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Business Strategy for Volkswagen Company Research Project

Abstract

Volkswagen Company is a German-based corporation that assembles motorcycles, personal cars, business vehicles, and engines. In 2011 the company was the largest automobile manufacturer by output worldwide. The company also gives monetary and leasing services. Volkswagen owns 12 vehicle brands, such as Volkswagen, Porsche, Bentley, Audi, Skoda, Scania, Lamborghini, and motorcycle brand Ducati. The company operates in approximately 150 different countries and considered as one of the largest companies globally in terms of size and revenue.

Volkswagen’s overriding strategic goal is to develop its products into the world’s leading brand in the premium automobile segment. The company’s strategies aim at promoting challenges in economic, social and ecological needs. The strategic plan is aimed at ensuring sustainable corporate success. The company, thus, plays a vital role in globalization. As a solution to its challenges, Volkswagen has conducted a series of evaluations to assess its performance and production. Its focus is in management of its output, production cost, and products price rates. To attain it, the company aims at developing and innovating new related and unrelated products in its different sectors of production in different regions across the globe. The current paper seeks to find out why Volkswagen sales and revenue is unevenly distributed in different regions of the world.

The focal point of its performance is to have a sustainable transformation to avoid decline or loss of market segments and at the same time to improve and maintain competitiveness globally. In order to attain such a goal, the management has been involved in leveraging opportunities and creating more competition in different regions, especially in the US, China, and India. The increasing energy consumption, labor costs, and materials, as well as changing technology,  are the main threats and challenges to Volkswagen and its management in creating competition with competitor companies. The company requires strategic planning and management to transform and improve its performance and competition. The company can achieve it by promoting innovation and the creation of unique customer value. In addition, it should develop an organizational strategy to design and develop a plan with resources management. In addition, it should define the roles and responsibilities, time plans and ways of implementation, as well as follow the evaluation plans.

Executive Summary

A current research paper presents a five-year business research strategy for Volkswagen Company. It is created by its founders to strategize the way forward and secure additional distribution and market for its growth and development internationally, especially in China, India, and the US. It aspires to inform other stakeholders of Volkswagen Company current status as well. Volkswagen Company is an automotive company in Europe. Its founders expect it to have greater demand from local and international automotive consumers while providing attractive services and products. Research illustrates that the Volkswagen Company target market is comprised of the automotive-desiring customers that would like quality automobiles. They will also extend products and services as per consumers’ preferences, appeals, and technological changes. New goods will be added to their product lines with different logos and slogans. Moreover, Volkswagen Company will explore prospectus for efficient online promotion and marketing. The marketing environment is anticipated to be incredibly receptive to offers that include high-quality automobiles. Eventually, enthusiasts will globally demand the products and services and through powerful public relations and intensifying relationships, they will perform desired purchases. Over the next five years, Volkswagen Company can increase its strategies to reach a wider market segment, offer new products, as well as win new customers in India, China, and the US.

Strategic Analysis

Product specification

Volkswagens’ market offers an expansive range of products that further presents a dilemma to the industry. The fact that Volkswagens Company supplies numerous goods and services that vary from motorcycles, business vehicles, personal cars and engines to monetary and leasing services makes it difficult to assess its core competencies in growth and competition. It is caused by the fact that the company generally competes in a marketplace with many different big and small companies that specialize in particular products and can easily manage and assess their progress in production and marketing strategies (Harvard Business School, 2007). At such point, competition in the market can be considered as very high. Determining whether to maintain, consolidate, and downsize its products is a big challenge for Volkswagen due to the changing market and market trends.

Competition

Competition in the industry is continually intensifying as various new companies enter the market. Volkswagen already faces great competition, particularly from big automobile companies, for example, Ford Company in the US. The market is attracting due to increased access to motor vehicle mortgages, increase in population and demand for vehicles in different regions of the world, as well as other regions (Great Britain, 2011). Consequently, it presents a dilemma to Volkswagen on production as it becomes difficult to determine how much growth and production appropriate for each market segment. Determining whether such growth should be high, average or low is a great challenge that requires Volkswagen to be more proactive to overcome the challenge faced in determining the necessary growth due to already existing competition in the market (Leberman, Collins, & Trenberth, 2006).

Strategic alliance

Strategic alliance refers to an accord between two or more people to follow a set of specified and agreed desirable objectives, while still being autonomous in organizations (Leberman, Collins, & Trenberth, 2006). Such type of cooperation relies on Mergers & Acquisition (M&A) and natural growth. Stakeholders may provide a strategic alliance with resources such as products, manufacturing ability, distribution channels, capital, equipment, knowledge, and expertise. The alliance is a collaboration that is meant to re-energize stakeholders as they hope that they benefit in the alliance compared to individual effort. The alliance may involve the sharing of technology, expenses, and risk. Volkswagen faces a dilemma which firms to merge with and particularly how to cope with their different strategies and create a workable culture.

Forming such an alliance is a challenge for Volkswagen as it seeks for adequate technology, expertise, resources, allowing each stakeholder to gain a competitive advantage, as well as reduces risk in the company (Stutely, 2002). Unfortunately, it might be risky as it may become difficult to coordinate and monitor the alliance and its reputation. Additionally, the merger requires a large number of operational costs to ensure the essential structural and operational aspects of a company. Moreover, the implementation may require much time and it becomes risky and increases the cost of management. For these reasons, feasibility and strategic alliance create a challenge to Volkswagen Company and its adoption presents an additional and superior challenge.

Dynamic Market

Constantly changing market is a challenge that affects Volkswagen’s activities and growth rate. Thus, Volkswagen has to consider where and how to create new opportunities for its products (Glynn & Woodside, 2012). Most materials used by the company are incorporating aspects that reduce environmental threats, and there is increased the entry of sustainable options in the market making competition higher within the industry. As a result, it is difficult to achieve consolidation of its existing products. It means that Volkswagen has to make a continuous data collection, design products, determine production, be innovative and develop products to make it difficult for new entrants to take its market share. Such introduction and adoption may affect Volkswagens’ capabilities in its operations, marketing, and sales strategies. It also threatens the aim of the company to minimize production costs so that to meet its goals and objectives.

The strategic dilemma of Volkswagen is related to appropriate growth and development intending to increase the market of automobile products, as well as remain competitive. The question of whether it should remain with its present products in its market is an important issue for the company. Lack of continuous products development and innovation limit its future potential. It may result in managing and production of the same products that may create a crisis and reduce the competitive advantage.

Methodology

Method of research on Volkswagen Company is properly designed and chosen to ensure that exact data is obtained. Besides, the information will promote analysis and the presumption of conclusion to foster a better marketing and distribution of Volkswagen products and services globally.

The results are presented in the tabular form as reflected in the data collected from questionnaires and interviews.

Purpose of the Study

The main purpose of the current paper is to obtain insight into the market, sales, and revenue of Volkswagen, as well as to propose further recommendation and forecast market and sales of Volkswagen products and services globally in the next five years.

Due to the above reason, the present paper will use explanatory approach. The explanatory approach is used when much information about the condition at hand is unclear. The objective will be to achieve familiarity about Volkswagen marketing and distribution strategy and gain a deep understanding of the situation.

Collection of Data

In order to achieve the objectives, the current study will involve collecting primary and secondary data (Glynn & Woodside, 2012). The secondary data will help in providing background information. It will constructively build the project in order to comprehend the study survey. The research will collect the primary data in two ways. First, a questionnaire survey will be conducted in different localities of Europe and the US. Secondly, the information will be collected from other regions, such as China, Africa, and India.

Sampling Design

Samples will be taken from different sales and revenues in different regions worldwide. The current study will identify and sample different sales and revenues evolutions across the years from 2005 to 2014. The primary data will be collected using the questionnaire survey technique. The study will randomly select a population sample for a questionnaire designed for automobile users. The sample will entail 100 participants.

Besides, an interview survey will be conducted. Interviews will be carried out on the sample population and stakeholders. It will involve different Volkswagen automobile users to access their views on the quality, quantity, and price of the products. The survey will also assess the distribution and availability of products.

Questionnaire survey

The study shall use questionnaires as a self-reporting tool to gather data on variables of the research. The questionnaire will also involve closed-ended questions to capture responses from different stakeholders, including the Volkswagen customers, public vehicle and private car owners. The questions will narrow down to ensure that all fields of inquiry are catered for. As a result, it will aid the researcher in the analysis of the acquired data.

Interview survey

Interview survey will be used to attain the objectives of the research. The interviews will be conducted with the help of Volkswagen management, researchers and consultants through a guided discussion in different social networks. The interviews for the project will involve semi-structured interview questions through local and regional radio stations, magazines, and business newspapers. The choice of such interviews will be done depending on the interviewee and their aim is to ensure imperative adoption throughout the interviews.

Data Analysis

The scores in percentages are diagrammatically presented below, indicating the distribution of Volkswagen products. The particular participants were requested to choose the products of relevance from a particular company among a list of companies and given an opportunity to include the products and services, which were excluded from the availed list.

The presentation below is a two diagram case relating to sales and revenue distribution. The distribution reduces across the globe, including Europe, the US, China, India and other regions of the world. Such findings can give information on a preliminary basis of how marketing, sales, and revenue of Volkswagen are distributed, defined and perceived locally and internationally.

The products perception and distribution are predominant locally.

The diagram above illustrates that there is a positive tendency on the sales and revenues in both the US and Europe. Europe, however, seems to be leading in its revenue and sales all the time. It is reported to be leading in the year 2014 with 200000 EURO.

From the pie chart above it is clear that almost more than half of sales and revenues come from Europe, while only 3% come from China and India.

Analysis of Findings

The analysis revealed commonalities and diversities across the globe in the availed data. In business, the market, sales, and revenues are considered to be very valuable aspects (Gil & Reyes, 2013). However, despite the fact that Volkswagen Company being reported to have the highest sales and revenue globally, its distribution is uneven and, therefore, the importance to emphasize on the need for support to promote equal distribution of the company’s products and services. Equality needs to be even despite the presence of other competitors in the motor industry.

Volkswagen Company automobiles are generally requested across the globe, especially in Europe. Establishment of new companies and markets across the globe will be an important factor for increasing international outlook and market. The current perception of the company’s products and services in different regions will be the most important factor in establishing, promoting and marketing the company. Other factors may include the quality, prices, and cost of products.

Critical Analysis of the Current Company’s Strategy

Market Growth

Strategic growth requires a development plan for the Volkswagen Company. Market growth is underpinned by considerations of the external and internal environment to establish long-term strategic planning (Dumas, 2013). To develop Volkswagen’s strategy in the strategic planning system, there is a need to consider the past growth and current opportunities of the company in the market in different regions. In turn, it can require a systematized and workable plan. The strategic planning process will play different roles within the organization. The role of the strategy is to establish goals for the company and complement areas of growth and ensure processes to overcome the present challenge of the company. It will create capability and ability to realize the goals by undertaking short-run economic activities to ensure predictable business operations that promote competitive advantages internationally.

Local and international considerations

Volkswagen has a global outlook. Its goals to provide automobile products and services internationally and locally, hence, require a special design to ensure growth. A fact to consider is that the world is dynamic today, and different market segments are no longer influenced by larger markets in developed countries (Doole & Lowe, 2008). Volkswagen strategy that previously standardized products can fail greatly in its international growth objectives. Eventually, Volkswagen will need to have effective research and development team to work in multiple market segments globally. In the modern world that demands flexibility, Volkswagen has to ensure that it has a strategy that suits local sensitivity and responds to the unique demands of different nations. Its strategy must be evolutional to leverage local markets in the global segments (Dumas, 2013). For instance, there are markets that are increasingly demanding sustainable products free from diesel, while others require standard products. Consequently, both issues have to be considered.

Leveraging different segments

Volkswagen has not leveraged great opportunities due to its strategy that emphasizes on specific market segments. The target market for Volkswagen has been active customers or a demographic group of successful individuals. Members of such groups buy products as per their household incomes, which is considered higher compared to other people. Despite the potential to ensure production for high-quality products, for example, Porsche marks a certain segment preference. Volkswagen can ensure products that will be demanded by price-conscious consumers and at the same time seek value for its goods. Eventually, it will lead to leveraging segments with many consumers, both middle and lower-income earners. Current demand can be expanded and even ensure stiff competition by offering alternatives that are cheaper for current consumer segments (Doole & Lowe, 2008)

Technology Efficiency

The desire of the Volkswagen Company for growth must be based on new technology and production should reflect modern manufacturing systems. With efficient technology, the company can transform the growth and development of its product to ensure added quality and value to a customer (Covello & Hazelgren, 2006). Volkswagen has to identify and design products fast and efficient to meet the needs of different customers and develop pricing strategies to promote profitability. Technology is vital and can lead to the adaptation of different and simple strategies that are essential to consider the internal and external environment and ensure profitable and constant growth.

Collaboration and Partnership

To be effective in new markets, as well as the existing ones, Volkswagen requires a dynamic team to promote merging and acquisition and effectively operate the company to attain the ability to change the policies, strategies or activities in accordance to specific markets (Chernev & Kotler, 2014). Shareholders need to access constantly updated information from the company on matters involving financial performance and activities as their decisions are vital, and their strong interest can be effective in the plan development for the firm. The company needs to reveal its information to shareholders and investors to encourage them to invest their money in the company because it proves the reliability of the company (Covello & Hazelgren, 2006). Meanwhile, the performance in the company generates a great need to promote cohesion among the staffs, executives, and shareholders within the enterprise. Consequently, the portfolio management cost of production and operation, implementation, and restructuring of the company become feasible due to the strong interest of stakeholders in the company.

Recommended scenarios

During the planning and following the implementation of the plan, the management of the company needs to work with the project manager and teams to have a better outlook and understand the changes that might affect the project. The teams should be ready to anticipate and respond to project scope changes by spending more time agreeing on the requirements. There should be a contingency plan indicating how such changes would be met with specified corrective actions, schedules, and resources.

The automotive company will incur significant losses if a completed stage has to be re-worked entirely. Constant reporting can promote clear project valuation through brainstorming and promote the application of creative and innovative measures to meet the project deliverables (Chernev & Kotler, 2014). The customer will also have to recommend changes in the process of stage delivery. As soon as changes occur, the project manager and the team members should agree on changes in other stages to compensate for the costs and re-align the project to its initial plan.

Present research recommends that Volkswagen continuously improve its management and workers performance globally. Additionally, the company needs to expand its production companies from Europe and the US to China and India regions to increase its market. The company should exploit opportunities in China and India and invest capital in sales and marketing of its automobile products and services.

Volkswagen Company is also recommended to deploy intelligent innovation and technology. To become global leaders in the automobile industry, it is recommended that the company promotes customer satisfaction with the adoption of modern technology to ensure quality products and services. The company should also adopt new environmental-sensitive technologies, for example, manufacturing of diesel-free vehicles.

Implementation

Contingency Plan

As Barnes (2007) points out, the contingency plan is important in promoting marketing and sales of products. During the implementation, the whole or part of the initial plan can fail due to unforeseeable factors. Major impacts on the automobile sector are competition from companies producing similar products, as well as a lack of proper promotion of products. Quick planning may help put the sales and marketing of the company’s products to an even distribution globally in the next five years. The contingency plan will represent the activities in details to ensure that the scope of the plan is manageable and set the corrective actions and preferred strategies (Barnes, 2007). Activities like combining promotional activities can be done in the first year, especially in China and India. The facilities and projects will be accelerated and put into place with an additional need to hire more staff members to implement multiple activities. In any case, Volkswagen founders may find it necessary to develop quick actions as they will source funding, look for alternative contractors, suppliers and involve other stakeholders who can deliver the products and services at lower costs internationally.

Therefore, Volkswagen requires many resources, including construction materials, facilities, contracting for Websites and web hosting, money for the lease, obtaining government approval, and resources for continuous promotional activities. The founders will involve investors and banks to fund most of the projects. At the same time, resources will be accessed in the markets where they can be sourced with the lowest costs possible. The products will be accessed locally in each region to reduce transport costs, delay and ensure that they comply with quality standards. Some automobile resources will be accessed from China where they can be bought cheaply in great quantities. Web development and hosting will be accessed locally and internationally to ensure that Volkswagen can communicate to potential customers globally and at all times. It is important to note that there will be a resource calendar to design when a certain resource will be contracted and priority setting in the resource breakdown structure.

Business Aims & Objectives

During the next five years, Volkswagen Company seeks to achieve some financial and non-financial goals:

Financial Goals

a) Obtain finances to establish Volkswagen companies in the US, India, and China to promote more capabilities, introduce new products lines and increase customer segments.

b) Increase revenues each year by at least 40 percent.

c) Use at least 10% of total incomes in the process of automobiles production to ensure conservation and environmental programs.

Non-financial Goals

a) Enter into new geographical markets, such as China and India.

b) Develop Internet and Web platforms and sustain a strong relationship with customers and markets.

c) Develop conservation program each year to ensure the sound development of the Volkswagen Company concept.

d) Introduce new and affordable Volkswagen products with customized logos and slogans.

Marketing Strategy

Volkswagen Company will use sales promotions, non-traditional marketing methods, and public relations as its strongest part of the marketing strategies. Through product strategy, the company intends to offer high-quality goods and services with an appeal to different cultures and lifestyles. The company will produce T-shirts, caps, jackets and fleece vests with different logos and slogans that specifically mark a particular automobile products activities. The Slogans will be changed within a year to mark different products and services. Some logos and slogans will be retired, while the new ones are being introduced to keep the concept fresh and attract first-time customers.

Volkswagen Company’s distribution strategy will be built by initial marketing through local and regional TV stations, radio stations, business newspapers, and magazines. Consequently, it will enable providing of information to different consumers scattered all over the world. So far, Volkswagen Company advertising will not be centered on national distribution to prevent overloaded of facilities. In the next three year, Volkswagen Company will seek to establish and promote the company in China and India. Furthermore, it will embark on online marketing via the Internet as a more profitable mode of marketing in the automobile industry.

Promotion

Promotional strategies will also be used to communicate with customers about the Volkswagen Company in various ways. Information about Volkswagen Company and its products will be available via the Internet, personal approach, and direct mailing. Personal contact will be used to promote products where people and organizations will be contacted through phone to convey the Volkswagen Company message, demonstrate unique goods and services.

There are many non-traditional marketing methods that will be applicable to the Volkswagen Company and require little money but much creativity to make them effective. The company will implement ideas like distribution of discount coupons, insurance, and free maintenance services for a specified duration of time. In the next year, the Volkswagen Company plans to implement the following marketing strategies:

· Create Volkswagen Company Tour where several Volkswagen Company staff members will drive around different regions around the world campgrounds, as well as distribute promotional items like stickers and discount coupons.

· Attend community events, expositions and other events like races, bicycling, and rock climbing events to distribute stickers, shirts, hats, and discount coupons.

· Organize Volkswagen Company contests and select winning teams’ slogans and logos for adding them to the promotional campaign.

Sales Activity Plan

Such activities are based on Volkswagen Company business goals and objectives. They are as follows:

a) Clarify Sales Process

Generate various strategies as identified in the marketing strategy above.

Make appointments through phones, e-mails, third-party introduction, scripts, and templates. Ensure continuous needs analysis through face-to-face conversations with customers, rapports, building the trust of the potential clientele, providing high-quality services, and planning the next meetings. Use personal handwritten notes, testimonials, etc.

b) Clarification of Volkswagen Company principles for consumers by analyzing the most profitable customer’s segment and the region where most products are bought.

c) Lead generation activities like networking with small groups, workshops, using affiliations and niche marketing to target particular kind of customers.

d) Time and priority strategies.

The project is divided into four stages, where each stage is assigned with its specific duration and cost as shown in fig. 1.0 below.

Stage/task

Duration Cost

1. Establishment of office and workshop facilities

1 year $80,000

2. Manufacture of products

1 year $60,000

3. Promotion and marketing activities

1 year $30,000

4. Sales and marketing activities

2 year $ 2,500,000

The process will involve identifying the important location in a specified region, designing promotion, marketing, and sales activities to be performed constantly. Planning for different regions will help meet the needs of customers during low seasons, as well as high seasons.

Promote tracking and measurement activities

Such activities will utilize key performance measures through annual, monthly, weekly and daily sales through the use of such elements as the spreadsheets and registration books.

Pricing and Production Costs

Volkswagen Company founders have been paying very little attention to the production costs in the first five years. Production costs will involve the overall operating costs and activities that are directly connected to overall costs like raw materials, man-hours, and utilities. Regarding man-hours, the recurring costs can be reduced by having a third of staff members on a full-time employment basis with two-thirds on a part-time basis. There will be minimum facility maintenance costs after initial deployment.

The pricing as a strategy is employed as a core part of marketing. Volkswagen Company products and services are valued for their prices, though, considering the competition as well. Volkswagen Company does not aim at setting high prices as a sign for prestige or luxury. At the same time, it does not endeavor to realize its goals by offsetting minimal prices to attract more consumers. In its place, quality pricing will be observed so that customers could enjoy purchasing products very often (Allen, Kania, Yaeckel, & Allen, 2001).

Staffing Requirements: Recruitment and Training

Volkswagen Company will initially work with experienced staff members in already existing companies. The jobs will be open with staffs duties being tailored to meet comprehensive responsibilities since there will be no department that will be fully functioning to its capacity in the first year. Employees are the most important asset of each company, as well as good management. Venture capitalists and banks study the experience, qualifications and personal attributes of the directors and senior managers and base their investment decision on their judgment of the management team quality above any other factor. Therefore, it is important to provide a clear description of each manager’s career background and responsibilities and explain the management structure properly. The management structure will also design ways of evaluating the company’s activities to determine their success or failures and give corresponding recommendations.

Management team

Currently, Volkswagen Company has employed Project Managers in different regions to aid in planning and establishment of Volkswagen Company in China, India, and the US. A Procurement Manager is needed with major skills in breaking down into details on the works, consultancies goods and services required in each case. As the number of customers increases, the Volkswagen Company will adjust to it by providing more managerial roles like HR training and Activities Managers. Service staff members will also be added to convene high season demands and supplies.

Non-executive directors

The already existing directors of Volkswagen are highly skilled. Nonetheless, due to intricate environmental matters, corporate and social responsibilities, Volkswagen Company needs two non-executive directors who can direct in these areas to ensure smooth transition and establishment of companies (Barnes, 2007).

Conclusion

Volkswagen Company is an international automotive producer that offers different automobile products and services. With the increased demand for automobiles around the world, its management team has been committed to ensuring the growth and even distribution of products. Improved technology has promoted advanced exploration and development of operations. A five-year project will employ project management expertise to ensure that the Volkswagen Company is established in different regions of the world to increase competition.

The project will be completed as planned in its scope and in accordance with the schedule and costs. The project manager has to be committed to ensuring the highest standards of project management, ensure the team’s responsibility, as well as deliver the products according to the requirement and the quality agreed with the customer. With project work broken down, the project pipeline is demonstrated and integrated a single unit where resources, risk, and potential changes can be controlled. During the course of the project, unexpected changes, such as the ones related to technology improvement and which were not foreseen at the beginning of the project, may occur and cause changes in the process. In turn, the project manager needs to develop mechanisms to control changes in costs, schedule, quality, and project team’s morale.

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