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Dr. Uwe Matulovic Bianca Fassnacht November 27, 2007 Volkswagen of America: Managing IT Priorities
Comment [MLW1]: Great job, Bianca. With your permission I would like to use this as an example for future students. GRADE: 100%
This recommends helping the business unit executive for supply flow to make an argument for funding the yet unfunded supply flow project from alternative sources and to strengthen the executive’s position in doing so. Implementation of this exception-handling process will take place within 5 days of approval. As a result, the most important strategic goals of VWoA will still remain in focus and the new prioritization process will not have to be reopened. Thus, resistance and fighting against the new prioritization process can be prohibited and at the same time a potential conflict with the parent company due to impeding their globalization initiatives can be resolved. Consistency in the prioritization process of the enterprise’s IT projects and reduced costs will result from these actions. The implementation of the new IT project approval process led to the fact, that a SCM project with high importance to the global level of the organization did not get funding as it does not show significant value at VWoA level. Top-ranked NRG goals such as “build brand customer loyalty” or “improve vehicle value” are not addressed directly with this project, whereas stopping it would lead to a major setback for globalization initiatives of VW AG and would probably lead to a conflict with the parent company. The introduction of VW AG’s new strategy of global product diversification breeds new model introductions in the U.S. and Canadian markets, which emphasizes the need for effective and sophisticated supply chain management even more. The recommendation is to find alternative sources for funding which could be raised in discussion with the IT department of the parent company VW AG or in getting VWoA’s CEO, Gerd Klauss, involved in the funding effort. This plan should begin as soon as possible, as alternatives have to be found when this plan does not succeed. In the end, our objective is to contribute to the strategic supply chain position of VW AG worldwide with applying an exception-handling process and at the same time following VWoA’s strategic goals of the NRG program in spending the $60 million budget only for projects in the top-ranked goal portfolios. The most important reason for this is to keep consistency in consorting with the new prioritization process for IT projects and thus prevent resistance and business unit executives fighting against it. The second most important reason is to avoid a potential conflict with VW AG due to impeding the globalization initiatives of the parent company in not finalizing the SCM project. Supporting VW AG in their globalization effort will position the entire VW Company in a long-term strategic stance to face the upcoming challenges from implementing the new strategy of global product diversification. Other alternatives would be not to fund the SCM project and thus stopping it (see options grid- exhibit 1). This decision could lead to serious conflicts with VW AG and to disadvantages in VW’s strategic positioning worldwide. Another option would be to reopen the prioritization process or to cut funds of other projects at VWoA. Both alternatives could lead to resistance and to the fact, that other projects which are important to VWoA’s strategic goals would be neglected. The risk in our course of action is not being able to find alternative sources for funding the SCM project which could cause discussions and a break with the supply flow people in Germany. If we do not succeed in raising alternative funds for the SCM project we should imply another sort of exception-handling process. This is important to do as successful businesses continuously forge new opportunities which cannot all be covered by the existing IT decisions. Thus we would...
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