Student name and ID

500224000 - MOHIT KUMAR

Course – Supply Chain Management- ERP

Subject: 2024-T1 HRPG3002- Organizational
Theory and Design.
Instructor name- Ali Karovalia
Assignment Topic –
Write an example of an organization which has
formed an inter-organizational relationship and
collaborated with another competitor organization
because of changes in the external environment.

1. Describe and evaluate the changes in the external

environment and their impact on the organization.

2. What type and scope of inter-organizational

collaborative relationship was formed by the
company and why?

Give detailed reasons and justifications for your

answers. Apply the concepts and processes studied
in the course.

ASSIGNMENT-3
SUBMISSION DATE – FEBRUARY 9, 2020
Case Study: Volkswagen and Ford Alliance in
Response to Electric Vehicle Market Dynamics:

1. Changes in the outside world and how they affect organizations:

Concerns about the environment, new technologies, and changing customer tastes are all
causing a paradigm shift in the car business. One of the biggest changes is that more and
more people want electric cars (EVs). This is because pollution rules are getting tighter and
people want more environmentally friendly ways to get around. Traditional companies like
Volkswagen and Ford will have to work hard to adapt to this change.

Volkswagen is a world winner in standard internal combustion engine (ICE) cars, but it is
under pressure from regulators and customers to change its product line to include more
electric models. Ford, which is also a big name in the car business, needs to speed up its
EV plan to stay competitive and adapt to how the market is changing.

Volkswagen and Ford, important players in the car sector, are facing similar external
pressures:
a. Technological Disruptions: The rise of electric vehicles (EVs), connected cars, and
autonomous driving technologies is upsetting standard automobile manufacturing
processes and supply lines. Both businesses must change to these innovations to stay
competitive in the changing market.

b. Regulatory Mandates: Governments worldwide are adopting strict pollution standards

and laws to fight climate change and improve air quality. Compliance with these rules
necessitates sizable investments in clean technologies and alternative fuel options.

c. Shifting Consumer Preferences: Consumers are increasingly moving towards

sustainable and highly advanced cars. Demand for EVs, hybrid models, and smart features
is rising, spurring automakers like Volkswagen and Ford to rethink their product ranges and
customer experiences.

d. Global Economic Uncertainty: Economic instability, trade issues, and global risks offer
challenges to the car industry, affecting sales numbers, production costs, and market
demand across regions.

These external factors drive Volkswagen and Ford to rethink their strategy goals, work on
shared challenges, and explore new growth possibilities.
2. Type and Range of Collaborative Relationships Between Organizations :

Volkswagen and Ford made a strategic partnership to work together on the development of
electric and self-driving cars in reaction to these challenges and possibilities. This kind of
working together goes beyond normal relationship models and includes things like joint
businesses, deals to share technology, and shared manufacturing sites.

Type and Scope of Inter-organizational Collaborative Relationship: In reaction to the

changing external environment, Volkswagen and Ford have formed a strategic relationship
aimed at leveraging their respective strengths and managing industry changes. This
partnership covers several key areas:

a. Electric and automated cars: Volkswagen and Ford have pledged to jointly creating
electric and automated cars, sharing technologies, systems, and knowledge. By sharing
their resources, both businesses can increase the pace of innovation, lower R&D costs,
and bring competitive electric and driverless cars to market faster.

b. Supply Chain and production: Given the size and complexity of their global operations,
Volkswagen and Ford are studying chances to improve their supply chains and production
processes jointly. By standardizing components, sharing production sites, and organizing
transportation, both businesses can achieve cost savings, enhance flexibility, and improve
overall operational performance.
c. Market Expansion and Joint Ventures: To build on new market possibilities and meet
regional challenges, Volkswagen and Ford are considering joint ventures and strategic
partnerships in key markets. By joining their market data, delivery networks, and brand
strengths, both businesses can enter new areas more effectively, expand their customer
base, and drive revenue growth.

d. Sustainability and Corporate Responsibility: Recognizing the importance of

sustainability and corporate responsibility, Volkswagen and Ford are collaborating on
environmental initiatives, such as reducing carbon emissions, promoting renewable energy
adoption, and enhancing supply chain transparency. By matching their sustainability goals
and sharing best practices, both businesses can reduce their environmental effect and
improve their identities as responsible corporate citizens.

Reasons and Justifications:

a. Sharing Development Costs: Developing electric and driverless car technologies needs
major spending in research and development. By cooperating, Volkswagen and Ford can
share the load of these costs, allowing both companies to allocate resources more
efficiently and accelerate the pace of innovation.
b. reach to New Markets: The partnership allows Volkswagen and Ford to reach each
other's markets more effectively. For example, Volkswagen gets access to Ford's strong
position in North America, while Ford can leverage Volkswagen's established market
presence in Europe and Asia. This increased market reach boosts the possible customer
base for their EV products, driving sales and income growth.

c. Leveraging Complementary Expertise: Volkswagen brings its expertise in electric

vehicle platforms, battery technology, and global manufacturing capabilities, while Ford
contributes its proficiency in autonomous vehicle development, connected vehicle
technologies, and agile manufacturing processes. By tapping each other's strengths, both
businesses can create competitive EV and driverless car products more effectively.

d. Risk Mitigation: The partnership allows Volkswagen and Ford to share the risks involved
with the shift to electric and driverless cars. This includes technology risks, legislative
changes, and market instability. By spreading their risks and sharing knowledge, both
businesses can minimize possible negative effects on their individual operations and
financial performance.

e.Streamlining Production: Collaborating on shared manufacturing sites and supply chain

optimization efforts allows Volkswagen and Ford to achieve economies of scale and cost
savings in production. This helps both businesses to make EVs and driverless cars more
cheaply, improving their revenue and reliability in the long run.

Conclusion:

The partnership between Volkswagen and Ford shows a planned reaction to the changing
conditions of the car industry, especially the shift towards electric and driverless vehicles.
By cooperating on technology development, market access, risk reduction, and production
optimization, both businesses can improve their competitiveness and place themselves for
success in the changing car environment. This inter-organizational relationship allows
Volkswagen and Ford to leverage their mutual strengths and resources to capitalize on new
opportunities and handle the challenges created by the shift to electric and driverless
transport.

References :

https://media.ford.com/content/fordmedia/feu/en/news/2020/06/10/Ford-Volkswagen-
Sign-Agreements.html

https://www.motor1.com/news/657646/volkswagen-group-ceo-partnership-ford-growing/

https://www.businesswire.com/news/home/20210104005480/en/A-Strategic-Analysis-of-
the-Volkswagen-Ford-Partnership---ResearchAndMarkets.com

https://www.fabbaloo.com/2020/06/ford-volkswagen-co-production-and-3d-printing

https://www.wardsauto.com/north-american-international-auto-show/ford-vw-alliance-
jointly-develop-vans-pickups

https://www.carscoops.com/2020/05/vw-and-ford-expanding-their-alliance-with-city-
delivery-van-one-ton-van/

https://www.managingconsultserv.com/about/corporate-social-responsibility-and-
sustainability/

https://www.techtarget.com/whatis/definition/supply-chain