VW Group Strategy
Introduction
Volkswagen (VW) is a global automotive industry based in Germany. The industry specializes in the manufacturing and distribution of vehicles in Germany and other parts of the world. With the current challenging business environment and the high competition in the automotive industry, VW group ought to come up with effective business strategies to make her succeed. The company composes of experienced employees that dedicate their time and efforts to produce unique products into the automobile market. VW Group has set a 2018 strategy aimed at positioning the company as a business leader among all automobile manufacturers globally (Volkswagen, 2014). The following is a report to the industry’s executive committee showing the initiatives that the company should take to achieve its 2018 strategy. In addition, the report will provide the executive committee with the expected benefits of the initiative, risk assessment and mitigation measures, and the implementation plan.
Over years, VW Group has aimed at securing the first position in the global automobile industry through setting up a specific target of reaching annual sales of 10 million vehicles by the year 2018. Johnson (2014) claims that the manufacturing industry faces many challenges than any other industry that calls for business leaders in this category to come up with strategic business plans and initiatives. Strategic management helps in improving operation efficiency and success in a manufacturing firm. The following outlined four sectors would make VW group achieve the 2018 strategy.
- Technology
- Sales
- Increased gross revenue
- Employment
Technology improvement forms the first initiative that VW Group should take to in order to beat the challenging environment. Technological innovations would play a great role in increasing the demand for VW vehicles in satisfying consumer needs and wants. Secondly, the company needs to increase its sales output. In the year 2011 and 2012, the company sold 5,772,000 and 5,272,000 passenger-cars respectively (Volkswagen, 2014). The 2018 sales target is 10 million cars annually, which can only be achieved through adapting the following initiative. The third initiative of increasing return on sales before any taxes would ensure the company receives more revenues and gets enough cash to pay off any expenses. Finally, the company needs to increase its workforce in order to accommodate the high productivity.
The main reason for selecting the above four initiatives to assist VW Group achieve its vision 2018 was because most other firms have implemented them and achieved their goals. The selection was based on the prevailing business conditions, and aims at ensuring the company meets all consumers’ needs. On the other hand, the above selection plays a major role in establishing a concrete working environment for the company employees, who in return will assist in improving productivity and brand creation.
Expected benefits
Through implementation of the above strategies, VW group will achieve the following benefits. Firstly, the industry will achieve an environmentally friendly position and gain a large profit margin by implementing the current automobile manufacturing technologies. Most consumers today look for technologically advanced vehicles fitted with automatic gear systems, navigation systems, automatic air conditioners, and other innovations that make the driver more comfortable. The use of intelligent innovations will make the company increase its sales output and achieve its strategy. Information Technology (IT) helps many businesses achieve a competitive advantage when they incorporate organization strategies with technologies. Managing a business driven by IT plays a vital role in implementing technology oriented solutions that ensure an organization meets goals, strategies, and objectives for its own benefits (Van & Haes, 2009, pp. 78-80).
Secondly, VW Group would benefit from high sales output when they implement the above initiatives. One of the VW Group 2018 strategies is to increase unit sales to more than ten million vehicles annually. The above strategy has been dealt with on the second initiative because it recommends that the company introduces new brands to the market and use intelligent innovations. By adapting this strategy, the company will achieve a financial stability and flexibility, hence; gaining a competitive advantage in the automobile industry. According to (Seley & Holloway, 2009, p. 5), the use of innovative sales practices focuses on creating value for both sellers and buyers. Buyers benefit from unique products that satisfy their desires while sellers benefit from increased sales output and eventually high profit margins. Predictable superior, repeatable business results emerge when an organization uses innovative sales approach. Moreover, the industry enjoys increased revenues and decreased sales costs.
Every industry wishes to hire and recruit the most talented and experienced professionals. After implementing the above initiatives, VW Group expects to benefit from high employee turnover. By becoming the best vehicle manufacturer in the globe, most potential employees will be willing to work for the company. An increase in the number of employees, and the opportunity to hire only professionals in the engineering career places the company in a better position to meet its expectations and achieve the 2018 business strategy. In addition, employees will benefit from increased salaries and allowances once the sales output goes up. On the other hand, the company will grow into an internationally known vehicle manufacturer and develop a brand name like other known manufacturers such as Chrysler, BMW, and Mercedes Benz.
Risk assessment and suggested risk mitigation strategies
Risks in business make the planned strategies fail if not assessed and mitigated. The suggested VW Group initiative is capable of facing many risks. The following assessment criteria will be used to determine the potential risks, and define their mitigation strategies. Five risk assessment strategies used are:
- Identifying the hazard
- Determine the potential harm
- Evaluate the risks and decide precautions
- Record the findings
- Review the assessment and update the necessary parties
Under the first step, the main issues likely to challenge the implementation of the VW Group initiative will be identified. The process will involve conducting research to company employees and stakeholders to investigate the main problems they face. The most useful tools to acquire this information are interviews with company managers and conducting surveys to company employees. Both short-term and long-term effects will be assessed during the research. In addition, a close look at the company’s past reports such as financial records, sales records, and human resource records will help in establishing the potential risks that might hinder it from achieving its 2018 strategy.
The second step involves determination of potential harms. Each of the identified hazards presents certain harms to the industry. A table of risks identified will be drawn and their potential harms listed alongside the risk. Some of the planned initiatives might face challenges during the implementation and with a proper listing of such harms; it makes it easier to mitigate the risks once the processes is in progress. For example, the company might face the risk of losing money while trying to implement the technological innovations for vehicles. Ensuring all risks are well highlighted and discussed would make the executive team reading the report get ready for both the positive and negative outcomes.
The third step involves evaluating the risks and deciding on precautions. After spotting the major risks, the next step involves deciding how they should be avoided. The business management law calls for risk managers to do everything possible to protect harms through practicing good practices (Health and Safety Executive, 2014). In order to achieve the objectives of this step, the following questions will be asked:
- Is it possible to get rid of the identified hazard?
- If yes, what measures can be taken to control the risk and prevent future harms?
The above two questions help in designing risk mitigation process for the identified harms, if the answer to the first question is “YES”.
Risk mitigation strategies
Some of the possible risks at VW Group include individual risks, production risks, management risks, procurement risks, environmental protection risks, IT risks, and restructuring risks. These risks are capable of causing a huge harm to the company leading to the failure of vision 2018. Table 1 represents the type of risk and possible mitigation strategy.
Plan implementation
In order to ensure the company achieves its 2018 strategy, the following implementation plan was recommended.
Technological innovations
The company needs an up-to-date Information Technology (IT) department with the current computing systems in order to achieve its technology goals. New professionals will be recruited in this department who has enough experience in vehicle manufacturing. Some of the most important aspects of this plan include producing high-tech vehicles in the next 3 years. In addition, the implementation process involves acquiring information from buyers all round the globe on the type of vehicle they would wish to drive.
Sales
A team of devoted sales personnel will be necessary to ensure more sales are made and the expected target reached. The sales department requires extensive changes so that only competent employees are allowed to perform sales duties, while the rest can be moved to other departments. The implementation plan on the sales department will involve the use of different forms of advertisements, promotions and awareness creation.
Production sector
The production sector performs the most essential processes and a major change would be implemented under this area. Firstly, all production machines and structures will be upgraded and automated where necessary in order to improve their efficiency. New production plants should be installed to cater for the new models and designs. In order to ensure each department takes responsibility of their processes, the production sector will coordinate all development and implementation standards.
Finally, because the company wishes to introduce new models and technologies, a new legal requirement on the existing market requirements will come into action. A group of experts will be employed to cater for the new changes and implement a new communication technology to reach buyers from all locations.
Conclusion
The above initiative and plan is capable of not only achieving the 2018 strategy but also making the company stay on the top position throughout the production process if implemented fully.
References
Health and Safety Executive. (2014). HSE: Information about health and safety at work.
Retrieved June 30, 2014, from:
http://www.hse.gov.uk
Johnson, J. (2014). Strategic Management in the Manufacturing Industry. Small
Business. Retrieved July 1, 2014, from:
http://smallbusiness.chron.com/strategic-management-manufacturing-industry-14334.html
Seley, A., & Holloway, B. (2009). Improve business results using innovative sales
practices and technology. Hoboken, N.J: Wiley.
Van, G. W., & Haes, S. (2009). Enterprise governance of information technology: Achieving
strategic alignment and value. New York, NY: Springer.
Volkswagen. (2014). VW Group Strategy 2018. Retrieved from:
http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.bin.html/pdfFile/strategy.pdf
