STRENGTHS OF VOLKSWAGEN
Strong Existence Worldwide: Volkswagen has business operations throughout the world. The company operates in around 153 states across the world. The largest manufacturing plant is present in Germany, followed by China and Brazil, respectively. The majority of the vehicle units are produced here and are exported worldwide.
Manufacturing Plants Working Through the World: The company built its first industrial unit in 1938. Since then, Volkswagen has established 119 factories across the world. For instance, the company has factories in Europe, South and North America, Oceania, Asia, and Africa. These industrial units employ skilled labor forces. No less than six lacs workers are employed by the company in 11 Asian, 20 European as well as in American and African states.
Successive R&D: The research and development section of the company is strong and is continuously working on trending consumer demands, emerging designs, and innovative technologies to keep pace with the world. The company is wise enough to allocate good sums for this ambition. Volkswagen allocated a mighty figure of €11.9 billion in the year 2015. The company shaped a policy that encourages about a 3.8% increment per year in the allocation of resources. Even more, the firm aspires to grow in technology and innovation by allocating further resources.
Strong Presence in The Chinese Market: The rise of the Chinese economy can be felt in its economic indicators. China has the greatest vehicle market in the world. Volkswagen has successfully penetrated its vehicles and captured about 20% market share of the cars. The most common brands penetrating are Volkswagen and Audi. The indicators prove the strong market presence and share of the company in the Chinese market. Currently, 13 factories are operational in the country which delivered around 722,800 vehicle units to the Chinese customers. The increase rate was above 4% with a four-decade long presence of the company in the region.
Mexico And Volkswagen: The company is operational in Mexico for more than six decades and is offering its services and products. The largest manufacturing unit is the Puebla industry which has around 15,000 employees. The unique models such as New Beetle, Jetta, and Passat are primarily produced there and are exported around the world.
Well-Recognized Brand: The company has successfully created a strong brand image that owes to the performance of its cars.
Employee Force: The company has a strong force of employees of around six lacs who are working hard to make Volkswagen a strong one.
Diversified Brands Within Volkswagen: The company owns as many as 15 brands including Porche, Audi, Bugatti, and Volkswagen are known worldwide for their unique and high quality. Some other names include Bentley, Neoplan, Scania, Volkswagen Marine, Seat, and other Companies’ commercial vehicles. Thereby, this diversification has built a strong brand force within the company.
Acquisitions And Mergers: The company is well known for its merger policies. It has acquired many new brands since its inception. The most notable of which are Audi, Bentley, Porche, Skoda, etc.
VOLKSWAGEN’S WEAKNESSES IN BUSINESS
Position In the Indian Market: The company has failed to grab the big market of India. Although India has a strong market of consumers, the company has failed to make a strong penetration there. Volkswagen has only three factories in India and failed to attract customers on a larger scale.
Weak Standing in The United States: The firm has failed to capture the great market of the United States and its revenue potential from there. Even more, some experts say that after the diesel emission scandal the company is no longer in the position to successfully penetrate the US market. The company has only 4.8% penetration into the US market.
Non-Eco-Friendly Vehicles of Volkswagen: The company needs to understand the fact that the world has moved to green-friendly technology. The high carbon emissions of Volkswagen cars are not coping with the new trends. The three famous brands of the company namely Porsche, Bugatti, and Lamborghini are emitting excessive footprints of carbon. The company may suffer a loss in the market as well as may face legal or social consequences if it fails to address this.
Lack Of Strong Penetration Like Toyota: The company is not as visible as other brands are visible on the road. The obvious reason is the policy of producing luxurious and upper-class models rather than the production of middle-class products.
Diesel Emission Scandal: In September 2015, the company was caught in a scandal in which a fake device was installed to fake the carbon emissions of the diesel engine cars. Around 10 million cars were defective by this scandal. The company backs over 8.5 million of the units back to the warehouses. Such acts can adversely affect the market position of the company.
To conclude, this internal analysis has examined the internal factors including the strengths and weaknesses affecting the company’s business. Strengths, however, are greater in number compared to the weaknesses.
VOLKSWAGEN OPPORTUNITIES IN EXTERNAL ENVIRONMENT
Innovation In Technology: The company has suffered a great loss in the carbon emission scandal in revenues as well as the loss of reputation. The Time has come to look for a policy change to recover the revenues as well the lost image. The company must undergo eco-friendly policies and innovations to keep pace with the recent development in the vehicle industry. The allocation of more revenues for R&D is the new hope to address these challenges in the future.
Potential In the US Market Share: Although the company has failed to capture the big sums in the markets of the US, it still views the US market as an opportunity. The company must devise policies that can capture the US market.
Expedient Indian Market: The populous country has a market that is developing day by day. The Indian market is increasingly welcoming luxurious cars. These rising trends provide an opportunity for Volkswagen to grow and expand here. Further, the Indian government supports foreign investment and has given 100 percent FDI in this sector.
Social Obligation: The company has a social responsibility for the improvement of eco-friendly technology along with the social image. The reduced emission of carbon dioxide by cars can greatly help the company in this scenario.
EXPANDING THE COMPANY’S OPERATION THROUGH Acquisitions: The company has successfully acquired the world’s most reputable brand so far; this has improved the overall reputation of the company.
The Gaining Market of Buses in The World: The company has successfully provided buses to some regions of the world. Currently, India is the large market for buses for Volkswagen. Whereas the growth rate of buses is 5% year by year. The company has the opportunity to expand the business growth in this sector of the automotive industry.
Rising Trends of Minibuses Especially in Brazil: The trends of minibuses have experienced a surge in the past. The company has the 3rd largest plant in Brazil, and it has an opportunity to increase the sales and operations i9n this sector. This minibus can also be exported to other regions of the world such as India and Bangladesh.
New Manufacturing Units in China: The Chinese market is growing at a faster pace. The worker’s strength in the Chinese market has grown to 120,000 by the year 2019. Furthermore, two new plants have been built in China to help the rising demands of the products there.
Investment Shifts: It is predicted that the sales and revenues in the US market can decrease in the coming years. The obvious reasons are the penetrating threats of higher loan interests which discouraged the people to get loans. The increase in the market for used cars is another factor. In the end, the vicious economic recessions of the US economy are the factors that contribute to the shift change in investment. China, on the other hand, provides an opportunity for an excessive rise in market growth.
THREATS IN THE BUSINESS OPERATIONS OF VOLKSWAGEN
Co2 Emissions: The company would suffer a great loss if the government would put any limits on the emissions of carbon dioxide.
Sky-Rocketing Prices of Raw Materials: The increased prices for raw materials are a significant threat to the company. The increased prices would contribute to increasing the products’ market price.
Competitive Rivalry in The Market: Many other new brands have captured revenues and market share in many regions of the world. For instance, Toyota and Ford cars have increased their markets in developing countries such as India and Bangladesh. This penetration of other brands in the market is a definite threat to the company’s position.
Fierce Competition in The Indian Market: The Indian market is offering fierce competition to the newcomers. These competitions are posed by the local manufacturers like TATA who are manufacturing the cars at low prices and thereby, selling them at low rates. Developing countries like India would prefer to buy low-prices vehicles with some exceptions. Whereas the cars offered by Volkswagen are high in price as compared to the local manufacturing cars, giving rise to intense competition in the Indian market.
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