Business Strategy Report: Analyzing VW AG's Strategic Positioning

This report provides a comprehensive analysis of Volkswagen AG's business strategy. It begins with an introduction to business strategies and their importance, followed by an analysis of VW AG's strategic positioning, including a SWOT analysis of the automotive industry and an environmental audit using the PESTLE model. The report emphasizes the importance of stakeholder analysis and proposes a new strategy for Volkswagen AG, focusing on market and product development. It explores the appropriateness of various alternative strategies, such as market entry, substantive growth, limited growth, and retrenchment, justifying the selected strategy. Finally, the report outlines the roles and responsibilities for strategy implementation, analyzes the required resources, and highlights the contribution of SMART targets to the success of strategy implementation, concluding with a summary of key findings and recommendations.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Covered in PPT...........................................................................................................................3
TASK 2 ...........................................................................................................................................3
2.1 Analysis of strategic positioning of VW AG by conducting audit of the firm.....................3
2.2 Environment audit of Volkswagen AG.................................................................................5
2.3 Importance of Stakeholder Analysis.....................................................................................6
2.4 New Strategy for Volkswagen AG.......................................................................................7
TASK 3............................................................................................................................................7
3.1 Appropriateness of alternative strategies related to market entry, substantive growth,
limited growth and retrenchment................................................................................................7
3.2 Justification of selected strategy...........................................................................................8
TASK 4............................................................................................................................................8
4.1 Roles and responsibilities of personnel who are given the responsibility of strategy
implementation............................................................................................................................8
4.2 Analysis of the resources required for the implementation of the new strategy for
Volkswagen AG........................................................................................................................10
4.3 Contribution of SMART targets in the success of strategy implementation......................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategies are concerned to the activities which are carried out by the firms to
achieve their goals. With the help of strategies they can attain long term targets which will pay
the path for their success. Strategies will assist them in gaining competitive advantage in their
respective area of business. If they frame and design a strategy which is according to their targets
then they will experience a financial growth. There are lots of resources like employees,
suppliers and shareholders are some assets which has to be managed properly and that thing can
only be done through a proper strategy (Acquaah, 2011). Volkswagen is a company which deals
in car manufacturing and is part of automotive industry. All this report will be dealing with
various aspects of business strategy and emphasizes on process of strategic planning. This will
give a brief about the tools which are used for framing a business strategy or plan(Astrachan,
2010). Other than this it highlights the various kinds of approaches which are used by the
enterprises. There are certain SMART goals which are set by the companies in order to
implement the strategic plans.
TASK 1
Covered in PPT
TASK 2
2.1 Analysis of strategic positioning of VW AG by conducting audit of the firm.
The strategic planning manager of New Phoenix can do the inspection of the firm so that
they can know and analyse the status of VW AG in the market. With the help of SWOT analysis
of automotive industry they can conduct a audit. All the strengths, weaknesses which are part of
the internal area of business they can analysed in this and for the external like opportunities and
threats same can be done(Bharadwaj and et. al., 2013).
Strength: These are the elements, tools, factors or capabilities which will help the group
in gaining competitive advantage. It defines the positive characteristics possessed by the
company.
 It is observed that Volkswagen has better brand identity as compare to the automotive
industry.
 They have good customer number and they also owns a lots of manufacturing units.

 To make sure that customers get the quality cars and services so for that they have large
population of the employees. They have employed almost 350,000 employees for there
activities.
 To make sure that they have approach to the big mrket they have collaboration with the
company of China. There they have tied their partnership with FAW Volkswagen and
Shanghai Volkswagen(Boyer and et. al., 2010).
Weaknesses: These are the factors or the characteristics which can hamper their business
in negative way. Following are some of the weaknesses of Volkswagen:-
 The market share of Volkswagen is quite low and the reason behind this is the higher
competition in car manufacturing segment.
 Volkswagen has faced the emission scandal which has impacted their brand image in
negative way.
Opportunities: They are part of the external factors and with this they can defeat their
competitors in the market.
 If they wants to grow their market they have to develop a healthy relation with the other
car manufacturing companies.
 If they have to increase their customer number they need to bring cars which has unique
and creative technology. The reason behind this is that people are more attracted to the
product which is different and unique from others.
 Expanding the business at the newer market can improve their brand image to a great
extent.
Threat: There are certain components available in the business environment that can
degrade the growth and functioning of the firm. Following are some of them:-
 At the same time when they are coming with new things their competitors can also use
innovative strategies so that they also attract clients(Burlton, 2010).
 This will impact them and their purpose will be defeated.
 With the increase in the fuel prices at the internation market the automotive industry may
face crisis as people will avoid buying any car at that time.

2.2 Environment audit of Volkswagen AG.
This is a technique that can be used by the company so that they can know their position
in the market. They have to identify the external factors which can influence the strategies of
Volkswagen. For this the use of PESTLE model is suggested.
Political: It includes elements like trade barriers, tax policies and the political situation of
the country in which they wants to establish their business. Volkswagen deliver their services to
almost 150 nations so they are facing certain political conflicts and issues(Campbell, Edgar and
Stonehouse, 2011). Each country may have different political conditions so by keeping this thing
I scenario they develop strategies.
Economical: Those factors which are related to financial economy of the country are
included in this. Elements like income, unemployment, tax duty, trends in the stock market and
etc. of a specific country. Those firms who are in the business of car manufacturing contribute
widely in the national economy(Chang and Chuang, 2011). They are one of the main income
source for the country's government. There might arise situation when the nation may face
economic crises and in such situation the performance of the firm will go down because now
individuals don't have much money to spend on the purchase of car.
Social: Cars are seen as the luxury goods in most of the developing countries, so it can be
said that this industry increase the standard of living. As the Volkswagen group is giving
employment to lots of people at their workplace so they are increasing the employment rate.
Societal status of citizens also improve when they buy cars.
Technological: This is the industry which heavily depend upon the technological
advancement. Volkswagen is delivering cars which consists of creative and innovative features.
Audi and Bentley are some of the examples of this. They have experienced hike in the sales of
their cars due to this.
Legal: There are various rules and regulation made by the governing regime which they
have to follow. In different countries various laws exist so any one market strategy for the all
over countries will be wasteful(Cinquini and Tenucci, 2010). There might be laws on taxes,
import duty, any legal claim, consumer protection act, health and safety law and etc. are different
laws which needs to be understood.
Environment: This is the industry which is responsible for the environmental
degradation as cars runs on petrol and diesel. The burning of the fuel causes pollution in the

environment and thus causing global warning. By keeping this thing in mind Volkswagen needs
to make sure that they bring cars which are energy efficient and electric cars. They can adopt
CSR model to make their image as a group who is really concerned about social environment.
2.3 Importance of Stakeholder Analysis.
Those people at New Phoenix who are given the responsibility of developing the strategic
plan for Volkswagen needs to know the stakeholders of the company. With this they can identify
people who are important to the company and what powers they exercise(Connor and Lande,
2012). They have crucial role to play when it comes to the decision making procedure.
Following are the steps which are involved into the process of stakeholder analysis.
In the initial stage they will try to look at the people who are part of the business
operations of Volkswagen and who get affect due to the operations of the company.
At the second level they need to know the interests of various stakeholders and for this
they can use stakeholder mapping. Those individuals which exercise high power and high
interest are closely attached with the firm and they also promote the services of automotive
industry. On the other hand people who has less power with low interest are not impacted by the
business activities of the company.
At the final stage of this process, the firm try to understand the interest of all the stakeholder of
the company. If they have to increase the performance, feedback from the all the stakeholder is
necessary. They should make sure that they make them involve in the decision making process.
Illustration 1: Stakeholder Mapping, 2017

This all steps are very crucial because which the stakeholder analysis Volkswagen can
know the contribution of the certain specific individuals in the decision making procedure.
Workers core competencies can be identified.
2.4 New Strategy for Volkswagen AG.
If Volkswagen have to attract more customers towards them they should bring new
products in the market. For that they can adopt market development and product development
strategies. In the market development they can introduce car and services in the new markets
where they don't have any existence(Cooke and Saini, 2010). In London they can introduce their
cars and with this their market share will increase thus brining more profits to them. In the
product development they can make new cars and present it in the current market. There is lots
of advantage of this as they can attract the customers of their competitors because now those
consumers are getting better products in best prices.
Porter generic strategy can be used to bring new products in the market. It will
emphasizes on the cost, differentiation. In the new market strategy they focus on the cost of the
of the cars and thus they can attain cost leadership in the market. They will make sure that
customer get good cars at relevant prices(Dong-Hun, 2010). Through differentiation strategy
Volkswagen ensures they deliver unique and creative features to the target audiences which will
attract loyal consumers. With the focus concept they will try to provide unique provides to the
individuals who are price sensitive. Out of all strategy VW AG can adopt differentiation strategy
because with this they can gain competitive advantage and at the same time they can increase
their profit margin.
TASK 3
3.1 Appropriateness of alternative strategies related to market entry, substantive growth, limited
growth and retrenchment.
Alternative strategies is the best way to improve Volkswagen brand image and they can
increase their market share. Following are some of the strategies:-
Market Entry:- This is the strategy which will make help them in introducing their cars
in new markets. They can merge with the other car manufacturing company as they done in
China because this saves their time and money(Eccles and Krzus, 2010). Acquisition and joint

ventures are the other strategy which can give fruitful results. If they want to increase their
market share at rapid pace they can adopt the procedure of franchisee.
Substantive Growth: To attract the more number of customer this strategy is used which
brings growth in the market share in appropriate manner. Volkswagen has the option of using
diversification, vertical and horizontal integration.
Limited Growth: A limited comes when the companies face financial cruises thus this is
the strategy which can be used to make things better. With this they can handle difficult
situations easily and can resolve all the issue coming in their path. Volkswagen uses market
penetration. Market development and product development(Grover and Kohli, 2013).
Retrenchment: This is the most suitable strategy when they are failing in expanding
their market share. So they can use divestment, liquidation and turnaround strategies. With this
they can manage their resources available to them and can satisfy the customers.
3.2 Justification of selected strategy.
With the adoption of the strategy they wants to increase their market share in various
nations of UK. At the same time their will be improvement in the brand image also. Market
development strategy will be best for them because in this they does not need to bring new
products. They have to just introduce the current to the new market. More number of the
customers can be attracted by giving quality service through this strategy. They want to make
things quite easy and and wanted to expand the market in quick time. For such thing they can use
strategic alliances and joint ventures strategy. Almost all the functions of the various departments
can gain pace with these and in those areas where competition is high they can bring product
development so that they can differentiate their cars from others(Hoejmose, Brammer and
Millington, 2013). It is observed that it takes more investment in acquiring new customer but if
they maintain the customer royalty their profit margins can be increased. Whenever an old
consumer comes he or she should be given some sort of benefits.
TASK 4
4.1 Roles and responsibilities of personnel who are given the responsibility of strategy
implementation.
When the company has develop a strategy they require an individual who can help assist
them in improving their performance and maintain a study growth. He or she will be given the

charge to look at the every aspects of the organisation and allocate the tasks top the employees of
the company according to the strategy. They will make sure that things are going well and
whatever hurdles are coming in the way should be sorted in quick time. Responsibilities may
vary according to the different strategies developed for the newer markets. Following are some
of the roles which a individual has:-
 He is the main person in the firm, so whatever he or she do will decided the success of
the strategy. They should make a note that all the members who are part of the
organisation in some or other way should be given all required information and the
departments of Volkswagen should be assigned various tasks which they have to
perform. If everyone becomes aware about their roles and responsibilities that will bring
effective functioning of the company(Klettner, Clarke and Boersma, 2014).
 For effective implementation of the strategies the person who has been given all the
responsibility should be well aware about all the details mentioned in the strategy. They
should have full fledge information about the what the company wants to achieve from
this. If they will have all the details and knowledge then only he or she will able to
convince their staff and can easily guide them. He will tell them what they have to do and
what path have to be followed for the success.
 A proper relation with the employees and other workers is the must necessary thing for
the implementation of the strategy. The reason behind this is that without the
coordination between the individuals no one will do their work in proper way(Reich and
Benbasat, 2013). A trust has to be build among them so that overall performance of the
Volkswagen can be improved.
 Number of individuals needs to be given the responsibility in the procedure of strategic
implementation because through this different staff can increase and improve their core
competencies. Whatever the communication gap they are facing will be reduced as
people now can interact and understand each other in more easier way.
 For any activity which needs to be performed by Volkswagen requires some sort of
resources and these will act as the assets(Parnell and et. al., 2012). So the personnel has
the responsibilities to make sure that all the resources are managed properly and used in
better way. Any waste of the resources will bring burden to the organisation and the
strategy will not be able to implement properly. If they get success in managing the

resources they will able to generate more revenues in less period of time. All the
resources needs to be allocated in better way and they should make sure that they analyse
the requirement of all the department and then only they should allocate according top the
need.
 There should be proper inspection and monitoring of all the stages of strategy
implementation. On the regular basis they should analyse the condition which different
departments are handling(Pagani, 2013). From the initial period to the final period of
strategic implementation needs to be inspected because this way they can know whether
the real objectives can be achieved or not. Any loophole in the strategy can be find out
and after that appropriate action can be taken to to remove that loophole.
 He also need to observe the employees and analyse whether they are doing work
according to the strategy or not. Any person who is lacking any skill can be trained so
that he does not face any difficulty further(Li and Tan, 2013). With this the overall
performance of the Volkswagen can be improved.
4.2 Analysis of the resources required for the implementation of the new strategy for
Volkswagen AG.
Human, financial, raw materials and technological are some of the resources which are
required by the company to implement the new strategy. If they lack control over these resources
then it will be difficult for them to implement the strategy.
Human Resource: They are the most important resource available to the Volkswagen so
they needs to be managed properly in order to gain success in strategy implementation. The
manager at the company should make sure all the employees are working in safe and secure
environment and they are properly trained.
Financial Resources: To make the strategy for effective and productive financial
resources are required. If they will have sufficient financial resources they can get best raw
materials and can easily pay the wages to the employees(Meskendahl, 2010).
Raw Materials: The task of Volkswagen is to assemble all the raw materials and convert
into into a attractive car. They have to bring raw material of high quality and for that they should
need to chose the suppliers who are reliable and should deliver raw materials on time.

4.3 Contribution of SMART targets in the success of strategy implementation.
All the objectives can be attained in much effective manner and in quick time if they use
SMART target concept. This can be expanded as specific, measurable, achievable, realistic and
time bound. Following are the SMART target which Volkswagen desire to achieve.
 They have specific target of expanding their market and increasing the market share.
With this they will also get a chance to increase their profit margins at good percent.
Volkswagen has a goal of increasing market share by 5 percent.
 All the targets which has been set by the Volkswagen is in the numeric form so that these
can be called as measurable targets. It is hard to analyse the unmeasurable targets.
 They should look and analyse their capability and then only they should set their targets.
This way they can make sure that all the targets are attainable(Montgomery, 2011).
 There should be reasonable and result oriented targets which says that all the targets
needs to be realistic.
 They should fix a time and ensure that all the targets are achieved in that specific period
of time. They can inspect the objectives after some time and can make changes.
CONCLUSION
From the above report, it can be concluded that business strategy of of an company
largely helps in increasing the profitability of firm to large extent. These strategies developed by
the company helps in achieving the targets effectively. The the VW AG is largely focusing on
the expansion strategies in order to target the international market to large extent. The company
is countering the various problems faced during their expansion through development and
implementation of efficiently working strategic plan for business growth.

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