Business Strategy Analysis: Volkswagen AG Strategic Position Report

This report provides a comprehensive analysis of Volkswagen AG's business strategy, covering various aspects of strategic planning and implementation. The report begins by outlining the essential components of a business strategy, including mission, vision, objectives, goals, and core competencies, and discusses the factors that should be considered during strategic plan formulation. It evaluates the effectiveness of different strategic planning techniques. The report then delves into an in-depth analysis of Volkswagen AG's strategic position, including a SWOT analysis and an environmental audit using PESTEL and Porter's Five Forces. It emphasizes the significance of stakeholder analysis when introducing new strategies and examines Volkswagen's current strategies. Furthermore, the report explores alternative strategies, justifying the selection of the Ansoff matrix for Volkswagen. It also discusses the roles and responsibilities of personnel in strategy implementation, resource requirements, and the contribution of SMART targets. The report concludes with an overview of the key findings and strategic recommendations for Volkswagen, aiming to enhance its market position and achieve its business objectives. The report uses relevant theories and frameworks to provide a comprehensive analysis of Volkswagen's strategic approach.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
AC 1.1 Requirement of Business mission, vision, objectives, goals and core competencies 1
1.2 Factors that can be considered while formulating strategic plan.....................................2
1.3 Evaluating techniques and its effectiveness used to formulate strategic plans................3
Task 2...............................................................................................................................................4
2.1 Analysis of Volkswagen AG Strategic position: -...........................................................4
2.2 Environmental Audit of Volkswagen AG........................................................................5
2.3 Importance of stakeholders when introducing new strategies in business:-.....................7
2.4 Present Strategy for Volkswagen.....................................................................................7
Task 3...............................................................................................................................................9
3.1 Analysis of alternative strategies......................................................................................9
3.2 Justification for the selection of Ansoff matrix for Volkswagen:-.................................10
Task 4.............................................................................................................................................10
4.1 The valuable roles and responsibility of personnel in the area of strategy implementation
..............................................................................................................................................10
4.2 Requirement of resources for the implementation of new strategy...............................11
4.3 Contribution of SMART Targets for strategy implementation of Volkswagen.............12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
The Business strategy refers to that important element which is based on the long-term
action plan which is used to achieve a set objective in organisation The Different strategies will
affect the labour fore of the entity. This assignment shows those aspects which is required to
create good business strategy., that considers the importance actions and the basic elements
which are involved for the implementation of new and innovative strategy. The \ assignment
shows strategical aspects of Volkswagen luxurious car manufacturer company. Company
introduced more advanced and innovative cars in global market. They are known for their
automatic or brand cars like Bentley, Bugatti, Lamborghini, Porsche, SKODA and so on.
Present assignment includes overall business strategies of the automotive German company.
Company considers the new strategies to grasp their customers and advance technologies. A new
strategy will help to understand their customers’ requirements and on the basis of that they shall
include more innovative ideas and policies in organisation.
TASK 1
AC 1.1 Requirement of Business mission, vision, objectives, goals and core competencies
Business strategy refers to that planned organisational activity which is used to manage
resources, , strengthening their priorities and design good plan on the basis of company goal and
objectives. (Scholes, 2015). Business strategy relates to that long-term business plan which is
designed to achieve a specific objective. Preparation of strategy requires vision, mission and
objective which is clear.
Vision: - It is based on that statement which specifically create an idea of big picture that what
company wants to achieve in the future.. In other words, the vision is that desired dream that
involves organisation believes and generally describes the principles of company which guide
them to achieve their success.
Mission: - The mission statement is based on stage which includes the action planning process. It
describes that organisational task which is based on the company vision. The mission and vision
are quite similar but mission is more concentrate it relates to action oriented in nature (Teece,
2010).
Objectives and goals, cores:- It relates to that step which develop the specific goal that focus
the mission and vision of company. There are three types of objectives in the organisation: -
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Behavioural Objectives: - These kinds of objectives are used to check and look at the changes in
behaviour of individuals (Astrachan, 2010). This objective is used to understand the requirement
of employees of the company that directly affect the specific goal of the organisation.
Community-level outcome objective: - It relates to the objective which focus the community
level instead of particular person behaviour changes. This involves the culture, morale values of
employees.
Process Objectives: - These are the objectives which involves the activities which are necessary
in implementation of specific goal of the company. This includes all aim of the company which
they want to achieve in the future.
1.2 Factors that can be considered while formulating strategic plan
Strategic plan is something where the manager matches the market opportunities with its
organisation's resources over the long run. In brief strategic planning is all about evaluating
where you are and where you want to be in the future and how will you achieve your future
plans. All the organisations around the world prepare strategic plan in order to meet their
organisational objectives and goals (Meskendahl, 2010). Following factors can be considered
while preparing and successfully implementing strategic plans:
 Vision and Mission: Organisational objectives and goals need to be standardised before
the view of achieving them. Therefore, articulation of Vision and Mission over the long
run and short run, of the organisation is necessary.
 Identifying the interested parties of the organisation: For implementation of strategic
plan, identification of stakeholder should be done in order to know the opportunities of
the business. It may include management, shareholders, suppliers, government authority,
etc.
 SWOT analysis: Management should conduct SWOT analysis for the organisation to
evaluate Strengths, Weaknesses, opportunities and Threats of the organisation. This will
allow management to identify achievable and non-achievable goals and objectives.
 Project Management:The project management is based on that key aspects that involves
the management of specific project which company introduce to their employees. . It
basically includes two critical elements – first is to identify projects which are required to
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ensure success and second is providing optimum resources to high priority projects. It
involves employee commitment toward the time required for projects.
 Innovation: Innovation should be a regular process. Proper amount of investment should
be done in research and development department to improve not just products and
services but to also review and adjust the set goals and objectives of the organisation.
1.3 Evaluating techniques and its effectiveness used to formulate strategic plans
Once after concluding fully implementing the strategies, evaluation of its overall
effectiveness is done to know at what extent we have reached the goals (Verbeke, 2013). The
results of the strategy may be satisfactory or non-satisfactory, changes may be done accordingly.
Strategic Techniques that were used by the management gave both, positive and negative
impact on the organisation. Positive impacts are:
 Efficiency of employees: Strategies used showed the high positive impact on the increase
of employee efficiency. Involvement of employees in organisational decisions and tasks
triggered the employees' efficiency and working environment of employees.
 Expansion of business: New strategies helped the management in looking towards the
wider approach of the business and let them to work in new areas that lead to expansion
of business.
 Product Demand: Strategies influenced the demand of the product in various new sectors
of the market. Advertising strategies of the company showed a good positive result and
hence, product demand was increased (Campbell, Edgar and Stonehouse, 2011).
 Innovation: Management's strategy to invest more in the Research and development
department lead to the new innovations and inventions in the product and services of the
organisation.
 Likewise, negative impacts of the techniques were:
 Increase in investment: For the purpose of innovation, management used the strategy to
invest more in research and development department that caused high investment amount
for the organisation.
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 Increase in operational cost: Expansion of business in new market and for attracting new
customers and also for innovations, management had to recruit more skilled employees
for the organisation that in turn increased the operational cost of the business.
Keeping all the above points in mind, management of the organisation is working in the
way of reducing the elements of the strategic plans that caused negative impact on the
organisation.
Task 2
2.1 Analysis of Volkswagen AG Strategic position: -
Volkswagen's was established in Wolfsburg, Germany. The actual meaning of
Volkswagen is people's car (Spender, 2014). It is that automotive company which is known for
their specific luxurious brand car like, Bentley, Bugatti, Lamborghini, Audi, Porsche, SEAT,
SCODA and Volkswagen.
SWOT Analysis of Volkswagen
Strengths:-It produce wide range of cars which provide various kind of luxurious brand
cars. They have a high brand presence in global world. The has largest industry in Germany.
There largest industries is situated in Germany, China and Brazil. Currently the have around 119
manufacturing plants all over the global world. They have large skilled manpower which fulfil
the new public demands. They introduce innovate ideas and best advertising and marketing
strategy which includes online ads and digital marketing. The company renewed their cars on the
basis of the changes in demand, preferences of the customers. They global manufacturing
companies ere they include excellent strategic plans. They provide world best car services to
their customers. They provide rewarded employment facilities to their workers. They use high
technology to skilled their labour for the invention of modified and automatic luxurious cars.
They are known for the production of hybrid cars and sports motorcycles (Grover and Kohli,
2013). The Volkswagen is oldest car manufacturer company which highly innovative and
introduce new idea to their customers.
Weaknesses:-They have weak strategical positioning in some market. it posses around
only 3% of market share in a large country India. There focus is on modern production
technology based facilities which is not enough to middle level persons .They still not achieve
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there target of selling their cars in different under developed countries. They have limited market
share in developing countries. There intense competition from various international car
manufacturing companies are low. The fraud and different controversies create negative impact
on their brand image. The negative impact of brand image will cause of losses to their
organisation (Casadesus-Masanell and Ricart 2010). There some of the products are not
environment friendly which is cause of environmental harm to the society. Some of their car
have high limits of carbon dioxide and have insufficient amount of fuel. They have weak market
positions in some countries which negatively affect the brand image of the company.
Opportunities:-There various opportunities for the organisation which may help to grasp
the entire market in global world. They have to create an long term relationships with the non-
German car producers. That will help to understand their competitors strategies. They implement
more innovation and inventions in producing there cars, which will boost the brand image of
Volkswagen. They have to entered in various market to increase their market share. They should
offer new and more automatic features that will attract their customers. They understand the
satisfaction level of their market which will increase their trustworthiness.
Threats:-They include more innovative and automatic features that will positively affect
to their brand image. They should increase the cost of some of their cars or introduce low budget
cars in the market that will help to grasp their middle level customers (Liedtka, 2010). Due to
fluctuations in prices of fuel, the company bear large losses in hybrid and fully automatic cars.
The price of fuel will affect the customers preferences. The government policies will also make
a negative impact to the company.
2.2 Environmental Audit of Volkswagen AG
Volkswagen is German based multinational automotive company, internationally known
as Volkswagen group. The environmental audit of Volkswagen AG. Environmental Audit
consists few types of analysis like PESTEL Analysis, PORTER five model analysis, etc.
PESTEL Analysis of Volkswagen AG.
This is a management tool that helps in assessing the macro-environmental factors of the
organisation. I have completed PESTEL analysis for Volkswagen AG here.
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 Political Factors: Volkswagen AG has faced many political difficulties during its
development phase as it is present in not just 2 or 3 companies, but it is present in more
than 150 companies. Different countries have different political situation and
Volkswagen has to formulate its strategies according to the countries (Tsamenyi,
Sahadev, and Qiao, 2011). Being an auto-mobile company it is closely related to the
Government policies of the country along with, banking and financial sectors also plays
an important role in the sales of the cars. Understanding different political pressure is the
biggest challenge in front of Volkswagen AG.
 Economic Factors: Auto-mobile industry plays a vital role in development of any country
with its contribution to national income. Being a multinational company, Volkswagen
contributes to the GDP of various countries. Auto-mobile industry is also linked with
other industries like steel industry, glass industry, etc. and therefore, helps in their
development. Hence, Volkswagen has a good advantage of it.
 Social Factors: Society for Volkswagen is different in different companies. Being an
auto-mobile company it affects society as a whole. It also generates local as well as
international employment opportunities to the society (Coad, 2011). It enhances the level
and living standard of the company but on the other hand also have social issues like car
accidents on which it needs to emphasise.
 Technological Factors: Technology in an auto mobile industry plays a crucial role in
development and in maximising profits. Volkswagen is among one of the company
having the best technology for cars. It operates in different segments like classical and
sports. This factor is most competitive factor in auto mobile industry, all the companies
are competing high for introducing the best technology.
 Environmental Factors: Auto mobile industry has a huge impact on the environment. It
uses petrol, diesel and gas as a fuel that affects the natural resources. In this regard
Volkswagen is subjected to many environmental laws and regulations for the prevention
of various types of pollution.
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 Legal Factors: Every company needs to adhere to legal requirements. It's a big challenge
for Volkswagen to adhere to legal requirements as it is subject to laws and regulations of
153 countries.
2.3 Importance of stakeholders when introducing new strategies in business:-
The stakeholder is that essential personality, group in the organisation that affects or be
affected by the companies polices, action plans, goals and objectives. The management od
stakeholder will create crucial impact of business success. The Volkswagen not only known for
their luxurious cars but also for management of their stakeholders. They very well understand
and aware for the needs and expectations of their stakeholders (Alsudiri, Al-Karaghouli, and
Eldabi, 2013). On the basis of business prospective the stakeholders have a great importance.
The specifically vested a interest in business and that interest are on the basis of intellectual,
financial, economical in nature, that make direct and indirect influence in the organisational
objectives. The stakeholders are divided in three basic categories primary, secondary and key
stakeholders. The primary stakeholders includes- customers, employees, creditors, owners,
society, and secondary stakeholders includes those personalities which affect the organisation
indirectly like government agencies are known for the insure the product quality on the basis of
different legislations and rules. The stakeholder which affect the organisation directly are the
main elements of the company. They are valuable and make a negative or positive impact on the
reputation of company.
The business must understand the changes in wants and needs of their customers. They
assist and identify the values and morale of society and fulfil the social needs,. As a result their
fulfilment of social responsibilities will create a positive impact to their trustworthiness. The
needs and wants of internal environment personalities are very much essential for the growth of
company. A team effort increase the efficiency and effectiveness of the employees and working
skill of them (Soh and Yu, 2010).
2.4 Present Strategy for Volkswagen
The new strategy which Volkswagen should use is Ansoff Matrix Strategy. This strategy
is also known as Ansoff growth matrix. It relates to that marketing strategy which involves the
joint work schedule growth of market penetration, product development, market development,
Diversification.
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Illustration 1: Ansoff's matrix strategy
(MARKETING THEORIES - EXPLAINING THE ANSOFF MATRIX,
2017)
Market Penetration:- It relates to the first part of matrix under the Ansoff growth matrix. It
introduce the situation where the organisation has their existing product which is well known to
their area of market and need to growth on that particular market. The Volkswagen should
consider this part in which they should focus on their existing production. They adopt this
strategy that help to grow their market share (MARKETING THEORIES - EXPLAINING THE
ANSOFF MATRIX, 2017).
Market Development:- This is the second part or quadrant of Ansoff growth strategy. This
strategy is used when the company target on the new area of market and introduce their existing
products. The company continue to expand their brand across the world. This expansion of their
brand will create a positive impact on their market of automotive company.
Product Development:- It refers to that quadrant of Ansoff growth strategy which considers the
good market share. Under this, the company introduce new product in the market where thwey
have good market. The development of a production needed when the customers have good
image for the specific company. The concerned company should introduce the new product in
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the area of customers which already get attracted to their brand image. As a result, their new and
innovative idea for their motor cars will easily attract the customers.
Diversification:- This is the fourth quadrant of Ansoff growth strategy which apply on that
situation when the complete product is new and introducing in new area of market. In other
words, this area of the growth strategy is more risky as compare to other quadrant (Chen and
Jermias 2014). This part is based on the situation where the company should target the new
market with introducing their new product. The concerned company should introduce the new
product in front of their new area of market.
Task 3
3.1 Analysis of alternative strategies
The developing strategies of the company will create a substantial impact on entire
organization. The analysis of strategies are divided into various alternative options :-
Market Entry:- The market entry refers to that alternative options which includes
various entries like, merger, franchising, alliance, organic growth, acquisition and franchising.
The Volkswagen can use the strategy of franchising and alliances that usually help to remain in
global market. These market entry strategies will help to analysis of the entire organization.
These strategies will create great knowledge about the overseas of global market.
Substantive growth:- This is the second way to analyzing the alternate business
strategy. The substantive growth includes various strategies like, related or unrelated
diversification, horizontal or vertical diversification (Giannoulis, Petit and Zdravkovic 2011).
The Volkswagen should consider vertical integration on their logistics, and they develop the new
strategic planing procedures.
Limited growth:- There are basically four kind of strategies under limited growth-
market penetration, market development, product development and innovation strategy. The
Volkswagen should consider and develop the innovation criteria and developing their product.
They should need to grab or develop new and innovative product line on the basis of the
lifestyle of customers.
Retrenchment:- The retrenchment is the fourth on e alternative strategy which is also
very essential. There specifically three kind of strategy in it- divestment, liquidation and
turnaround strategy. The Volkswagen may adopt these strategies for slashing to their particular
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cost and enhance the scale of economies. This strategy is help to analysis of company particular
situation.
3.2 Justification for the selection of Ansoff matrix for Volkswagen:-
The Volkswagen is a very famous luxurious car producing company which produce
Bugatti. Lamborghini, Audi and so on. The company should consider the new strategy of Ansoff
Matrix which is based on the strategy of growth. This Growth strategy includes four quadrants -
Market Penetration (This particular part include that situation where Volkswagen should adopt
the existing product with the particular market.) Market Development (The quadrant refers to the
situation where Volkswagen should target at new market with their existing product) Product
Development (This refers to the situation where the Volkswagen company introduce the new and
innovative cars to existing market). Diversification (This is the last quadrant which is risky but
very much profitable and increase the market share of Volkswagen company. Under this they
introduce new and full advance car to their new area of market).
The Ansoff matrix is base on the company growth which helps to grow the entire
company in global world (Annabi and McGann, 2013). By using this matrix growth strategy the
company will increase their market share in global market. this strategy is basically covers entire
market and the invention or innovative idea of a product. By using this growth matrix the
Volkswagen will understand the market situation and on the basis of that they will produce and
innovate their cars. As a result, they will grasp more and more customers with their attractive
strategies.
Task 4
4.1 The valuable roles and responsibility of personnel in the area of strategy implementation
The personnel have a great importance while implementation of strategy. The overall
success of implemented strategy is wholly depend on the personnel of the organization. The
strong personnel and managerial leadership team will help to boost the value of company. The
leader is relates to that skillful personality or managerial team which intent to mention the good
future of organization. The individual have various roles and responsibilities. The personnel is
the base of the entire organization which provide the healthy and friendly environment. The
positive impact of the company will increase the productivity and increase the creativity of
workers.
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