Faculty of Business and Management

Academic Year 2023/24

Module Name: Global Strategy

Module Code: IBGST

Module Leader: Dr. Seyed Amirhossein Shojaei

Student ID: 230952

Name: Ali Al Jahwari

Introduction of Volkswagen:

Volkswagen is global automotive enterprise which from its foundation, has experienced

enormous expansion and innovation. Volkswagen stands out among the many significant

brands due to its long history of innovation and worldwide reach. This German corporation,

founded in 1937, has become known with quality, dependability, and sustainability via

strategic alliances and constant advances in research and development. In this article, we will

look at Volkswagen's rise to prominence in the automobile industry through different

concepts, strategies for global success.

Evolution of Volkswagen, founded in 1937 by Adolf Hitler's German Labour Front, swiftly

became a symbol of Germany's economic resurgence following World War II (Dallas, 2020).

The early years of the corporation were defined by the manufacturing of low-cost

automobiles for the general public, such as the legendary Beetle. Volkswagen, however,

established its mark in the 1960s with the debut of the Golf model (Bai, 2021). With its front-

wheel-drive configuration and water-cooled engine, this tiny automobile changed the

industry. Market Position Right Now Volkswagen is now a worldwide automobile industry

leader. Audi, Porsche, Lamborghini, and Skoda are among the well-known brands owned by

the firm (Blackwelder et al., 2016). Volkswagen sold almost nine million vehicles globally in

2020, generating over €220 billion in revenue (Bai, 2021). Its popularity is also reflected in

its market share; as of September 2021, it held a large proportion of more than 10% in both

Europe and China (Bai, 2021). Prospects for the Future Volkswagen's success may be

ascribed to a variety of elements. One critical feature is its dedication to sustainability

through R&D projects. Volkswagen has made significant investments in the development of

electric car technologies in recent years in order to reduce emissions (Dallas, 2020). To

improve its sustainability initiatives, it has also forged strategic collaborations with other

industry leaders. Furthermore, the company's ongoing commitment on R&D has resulted in
revolutionary features like as improved driver support systems and autonomous driving

technologies (Blackwelder et al., 2016). These advances have contributed to Volkswagen's

position as a quality-driven brand. Conclusion Finally, the findings of this paper demonstrate

how Volkswagen has positioned itself as a prominent brand in the automobile sector.

Volkswagen thrives in a competitive market because to a rich history of innovation and a

strong commitment to sustainability (Wikipedia, 2023).

Managing Industry competitiveness:

The automobile business is a complicated and dynamic industry that is continuously changing

as technology develops and customer needs shift. Competition is an important part of this

business, with competitors competing for market share and striving to outdo one another.

Volkswagen, as a global leader in automotive manufacture, has used creative techniques and

extensive plans to preserve its market leadership. We may learn about successful techniques

for managing competition in the automobile business by investigating Volkswagen's policies

and accomplishments.

These methods, which include the five-force framework and polling activities, have enabled

the organization to adapt and grow in an ever-changing market. This part will provide the

conclusions of our research, emphasizing the success of Volkswagen's policies in preserving

its position as the industry's top competitor. Framework of Five Forces According to David

(2011), Volkswagen's use of Porter's Five Forces model has been critical in preserving its

industry competitiveness. Volkswagen has been able to design successful strategies to keep

ahead of its competition by understanding competitive dynamics such as supplier power,

buyer power, threat of new entrants, danger of substitutes, and industry rivalry. The

organization has identified possible market risks and opportunities and has taken aggressive
efforts to maintain its position. Volkswagen also conducts polling to gather information on

consumer preferences and trends. This enables them to keep current with market expectations

and make required improvements to their products and services. Volkswagen is able to

anticipate client wants and adjust its offers by regularly obtaining data through polls and

surveys. This has enabled them to maintain a competitive advantage by staying ahead of

market trends. Volkswagen maintains its position as a leading player in the automotive sector

by remaining informed about market dynamics and making strategic decisions based on this

information.

VRIO Approach:

The VRIO approach has evolved into a popular framework for firms to assess and analyse

their resources and capabilities. This useful tool enables businesses to obtain a better

knowledge of their competitive advantages, which may lead to enhanced market success.

Volkswagen, a prominent automobile company, is one example of a successful VRIO

technique application. In this section, we will look at how Volkswagen has used the VRIO

technique to harness its resources and competencies, proving its success in gaining long-term

competitive advantages. We may obtain insight into how other firms might use this strategy

for enhanced performance in their own sectors at any level, from high school to corporate, by

evaluating the value, rarity, inimitable, and organization of resources throughout

Volkswagen's processes.

According to the VRIO research, as one of Volkswagen's strategic management tools, the

firm has been able to properly analyse its resources and capabilities. Volkswagen has been

able to maintain its competitive position in the vehicle business as a result of this review.

Intangible assets, such as a specific technology, collected consumer knowledge, brand name,
reputation, and corporate culture, are extremely significant to a company's competitive

strength (Itami, 2007). Volkswagen's adoption of the VRIO approach to harness its resources

and capabilities exemplifies this. The VRIO approach is a useful tool for assessing a

company's resources and capabilities (Herbane, 2001). Its use at Volkswagen proves its

usefulness in giving firms with a full grasp of their worth, uniqueness, inimitableness, and

organization. Companies like Volkswagen may get a competitive edge by successfully

leveraging their resources by employing this technique. To summarize, the VRIO approach is

a critical tool for firms wishing to analyse their resources and capabilities. This strategy, as

illustrated by its application at Volkswagen, may give firms with significant insights into their

strengths and shortcomings. Companies may successfully harness their resources for long-

term success by recognizing these value creation and sustainability elements (Itami & Roehl,

1987). Itami H. (2007) is a citation. Concepts and Measurement of Intangible Assets. Oxford

University Press is an academic publisher. B. Herbane (2001). A Strategic Management

Approach to Business Models. John Wiley & Sons, Inc. Itami, H., and T.W. Roehl (1987).

Making Invisible Assets Visible. HBR stands for Harvard Business Review.

Volkswagen's VRIO study findings illustrate the method's usefulness in measuring resources

and capabilities. Volkswagen, a market leader in the automotive sector, has used the VRIO

framework to acquire significant insights into their strengths and limitations. This section will

analyse the ramifications of these findings and make suggestions for further study.

Interpretations: - Intangible assets are critical to Volkswagen's competitive position,

emphasizing their importance in today's corporate environment. VRIO enables a thorough

awareness of resources and capabilities, giving businesses with a clear image of their

strengths and shortcomings. Companies that use the VRIO approach can successfully harness

their resources to obtain a competitive edge. This was obvious in the case of Volkswagen,

which was able to retain a strong market position by using intangible assets such as
technology, customer data, brand reputation, and culture. Long-term success requires an

understanding of value generation and sustainability. Future Investigations: While this

research concentrated on using the VRIO approach to evaluate resources and skills at one

firm (Volkswagen), there is still opportunity for future investigation.

Strategies of expansion and diversification:

The business world is continually changing, and businesses must adapt in order to remain

competitive. Strategic diversification, acquisitions, and organizational restructuring are three

essential strategies for obtaining growth prospects. Volkswagen's entry into the electric car

industry is a great illustration of this strategy. In this section, we will look at how these

strategies might lead to considerable growth and success in today's ever-changing markets,

with a focus on Volkswagen's electrification journey. This part emphasizes the need of

businesses adjusting to new trends and technology in order to succeed in the modern world.

Strategic diversification, acquisitions, and organizational transformation, according to David

(2011), have been recognized as effective strategies for firms to attain considerable growth

potential. Volkswagen Group (2017) backs this up by emphasizing the relevance of these

tactics in creating corporate success. Indeed, Volkswagen’s expansion and development into

electric cars demonstrates that this method has been critical in their growth and adaption to

changing markets. Volkswagen has effectively extended its product range and entered new

areas, such as the electric car industry, through strategic diversification (Volkswagen Group,

2017). This has enabled them to enter a booming business niche and expand their consumer

base. Furthermore, Volkswagen's acquisition of smaller firms has given them access to new

technologies and resources, allowing them to remain competitive in the continually changing

automotive sector (David, 2011). Furthermore, organizational restructuring has allowed

Volkswagen to streamline its operations and improve efficiency. They were able to minimize

expenses and deploy resources more efficiently to their growth goals by rearranging their

structure and operations.

Venturing into new markets:

With the expansion of globalization, an increasing number of businesses are expanding into

new markets in order to prosper. This growth brings with it several opportunities as well as

major obstacles. In this section, we will look at these difficulties via the lens of Volkswagen.

We may get useful insights into managing this complicated terrain by reviewing

Volkswagen's market efforts' triumphs and failures. We will unearth the fundamental aspects

that lead to successful market expansion for firms like Volkswagen in today's globalized

economy via meticulous investigation and review.

As demonstrated by Volkswagen, diversifying into global prospects has helped them to

improve revenues and guarantee their future in the automotive business. The impact of the

pandemic on Volkswagen's operational earnings is one key discovery. According to Chen and

Zhong (2022), the ongoing epidemic has resulted in a considerable drop in these earnings.

This emphasizes the significance of always pursuing new markets for expansion, as focusing

on a single market can be damaging to a company's financial health. Furthermore,

Volkswagen's growth into China has been critical to its success. According to the staff

magazine for their Wolfsburg site, joining the Chinese market secures their future while also

advancing electric mobility (360°ALL ABOUT VOLKSWAGEN, 2019). This demonstrates

how entering new markets not only leads to immediate growth but also positions businesses

for long-term success. It is also worth noting Porsche's role in Volkswagen's growth plan.

According to the Volkswagen Chronicle, Adolf Hitler took notice of Porsche's technological
renown and motorsport successes and incorporated their design into his plans (Volkswagen

Chronicle). Volkswagen's entry into new markets has been marked by both achievements and

setbacks. From a public relations standpoint, the corporation has suffered blowback and

public scrutiny since the 2015 emissions crisis. According to analysts, "the company handled

the situation poorly from a PR perspective" (Barth et al., 2017). This has resulted in a huge

drop in market value, since Volkswagen had previously aimed to become the world's largest

carmaker by 2018. According to Zhou (2016), "the scandal caused the company to lose one-

third of the company's market cap." Despite these obstacles, Volkswagen has achieved

success in expanding its operations into new markets. According to Plute (2018), we may get

significant insights into navigating this complicated terrain by evaluating Volkswagen's major

themes in U.S. commercial ad campaigns, individual car advertisements, and print ads before,

during, and after the emissions issue. This emphasizes the need of researching case studies

like Volkswagen to understand both the benefits and challenges of major corporations like

Volkswagen entering new markets. To remain competitive in today's global economy,

businesses must constantly explore new markets for development and form strategic

alliances.

Alliances and Networks:

Globalization has created a plethora of new opportunities for firms, but entering new markets

necessitates smart relationships and networks. As we go more into this issue, consider

Volkswagen's success in worldwide growth through partnerships and cooperation with other

automakers. Volkswagen has been able to create a strong presence in numerous locations and

adapt to local customs and legislation thanks to these ties. This section discusses the

significance of strategic partnerships in corporate development.

Volkswagen's success as a worldwide industry leader may be credited to its strategic alliances

and networks, which have increased the company's reach and knowledge in important areas

across the world, according to Global Networks and Competitive Strategic Alliances in the

Automotive Industry (2015-2016). Volkswagen has received significant insights into local

cultures, legislation, and customer demands through collaborations with other firms and

organizations, resulting in increased worldwide expansion. Furthermore, Borille (2022/2023)

emphasizes the importance of Volkswagen's strategic connections and networks in boosting

the company's growth. These collaborations have offered Volkswagen with critical market

expertise, helping them to comprehend local cultures and customer demands while navigating

difficult legislation. As a result, revenues have soared, and the company has expanded into

new areas. According to the World Development Report 2016, Volkswagen has obtained vital

insights from these strategic collaborations and networks, which have contributed to its

success as a worldwide industry leader. Volkswagen has efficiently expanded its reach and

expertise in major areas throughout the world by collaborating with other firms and

organizations. Volkswagen has been able to comprehend the particular demands of diverse

markets and efficiently manage complicated laws by collaborating closely with other firms

through these collaborations. These strategic connections and networks have clearly aided

Volkswagen's entry into new areas, resulting in higher sales and overall growth. Implications:

The study's findings emphasize the need of multinational firms aiming to expand their reach

developing strategic partnerships and networks. Organizations like Volkswagen may speed

their worldwide expansion by using the knowledge of other firms and obtaining insights into

local cultures and legislation. This highlights the need of organizations actively seeking

partnerships to achieve a competitive advantage in today's linked world. More study might

look at how cultural differences affect the success of such collaborations. Finally, future
research should look at how emerging technologies such as artificial intelligence might

improve cross-border collaboration.

Conclusion:

To summarize, Volkswagen's experience in the automobile sector demonstrates the company's

durability, flexibility, and strategic acumen. Volkswagen has continually embraced innovation

and sustainability as foundations of its success, from its inception in 1937 to its current

position as a worldwide automotive giant. The legendary Beetle symbolized the company's

early years, which were defined by a commitment to offering inexpensive, high-quality

automobiles to the public. Subsequent landmarks, most notably the debut of the Golf model

in the 1960s, demonstrated Volkswagen's capacity to reinvent industry norms via innovative

design and engineering. Volkswagen has cemented its place as a global leader in the modern

era, with a diversified portfolio that includes renowned brands such as Audi, Porsche,

Lamborghini, and Skoda. The company's global sales numbers, which are expected to reach

over nine million vehicles and generate more than €220 billion in revenue by 2020,

demonstrate its pervasive influence and customer popularity. Notably, Volkswagen's market

share in both Europe and China exceeded 10% as of September 2021, demonstrating the

company's significant impact in major markets. Importantly, Volkswagen's success is built in

forward-thinking initiatives rather than previous successes. Volkswagen is a forerunner in

addressing environmental issues and developing customer expectations, as seen by its

expenditures in electric car technology. Strategic partnerships with industry experts boost the

company's ability for innovation, as seen by breakthroughs like as better driver assistance

systems and autonomous driving technology.

Volkswagen's proactive involvement with industry competition distinguishes out as the

automotive sector evolves. The use of frameworks such as Porter's Five Forces and VRIO has

offered a systematic knowledge of market dynamics, allowing the organization to efficiently

traverse hurdles and capitalize on opportunities. Volkswagen's strategy diversification into

electric vehicles, acquisitions, and organizational restructuring not only enlarged its product

variety but also ensured its relevance in a fast changing market. Looking ahead, Volkswagen's

chances of long-term success are dependent on a complete strategy. Continuous emphasis on

R&D, along with strategic relationships, will be critical for remaining at the forefront of

technological innovation. Addressing previous losses, most notably the emissions issue,

through open communication and ethical business practices is critical for restoring

confidence and sustaining a favourable brand image. Responding quickly to changing

customer expectations and technology advances will be important to ensure Volkswagen stays

a dynamic force in the competitive automotive industry. Volkswagen's path, in essence, offers

as a model for industry leaders managing the difficulties of global marketplaces, demanding

innovation, and shifting customer tastes.

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