6 KEY CHRACTERISTICS OF AN EFFECTIVE STRATEGY OF VOLKSWAGENS 1.
Volkswagen (VW) released a proposal on Feb 26 with-target of growing annual-vehicles-sales from thecurrent 1 million to 2 million as-well enlarging its-fleet byadding and also renewing at least 4 models per year by 2018. VW will open a new-chapter for thecompany's operationsin China. (Li Fangfang, 2009) VW is currently spending $1billion to build a new plant in Chattanooga, Tennessee, for the production of a midsize sedan in 2011 with initial capacity of 150,000 cars annually. VW’s plans for 2018 include increasing its U.S market shear from 2 percent to 6 percent by selling 800,000 vehicles per annum in the U.S.A. By 2018, VW plans to export 125,000 vehicles from North America to Europe. VW’s plans include large expansions at its Puebla, Mexico plant. (Fred R. David 2011) The initiation of Strategy 2018 has begun, along with-the long-term goals of VW in China. It tags along from-thesuccessful reformation, together at the same time with-the Olympic-Program; we implemented inthe coming along withthe 2008 Games, said Winfried Vahlnd, executive VP of the VW in China (VGC). (Li Fangfang, 2009) 2.
Scope of an organization’s activities
VW is focusing on theemerging markets such-as China and Brazil for the purpose reducing cost of production due to cheaper labor cost as well as raw materials. As a growth strategy VW are planning to widen their scope of activities to Indonesia where Toyota already has a manufacturing plant that dominates the market. This will be a challenge to VW but long term excellent strategic planning might help the market penetration. VW owns several first-class car manufacturers, including AUDI, Lamborghini, Bentley, and Bugatti. Other VW makes include SEAT and SKODA. VW operates-plants inAfrica, theAmericas, Asia-Pacific, and Europe; VW holds-68% of the-voting right in Swedish truck-maker Scania and-about 30% MAN AG. The VW has further extended its market leadership in Europe. Besides the innovative product range, this achievement is attributable to expert market coverage by the VW, the brands and the importers in these countries. (Martin Jahn, 2009)
VW is the leading auto firm in china, not Toyota or Nissan. VW’s market share in Western Europe rose to 20 percent in 2009 from 17.9 percent a year ago. While shrinking demand for new cars in major markets and high raw materials cost and unfavorable exchange rates have reduced earnings of most European automakers, VW anticipated these conditions through excellent strategic planning which gave them competitive advantage to take market share from rival firms worldwide. VW has achieved a great deal of milestones to their successful planning; VW ha boosted-quality beyond any other carmaker inthe past five-years, cutting-defects by-60%.
The newBeetle has injected so much good-publicity in-to the brand, luring buyers-into the dealerships where-they're also taking up Passats, Jettas, and Audis.
VW's share price has risen 36% last year, almost doubling the tempo of the overall German market.
In the United States, where VW ADRs trade right over the counter, VW outperformed General Motors.
Strategic fit with business environment
The increasing domination of VW in the automobile industry has clearly shown that the cars are provided based on consumer needs. For the fact that in 2008, VW net profit rose 15% to 4.75 billion Euros and revenues rose 4.5% to 114 billion implies that the current strategies are in line with their business environment. The current consumer’s preference is changing towards environmental friendly vehicle. To respond to this change business environment, VW is in talks with China’s BYD Co to build hybrid and electric vehicle powered by lithium batteries. Based in Shenzhen, BYD will supply VW with the battery technology. This will be the first automotive partner for BYD (suppliers of cell phone batteries). (Fred R. David,...
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