NAME SULEIMAN BOLA OTEGA

MAT NO: 2021/143119BB HND II

DEPARTMENT OF BUSINESS ADMINISTRATION AND MANAGEMENT

BUSINESS POLICY

Volkswagen (VW) was facing a crisis in 2003 with a decrease in profits and cash flow compared

to the previous year. This was not just due to the stagnant economy but also due to internal

factors such as low productivity and inefficient cost control. The former CEO, Mr Piech, had

invested heavily in developing new cars, including luxury brands, but had neglected cost control

and productivity. The new CEO, Mr Pischetsrieder, has taken steps to reduce costs, cut capital

spending and incentivize cost-saving among management. However, VW faces competition from

other carmakers and the narrowing technology gap has reduced its reliability advantage. To

maintain its brand image, VW had developed the luxury Phaeton but this has not been a success.

To stay ahead, VW needs to focus on both quality and cost-effectiveness