentley, Bugatti, Lamborghini etc. as well as motorbikes under the Ducati brand which
help them in attaining strong brand image in competitive market.
Weakness: Weak position in the united states: VW AG carrying lowest market share in United
States. The company started its new factory in US in 2011 has unable to reach their target
sales till now. Most of their cars are not environmental-friendly: The company manufactures vehicles
such as Porsche, Lamborghini and Bugatti which have excessive carbon-dioxide that
damage the environment. An if government take any legal action against them then it will
damage the brand image of company.
 Diesel Deception Scandal: The company has installed illegal software to cheat emission
test which allow diesels cars to make more pollution. Through which government orders
company to recall their diesel cars from the customers which majorly make negative
impact on the global car market.
Opportunities: Changing technology: In order to overcome diesel scandals the company needs to
change technology through which they manufacture environment-friendly cars which
helps in improving their brand image again. Decreasing fuel price: In order to attain large market, share the company need to
decrease their fuel price which help in increasing their sales of vehicles.
 Rooms for social responsibility: The company needs to make changes in their technology
in order to manufacture cars environment-friendly which will benefit to the society.
Threats:
5. Carbon Dioxide Emission Standards: If the government imposed some action against
the company regarding emitting carbon-dioxide then it will create a negative impact on
the brand image of company.
6. Decreasing fuel price: The demand of hybrid cars will may start falling due to decrease
in fuel price.
2.2
PESTLE Analysis
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Political Factors: It refers to laws and regulation imposed by government which need to be
followed by every company.
Political factors Affecting Volkswagen:
 Due to strict rules and regulation of government regarding protecting environment, the
company needs to take corrective precautions and care of the environmental issues while
manufacturing their auto mobiles.
 The UK government has provided support to manufacture hybrid vehicles due to its eco-
friendly emissions through which company focuses on manufacturing environmental
friendly vehicles in order to attain largest market share in economy (Sprengel and Busch,
2011).
Economic factors: The economic factors such as inflation, deflation, interest rates, monetary
policies etc. which affect the company either in positive or negative way.
Economic factors affecting Volkswagen:
 Manufacturing expensive cars by company involves huge revenue in marketing and
designing new product through which the company can able to recover their cost either
demand was less than supply.
 If UK faces deflation times, then the country does not make enough cash and through
which the company also fails to earn additional income.
 The high petrol prices do not bring huge impact on the economy and profits of company
as now more cars come in the market which is fuel efficient therefore it does not not
make impact on the buyer purchasing power.
Social factors: It is related with changes occurred in cultures and demographics while
performing function by company.
Factors affecting Volkswagen:
 Mostly customers prefer those cars which looks more attractive through which they can
build their personal image in front of people.
 The customers purchase cars according to their needs and requirement. If the customer
has a large family then they prefer cars which is bigger in size (Schaltegger and Wagner,
2011). Some customers buy sporty, luxurious and stylish cars that they feel more
comfortable in.
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Technological Factors: It refers to improving existing technology in order to enhance the
quality and features of product.
Factors affecting Volkswagen:
 As the government imposed rules and regulation regarding protecting environment
therefore company needs to develop technology and focus on manufacturing eco-friendly
cars which cannot harm the environment.
 In order to reducing transportation accidents, the company needs to implement automatic
pilot which will monitor the function of cars.
Environmental Factors: It is related with external factors which affect the operation of
business. Such external factor includes climate, weather, pollution and environmental related
laws.
Factors affecting Volkswagen:
 The company manufactures cars which uses diesel or petrol as fuel must affect the
environment in negative manner. Through this the air in the environment get polluted.
 The steel used in cars made up of iron and the process of converting iron into steel causes
water as well as air pollution. Therefore, company need to take care of environment
through investing in R&D department so that they can produce cars locally without
damaging an environment.
Legal Factors: It’s related with laws and standards that to be followed by an organisation.
Factors affecting Volkswagen:
As the company operate in 153 countries and every country has different laws and
standard therefore company needs to concentrate on legal requirements such as taxation law,
labour law, emission law etc. which helps them in operating business more smoothly. While
exporting and importing of raw material the company need to follow taxation requirement of
government.
2.3
Stakeholder refers to a person, employees, suppliers, investors etc. that involved in the operation
of business and whose contribution to the organisation plays an important role in making
business more successful. Therefore, stakeholder analysis need to be done in order to identify the
people who support business operations (Rahbar and Abdul Wahid, 2011).
Some benefits of stakeholder analysis of developing new strategy are as follows:
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IT helps in getting important opinions and views from stakeholders in order to make strategy
more effective.
Receiving support from potential stakeholders also helps in formulating new strategy more
effective.
In order to understand the behaviour of stakeholder, it should require for manager to
communicate to them on regular basis.
It also helps in estimating what people think about business and further analysing needs and
demand of people related to their product (Gamble and Thompson Jr, 2014).
The steps of stakeholder analysis for Volkswagen are under as follows:
Step-1:
In the first step, the company needs to find out about who are involved and affected by its
business operations.
Step-2:
In the second step, it needs to identify the roles and responsibility of stakeholders in
operations of business. The interest and power of stakeholder should also have analysed.
Therefore, company need to build a stakeholder grid in order to determine the influencing power
of stakeholder.
 High power and high interested stakeholders influencing strategies more and also
promote product.
 High power, low interested stakeholders also influences the strategies but due to less
interest the stakeholders take minimum participation in business operation.
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 Low power and high interested stakeholders should need to be informed about the
strategies.
 Low power and less interested stakeholders should not affect much in influencing
therefore company takes less efforts to monitor them.
Step 3:
This is last and final step of stakeholder analysis in which company needs to improve
better understanding of the strong stakeholders so that they can receive feedback and support
from them.
2.4
Volkswagen new strategy should be based on the providing importance to the customers
through satisfying them by offering stylish and luxurious cars. The company fist need to identify
the needs and requirement of targeted customers and accordingly make innovative changes in
features of cars so as to provide comfortableness to them. This will help company in generating
high revenue and attains largest market share in competitive environment.
TASK 3
3.1
Substantive growth strategy: This strategy includes horizontal and vertical integration that is
applied for motivating business (Murano and et. al., 2011). This provides the advantages of the
integral resources which can implement their top rivals to adhere similar segment of business.
Growth strategy of the VW AG is about expending of their activities. For achieving this aspects,
VW AG provides their products in new market. This will help the firm to evaluate trends and
activities for making changes in the production process and this would likewise gain the core
competencies. Changing in the goods can stimulates the firm which will be efficient as this will
enhance more firms.
Growth strategy: For making a business objectives of the firm, VW AG use market penetration
strategy for growth. According to this strategy, firm can gain boost existing products into new
market with an advance market covering advanced profits. These process will require higher
amount of funds and human resources. In addition to this, market share of the cited company can
be enhanced by applying strategy by way of limiting prices.
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3.2
By doing external and internal audit, VW AG market growth strategy is implemented in an
effective manner. However, VW AG is known for its advanced technology and strong human
talent. The manager of the cited company has identified that firm have inadequate needs of
training skills and knowledge for facing competition in this emerging market. Advancement in
the technology and skills of the candidates would assist them to improve the organisational
goodwill and also to enhance the market share (Grant and Taylor, 2014). Few of the reliable
plans are: Suitability, Feasibility and Acceptability.
TASK 4
4.1
The strategy implemented by the person who could lead over personnel and segregate
activities among employees as per their roles and level within the firm (Moseley, 2017). The
employees are charged to apply the strategy that must have few of the roles and responsibilities.
For assessing a sound strategy, these roles and responsibilities of the personnel must have to be
determined in a specific format. VW AG Company's managing director is accountable to
communicate strategy connected information to the employees and diverse parties. He is the only
person who is accountable to direct strategic planning. Various personnel roles and
responsibilities are mentioned hereunder:
Research and development manager: For implementing new strategy, role of the
research and development manager would accumulate and communicate information that could
be implemented in the strategy and many of the modifications, firm required to face. Deep
investigation of market and efficiency of the existing policy to collaborate with an advanced
strategic plan are done by the manager.
Production manager: For assessing an advanced strategy, Production manager would be
accountable to provides training and guidance to the new and existing staff for implementing
resources and apportioned of the resources adopting skills of individual. Apart from this,
production manager is required to identify issues or problems by investigating strategy before
implementing plans (Hair, 2015).
Finance manager: For applying strategy of the joint venture, finance manager estimates
additional costs and also essential guidelines to the senior level authority to apply changes that
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