Case Study Volkswagen AG

Topics: Automotive industry, Volkswagen Group, Porsche Pages: 11 (1592 words) Published: April 29, 2014
Thi Quynh Tran
MGT 6203.21 Strategic Management
Amberton University
Dr. Steve Tidwell
Carnival Case Study
April 26, 2014

Case Abstract
Volkswagen AG is the world’s leading automobile company, headquartered in Germany. During the recession, when other competitors lost dramatically, Volkswagen utilized excellent strategic planning to survive through the recession and earn profits. By expanding the business in the emerging market like China and Brazil, the company proved the strong growth, even outperformed other rival companies like Toyota or Nissan. The case focuses on the expansion and power of Volkswagen in the world and its strategy to develop the brand and increase sales worldwide.

Vision of Volkswagen is to become the global automotive leader.

The company mission is expressed as the company main goal: The goal is to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” The purpose of Volkswagen’s mission is to communicate its business core targets to its stakeholders and motivate VW Group to achieve their objectives.

External Environment
The American automobile industry suffered deeply from the recession, particularly the “Big Three” companies of General Motors, Ford and Chrysler. The emerging markets like China, Mexico, Brazil or Indonesia offered more opportunities for suppliers to create better value chain and increase sales for businesses in the automotive industry. After the recession in 2009, the dollar value in the U.S. decreased dramatically that motivated the American companies to expand their businesses overseas, the unemployment rate increased and the GDP decreased severely, mainly because people lost their jobs and cannot afford things. US International Trade Commission reported a loss of average annual rate of 20.2% in import during 2008-2009, marked a crisis in the US economic history (Sturgeon, 2010). Social, Cultural, Demographic, and Natural Environment Forces In the United States, the recession broadened the gap between the rich and poor. People tended to buy what they really need and are very alert at spending money. Since the increasing of the gas prices, customers preferred cars with fuel-efficiency. However, at the same time, in the developing countries, especially the Southeast Asia, when the U.S. dollar decreased, the population growth increased with the greater demand for oversea goods and products including the automobile products. Therefore, there were the increasing roles of large suppliers across the world and the expansion of many brands overseas in the automobile industry, which created the global integration and the globalization upon the supply base (Sturgeon, 2010). It was a great time for huge companies to merge or own the competitors in the automobile industry to expand the business. Political, Governmental and Legal Forces

In 2008, the US Congress created the Economic Stimulus Act of 2008 to design a $152 billion stimulus to help stave off the recession, which consisted $600 tax rebates to low and middle income Americans (Weller, 2012). In 2009, American Recovery and Reinvestment Act of 2009, a $787 billion bill covering expenditures from rebated on taxes to business investment, was implemented (Weller, 2012). In 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act strongly recovered the economy by cutting the payroll tax and maintaining extended unemployment insurance benefits (Weller, 2012). Technological

The recession has force manufactures in the US and Europe to minimize their cost and improved their technological development. Car manufactured implemented a combination of retrenchment and investment strategies to recover their profitability. Besides, forming or merging alliances with competitors enable car companies to share technique and methods on technological development to create...

References: David, F. (2011). Strategic Management: Concept and cases. New Jersey: Pearson. Print.
Jurevicius, O. (2013). SWOT analysis of Volkswagen. Strategic Management Insight. Retrieved from
Majstorovic, A. (2010). Recession in the automobile industry: A comparison between the responses to the economic recession of the United States and Europe. University of Van Tilburg.
Rauwald, C. (2008). “VW Earnings Buck Auto Industry Trend.” Wall Street Journal.
Schmidt, O (2014). Volkswagen Group: Powertrain and Fuel Strategy. Volkswagen: Group of America.
Sturgeon, T. Biesebroeck, J. (2010). Effects of the crisis on the automotive industry in developing countries: A global value chain respective. The world bank.
Volkswagen (2014). Group Strategy 2018. Annual Report 2013. Retrieved from
Weller, C. (2012). 10 reasons why public policies rescued the U.S. Economy: Recovery from the great recession was no accident. Retrieved from
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