Porters five Forces Analysis (Automobile industry)
Established in the 1930’s in Wolfsburg, Germany Volkswagen has 60 manufacturing plants in 15 countries. Inside of Volkswagen AG there’s roughly 563,000 employees who contributes to the production of vehicles and to maintain continuous relationships with customers, suppliers, and partners in 153 out of a total of 196 countries which is very impressive. Volkswagen AG consist of two divisions; the automotive division (Passenger Cars & Commercial Vehicles), and the Financial Services division (Dealer and customer financing, Leasing, Direct Bank, Insurance, Fleet Business, and Mobility Offerings). The Automotive division Vehicles sales totaled around 9.73 million vehicles 2013 which was a increase from 2012 sales. Although Volkswagen AG has maintained success they still have weaknesses they want to overcome. Volkswagen AG is currently looking to improve from its weak position in the US passenger car market. In 2012, Volkswagen had only about 5% market share in the US passenger car market. US is the second largest automotive market in the world and weak Volkswagen’s position there results in comparably lower sales. Another weakness VW is experiencing is that high-end cars are not environment friendly. Volkswagen owns three sport car brands Porsche, Lamborghini and Bugatti that emit high amount of CO2 and are fuel inefficient. Besides Volkswagen group is strongly opposing to legislation requiring tighter regulations on CO2 emissions and energy efficiency as their cars are not as fuel-efficient and environment friendly as their competitors. If such legislation would be passed the business would have to make huge investments to engineer newer engines that emit less CO2. With weaknesses brings huge opportunity windows for Volkswagen to innovate and increase product performance. CO2 emission problems brings a positive attitude towards “green” vehicles. Cars that emit large quantities of CO2 and fuel inefficient cars pollute air and has a negative effect on the environment. Consumers are more aware of this negative impact and are more positive to “green” vehicles that emit much less CO2 and are fuel-efficient. VW AG has strong synergy created between all 12 separate automotive brands. All 12 separate companies share a part of R&D and servicing costs, learns from each other best practices and shares distribution channels. This strong synergy could be used to partner with small but large name American automakers because of their positive synergy they bring to the table. Volkswagen has done very well in Growth through acquisitions. So far, Volkswagen Group has been extremely successful in acquiring other auto manufactures and getting access to larger consumer markets as well as faster than organic growth. To continue grow at faster rates and to access vital US market, Volkswagen should continue acquiring competitors. American companies such as bankrupt or Fiat Chrysler Automobiles NV could help to capture more US market share, and adopt their hybrid technology to also make success in the Green vehicle field. Stakeholder Analysis
The Volkswagen Group is made up of a large and diverse array of stakeholder’s that have large expectations and Volkswagen actively has an open dialogue with their stakeholder’s. These include analysts, investors, employees, talents, customers, neighbors, suppliers, business partners, legislators, public authorities, academia and non-governmental organizations. According to Volkswagen’s main website the Volkswagen Group’s goal is, “to create a dialogue with their stakeholder’s that ranges from expectation management through innovation initiatives to risk identification.” Volkswagen pursues a process that’s in...
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