Volkswagen Group Marketing Report

The Volkswagen Group The Volkswagen Group is now “the world's largest automaker by sales, selling 10.7 million vehicles”[1]. In 1937, the German government, under Adolf Hitler’s control, founded the automobile company known as Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH, which was operated by the German Labor Front. The company was soon shortened to simply Volkswagenwerk translating to “The People’s Car Company”. The main purpose of Volkswagenwerk was to develop and mass produce an affordable but fast vehicle that could be sold for under 1000 Reichsmarks (Approximately 140 Canadian Dollars at the time). For the development of the first vehicle, Adolf Hitler had hired the Austrian automotive engineer, Ferdinand Porsche. After the development of the first vehicle, the initial prototype was displayed at the Berlin Motor Show in 1939. However, it was not long after that World War II had begun. From the brutal destruction of the war, all Volkswagenwerk factories were in ruins, stopping all of their production.

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The allies had made it their main focus to repair these factories in hopes of resurrecting the German auto industry as it was predicted to be a very successful company. With many creative engineers from Volkswagenwerk wanting to make new automobile companies, Volkswagenwerk developed great relationships with many other companies. For example, when Ferdinand Porsche created his own car line, Volkswagenwerk was able to merge and eventually take over the company. Due to Ferdinand's relation with Volkswagenwerk, Porsche and Volkswagenwerk had similar ethical beliefs which made this maneuver easier for both companies (not many conflicts would arise). After continuing to expand, Volkswagenwerk became the Volkswagen Group we now know of today with a dozen subsidiaries of the most famous car companies in the world (Bentley, Lamborghini, Audi, Porsche, Bugatti, etc.)[2]. The Volkswagen Group aims to serve their customers needs with a portfolio of strong brands and offer tailor-made mobility solutions. Although they have become the sixth largest company in revenues, Volkswagen has not always made the best decisions[3]. This analysis is going to examine the Volkswagen Group’s big emissions scandal and discuss further possible actions.

SWOT Analysis

**Referring to Appendix A**

Strengths:

1. The Volkswagen Group is composed of a diverse group of the worlds’ strongest (well known) automobile companies Their diversity and brand names help appeal to a diverse group of consumers across the world giving an advantage over many other organizations.
2. The Chinese joint ventures (SAIC Volkswagen, FAW-Volkswagen, etc.)[4] have allowed the Volkswagen Group to mass produce hundreds of different car models to fit their various consumers’ needs.

Weaknesses:

1. Due to their lack of technical advances, they have begun cheating tests to improve the statistics of their automobiles in places such as the United States of America. This lead to the development of a bad reputation for the Volkswagen Group.
2. As the world is slowing shifting to the environmentally beneficial electric cars, the Volkswagen Group is not keeping up. Compared to many other car companies, the gasoline run Volkswagen Group is far behind in the production of electric cars with only 8 electric vehicles on their MEB platform (car platform for electric cars) across their 12 subsidiaries[5].

Opportunities:

1. A growing economy means more people would have more money spend on non-essentials, such as the luxury cars that most of the car companies, that Volkswagen Group is made of, sell.

Threats:

1. Any other lawsuits filed against the Volkswagen Group would have detrimental effects on the organization such as further lowering consumer trust and lowering profits.
2. With General Motors (GM) on the rise and the Volkswagen Group on the fall, they can easily become a massive threat to the organization (potentially stealing consumers). GM is increasing their production numbers providing an equal to or more car designs than the Volkswagen Group to fit personal consumer wants, stripping them of that advantage.

Problem Identification Recently Volkswagen has tried to cheat several tests to prove their car was better than it was using a software called the defeat device (Referring to Appendix B). Although these methods increased profits at first, the lawsuits filed against them drastically reduced their overall revenues and stock prices (referring to Appendix C). With the many issues Volkswagen is being presented with their previous actions, it is clear that they need to change some actions need to be taken to avoid any bigger losses. However, there is not just one correct way to keep Volkswagen from sinking.

What are some possible actions the Volkswagen Group can take to increase revenues and build credibility after the emissions scandal?

There have been many possible solutions that the Volkswagen Group directors have considered. The first solution was to ignore their scandal in hopes that their consumers would soon forget. However, ignorance is not bliss. Pretending that the issue is not there, does not solve the issue. The majority prioritized regaining credibility and did not accept this solution as it was not a way to do so. Another solution that the directors considered was rebranding. This would give the company a fresh start to enforce new (environmental) policies to get approval from environmentalists and in turn gain consumer trust. Although starting again had several benefits, it had its fair share of downsides. Joining independent verification agencies was another possible solution to the problem. Joining with environmental agencies such as the World Business Council for Sustainable Development (WBCSD). The WBCSD aimed to “create a sustainable future for business, society and the environment.”[6] and working with them would definitely rebuild their credibility and eventually restore revenue. The final considered solution was to post a surety bond after selling a subsidiary. If the Volkswagen Group were to sell a subsidiary and utilize the money in posting a surety bond (a legally binding contract that ensures obligations will be met) and investing in production and research of green vehicles, their credibility would drastically increase.

Stakeholders Map

**Referring to Appendix D**

Owner (Primary): With full responsibility and complete control over the company and its decisions, they are the biggest key player in any situation. They should always be informed and have all of their requirements met. Gets the final say on what the Volkswagen Group will do.

Subsidiaries (Primary): As they literally make up the company, they should be well informed about various decisions being made (having defeat devices placed in their vehicles) and have a big say in decisions that are going to be made in the company. Although they do not possess the power to make final decisions for the entire organization, they still are a valuable key player.

Shareholders (Primary): As they own parts of the company, they collectively have substantial says in the decision that is going to be made. However, some have a much lower level of interest than others (due to share amount), resulting in a collective medium level of interest.

Environmentalists (Secondary): As this is an issue relates to cars harming the environment, they have the power to change consumer perspectives. Consumers are more likely to trust certified environmentalists than the words of a company. As the environment is their top interest, they should be informed on the decision being made so they can ensure that the environment will be safe.

Consumers (Secondary): As they are the ones to actually use the products, the company should focus on reaching their consumer wants/needs. However, they do not possess the power to make any decisions, just slightly guide them. Although there are few consumers that want to be informed about the decisions that are being made in the company they have trusted, the majority of the consumers do not share this level of interest, collectively dropping it by quite a bit.

Appendix A:

• SWOT Analysis

Appendix B:   https://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissions-scandal-explained-diesel-cars   Appendix C: https://www.businessinsider.com.au/chart-this-is-what-happened-to-volkswagen-after-the-emissions-scandal-2015-12   Appendix D: https://www.desmos.com/calculator/wlga2v4bkh  :)

• Stakeholders Map/Graph

Bibliography:

• Jurevicius, Ovidijus. "Volkswagen SWOT Analysis." Strategic Management Insight. December 10, 2016. Accessed October 29, 2018. https://www.strategicmanagementinsight.com/swot-analyses/volkswagen-swot-analysis.html.
• Kottasová, Ivana. "Volkswagen's Diesel Scandal Costs Hit $33 Billion with New Audi Penalty." CNN. October 16, 2018. Accessed October 29, 2018. https://www.cnn.com/2018/10/16/business/volkswagen-audi-diesel-fine/index.html.
• "List of Companies under Volkswagen." Global Cars Brands. December 02, 2017. Accessed October 29, 2018. https://www.globalcarsbrands.com/companies-under-volkswagen/.
• "Strategy 2025." Strategy | Volkswagen Group. Accessed October 29, 2018. https://www.volkswagenag.com/en/group/strategy.html.
• Topham, Gwyn, Seán Clarke, Cath Levett, Paul Scruton, and Matt Fidler. "The Volkswagen Emissions Scandal Explained." The Guardian. Accessed October 29, 2018. https://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissions-scandal-explained-diesel-cars.
• "Volkswagen Group." Wikipedia. October 24, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group.
• "Volkswagen Group China." Wikipedia. September 18, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group_China.
• "Volkswagen Group MEB Platform." Wikipedia. September 21, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform.
• "Volkswagen Is Founded." History.com. Accessed October 29, 2018. https://www.history.com/this-day-in-history/volkswagen-is-founded.
• "World Business Council For Sustainable Development (WBCSD)." World Business Council for Sustainable Development. Accessed October 29, 2018. http://www.wbcsd.org/home.aspx.
• Jurevicius, Ovidijus. "Volkswagen SWOT Analysis." Strategic Management Insight. December 10, 2016. Accessed October 29, 2018. https://www.strategicmanagementinsight.com/swot-analyses/volkswagen-swot-analysis.html.
• Kottasová, Ivana. "Volkswagen's Diesel Scandal Costs Hit $33 Billion with New Audi Penalty." CNN. October 16, 2018. Accessed October 29, 2018. https://www.cnn.com/2018/10/16/business/volkswagen-audi-diesel-fine/index.html.
• "List of Companies under Volkswagen." Global Cars Brands. December 02, 2017. Accessed October 29, 2018. https://www.globalcarsbrands.com/companies-under-volkswagen/.
• "Strategy 2025." Strategy | Volkswagen Group. Accessed October 29, 2018. https://www.volkswagenag.com/en/group/strategy.html.
• Topham, Gwyn, Seán Clarke, Cath Levett, Paul Scruton, and Matt Fidler. "The Volkswagen Emissions Scandal Explained." The Guardian. Accessed October 29, 2018. https://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissions-scandal-explained-diesel-cars.
• "Volkswagen Group China." Wikipedia. September 18, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group_China.
• "Volkswagen Group MEB Platform." Wikipedia. September 21, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform.
• "Volkswagen Is Founded." History.com. Accessed October 29, 2018. https://www.history.com/this-day-in-history/volkswagen-is-founded.
• "Volkswagen Group." Wikipedia. October 24, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group.
• "World Business Council For Sustainable Development (WBCSD)." World Business Council for Sustainable Development. Accessed October 29, 2018. http://www.wbcsd.org/home.aspx.

Articles:

https://en.wikipedia.org/wiki/Volkswagen_Group (1)

• Basic information on the Volkswagen Group

https://www.cnn.com/2018/10/16/business/volkswagen-audi-diesel-fine/index.html (2)

• Volkswagen cheated on a diesel engine emissions test

https://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissions-scandal-explained-diesel-cars (3)

• Used a device called the “defeat device” which allowed their cars to perceive when they were being tested and change results
  • How does it work, what does that mean for the environment, etc

https://www.history.com/this-day-in-history/volkswagen-is-founded (4)

• History of the Volkswagen company

https://www.volkswagenag.com/en/group/strategy.html (5)

• Goals of the Volkswagen Group

https://www.globalcarsbrands.com/companies-under-volkswagen/ (6)

• The Volkswagen Group’s subsidiaries

https://www.strategicmanagementinsight.com/swot-analyses/volkswagen-swot-analysis.html (7)

• Help with SWOT analysis

https://gps.ucsd.edu/_files/faculty/gourevitch/gourevitch_cs_zhou.pdf (8)

• Help with possible solutions (This is a full case study itself)

https://en.wikipedia.org/wiki/Volkswagen_Group_China (10) - Joint Ventures in China

https://www.quora.com/Question-That-Contains-Assumptions-Why-does-Volkswagen-have-a-bad-reputation (11) - Why the Volkswagen Group has a bad reputation

https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform  (12) - The Volkswagen Group’s MEB platform for electric vehicles

Volkswagen Subsidiaries:

• Volkswagen
• Lamborghini
• Audi
• Porsche
• Bentley Motors Limited
• Bugatti
• Ducati
• SEAT
• Skoda Auto
• Etc.

Stakeholders:

• Subsidiaries
• Consumers (People who buy the cars)
• Shareholders
• Owner (Matthias Müller)
• Environmentalists

Fuel price increases

1. As the Volkswagen Group is mostly composed of fuel cars, it would gain one of the largest profits from gas price increases than other car companies.

[1] "Volkswagen Group." Wikipedia. October 24, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group.

[2] "List of Companies under Volkswagen." Global Cars Brands. December 02, 2017. Accessed October 29, 2018. https://www.globalcarsbrands.com/companies-under-volkswagen/.

[3] "Volkswagen Group." Wikipedia. October 24, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group.

[4] "Volkswagen Is Founded." History.com. Accessed October 29, 2018. https://www.history.com/this-day-in-history/volkswagen-is-founded.

[5] "Volkswagen Group MEB Platform." Wikipedia. September 21, 2018. Accessed October 29, 2018. https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform.

[6] "World Business Council For Sustainable Development (WBCSD)." World Business Council for Sustainable Development. Accessed October 29, 2018. http://www.wbcsd.org/home.aspx.