Large Market Share, Even Larger Csr; Volkswagen Ag

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Communications in Business 100

Critical Essay

Volkswagen AG

Volkswagen AG: Large market share, even larger Corporate Social Responsibility.

Volkswagen leads the European continent, as it’s most predominant car manufacturer. Volkswagen AG is the holding company for VW group that comprises of Automotive and Financial Services. VW also owns a garage full of luxury carmakers like AUDI, Lamborghini, Bentley, and Bugatti. Other brands include SEAT and Škoda and in 2009 VW acquired a 49.9% stake in Porsche as the first step in combining the two into an integrated car company. (Hoover’s Inc. 2011). These 10 brands under Volkswagen AG’s umbrella make up a global market share of more than 11%. In recent years, engagement with the community and ensuring sustainable development has become very necessary for VW to survive as a corporate entity in the 11 European countries and an additional seven countries in the Americas, Asia and Africa in which 47 plants operate (Datamonitor 2006). Corporate Social Responsibility and Corporate Public Policy has become gradually more evident in day-to-day life due to a growing convenience of affluence and education, rising expectations and increased awareness on the public’s behalf, because of these changing aspects of the social environment, businesses are constantly being scrutinized by the public, the government, special interest groups and employees and are now expected to go well beyond the scope of minimum statutory requirements. Community Involvement and social development has become increasingly important to the Volkswagen AG as seen in its reports as well as assurances made by KPMG (2002) and PwC. The social contract and the Iron Law of responsibility allows businesses such as VW to operate within in society with a great level of success but with Volkswagen’s significant market share in the automotive industry and substantial capital resources there also comes well-defined expectations and responsibilities. Because “economic progress without social development in not sustainable” (world economic forum), Volkswagen AG’s Corporate Public Policy clearly shapes the company as a good corporate citizen and indicates that social development, culture and education are key aspects of their entrepreneurial activities in their ‘host’ communities (VW 2011). The following paper will evaluate Volkswagen’s community engagement and social development efforts and whether or not it has been effective in holding up the company’s end of the social contract in terms of the impact on its stakeholder’s, in particular the communities in which the company operates in as well as it’s shareholders.

As the social environment evolves so too do the roles of businesses in conforming to changing expectations and criticisms of stakeholders. Major opportunities, threats and challenges brought about by an evolving social contract has forced the Volkswagen group to actively become more involved in regional infrastructure development, health promotion, education and environmental conservation to improve the living conditions and protect the interests of the regions in which their production facilities are situated. Projects supporting these actions include H1N1 vaccinations to schoolchildren in villages surrounding the Chakan plant in Pune and fair trade initiatives created to help producers in developing countries to earn an independent and dignified living as suggested by the General Works Council (VW 2010-11). Thanks to Corporate Social Responsibility, Volkswagen of South Africa is the biggest private sector employer in the Eastern Cape. As a market leader, the company is able to invest approximately R30 million in projects such as the “Uitenhage Despatch Development Initiative” (UDDI) that are designed to improve education, social and creative skills, youth development, the environment, sustainable economic development, health and community wellbeing in order to empower the South African family both...
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