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Volkswagen Strategic Action Plan Report
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Table of Contents
Executive Summary.......................................................................................................................3
Overview of the Company.............................................................................................................5
The Industry.............................................................................................................................5
Volkswagen's Strategic Purpose.............................................................................................6
Sustainability Challenges..............................................................................................................7
Environmental Analysis................................................................................................................9
Opportunities...........................................................................................................................9
Threat.....................................................................................................................................10
Firm Level Analysis...............................................................................................................10
Strengths................................................................................................................................11
Weaknesses............................................................................................................................11
Competition Analysis.............................................................................................................12
Strategic Action Plan...................................................................................................................13
Environmental Sustainability...............................................................................................13
Reputation Change Management.........................................................................................14
Recommendations........................................................................................................................14
References.....................................................................................................................................16
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Executive Summary
Volkswagen is one of the leading companies in the automobile industry. The company's
headquarters are based in Wolfsburg, Germany, where its primary activities are based.
Volkswagen's brand portfolio is comprised of at least twelve car brands which make it a
diversified company in the automobile industry based on the products it offers to its customers.
Some of the company's vehicle brands include the renowned Audi, Lamborghini, Bentley,
Porsche, Ducati, SKODA, and CUPRA. The company operates in a highly competitive global
automobile industry, where it competes against companies such as Toyota, Mercedes Benz, and
Ford Motors. The company's vision is to make the world a mobile, sustainable place with access
to all citizens. Its primary goal is to offer attractive, safe, and environmentally friendly vehicles
which can compete in the increasingly tough automobile market and to set world standards in
their respective class.
The main sustainability challenges facing the company include environmental
sustainability and Firm Sustainability Reputation (FSR). The company finds it extremely
difficult to deal with environmental sustainability issues due to the addictive manufacturing
associated with the global automobile industry. The company also has a ruined FSR, which arose
from the diesel gate scandal, which caused a lot of adverse health effects to the customers and
the general public. The company's opportunities include focusing on the increased investment in
the production of electric cars and technological advancement to promote its efficiency and
effectiveness. Its threat is the reputational damage caused by the diesel gate scandal, which hurt
its operations. The internal analysis of the company highlights various strengths and weaknesses
of the company. The strengths include brand equity, technological advancement and innovation,
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global presence, and a wide product portfolio, while the weaknesses are it's weakening brand
reputation and increased operating expenses. The company needs to take sustainable leadership
in the implementation of its environmental sustainability goals and formulate various
environmental and Corporate social responsibility (CSR) programs to address its sustainability
challenges. The company should allocate more resources to the implementation of the company's
sustainable goals. The company should consider formulating different tactics to guide the
company in implementing different sustainable goals and objectives.
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Volkswagen Strategic Action Plan Report
Overview of the Company
Volkswagen is one of the leading companies in the automobile industry. The company's
headquarters are based in Wolfsburg, Germany, where its primary activities are based.
Volkswagen's brand portfolio is comprised of at least twelve car brands which make it a
diversified company in the automobile industry based on the products it offers to its customers.
Some of the company's vehicle brands include the renowned Audi, Lamborghini, Bentley,
Porsche, Ducati, SKODA, and CUPRA. The company began its operations back in 1937 when it
was founded as a manufacturer of low-priced automobile motor vehicles in the German
automobile market (Volkswagen, 2023). The company manufactures different models of
automobile products which include passenger buses, trucks, car engines, motorcycles, and other
large commercial trucks. Volkswagen's major market is segmented into commercial vehicles,
passenger cars, financial services, and power engineering market segments. This report will
provide a strategic action plan for Volkswagen to address its sustainability challenges.
The Industry
The company operates in the highly competitive automobile industry, where it competes
with other global automobile manufacturers. The company's direct competitors in the automobile
industry include leading companies such as Toyota, Ford Motors, Tesla, Mercedes Benz, and
other automobile companies which manufacture different automobile brands (Kapustin &
Grushevenko, 2020). The global automobile industry has transformed greatly over its history due
to the integration of various technologies in manufacturing vehicles. The industry underwent
massive restructuring and development due to increased advocacy for reducing global carbon
footprints. As a result, the automobile companies were required to adjust their production
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activities to be in line with the global policy on climate change. The regulations to focus on the
production of environmentally friendly vehicles led to a massive transformation of the industry,
where companies began promoting the production of electric and hybrid vehicles.
The 2020 global covid-19 pandemic affected the global automobile industry like all other
sectors, thus reducing the global demand for vehicles. However, the industry has shown great
signs of recovery, as evidenced by the increased sales in the industry. For example, the industry
sold an estimated 66.7 units of automobile products was sold in 2021, and the industry is
anticipated to continue recovering in the subsequent years (Llopis-Albert, 2021). The increased
sales shows that the industry is experiencing increased production as a result of the economic
recovery.
Volkswagen's Strategic Purpose
Volkswagen is focused on being the leading automobile company by providing vehicles
that are designed to meet customers' needs and preferences. The company is focused n ensuring
it produces high-quality products for its customers. The company is preparing to incorporate the
global technological changes in the automobile industry to help transform the company into a
more software-oriented automobile provider (Volkswagen, 2022). The company is focused on
aligning its production activities with its strategies, mission, and vision to enable it to attain its
strategic purposes. The company's vision is to make the world a mobile, sustainable place with
access to all citizens (Volkswagen, 2023). As the company indicates in its vision statement, it
aims at using its product to promote the mobility of people throughout the world. The company
does not have an official mission, but it has goals that guide its activities. The company's primary
goal is to offer attractive, safe, and environmentally friendly vehicles which can compete in the
increasingly tough automobile market and set world standards in their respective class
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(Volkswagen, 2023). However, the company faces various sustainability challenges which
hinder its effectiveness in achieving its strategic goals and purposes.
Sustainability Challenges
The company is facing various sustainability challenges which hinder the company's
ability to achieve its sustainable goals and objectives. Different companies in the manufacturing
industry find it extremely difficult to overcome environmental sustainability challenges due to
the nature of their manufacturing activities. Increased climate change policies associated with
global warming and the emission of greenhouse gases as made it extremely difficult for
Volkswagen to cope with environmental sustainability (Allam et al., 2020). Regardless of the
continued efforts to address the increased demand for environmental sustainability among
manufacturers, Volkswagen is still faced with different challenges regarding the implementation
of climate change policies. The company's CEO notes that the company is still facing challenges
in addressing climate change which is the main concern facing manufacturers globally
(Volkswagen, 2022). Oliver Blume holds that climate change is a major concern for companies,
and Volkswagen needs to formulate and implement holistic policies to promote environmental
sustainability.
Similarly, Volkswagen is facing environmental sustainability challenges due to the
continued production of motor vehicles, which contribute to global warming. The motor vehicles
manufactured by the company continue to contribute to the increased carbon dioxide emissions,
which contribute to increased global warming. Regardless of beginning to manufacture electric
vehicles in 2017 in a bid to reduce carbon dioxide emissions, the company has not stopped
producing fuel vehicles making it extremely hard for the company to become environmentally
sustainable (Volkswagen, 2022). The company has not been able to implement its policies to
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become carbon neutral due to the continued production of diesel vehicles. In addition, the
company is still facing difficulties in implementing its recycling policies on rechargeable
batteries, making it extremely difficult for the company to implement its environmental
sustainability within the set deadlines. The lack of recycling of car batteries makes it extremely
difficult to reduce carbon dioxide emissions due to the increased manufacturing of batteries
(Allam et al., 2020). The company has not transitioned to the use of clean energy in all of its
production plants, thus derailing the implementation of sustainable goals. For instance, the
company has not implemented the use of green energy in its Chinese production plants.
Secondly, Volkswagen is facing a firm reputation sustainability challenge. The
company's emission cheating scandal continues to hurt the company's relationship with the
public. A recent study shows that the emission scandal of 2015 affected the health of children in
different areas where diesel vehicles increased pollution (Tachibana, 2022). The cheating scandal
led to increased environmental pollution, which continues to hurt the fortunes of the company to
date. Tachibana (2022) highlights that research shows that 1 in 1000 cheating cars was
associated with a 1.3 to 2.2% increase in three types of pollution. The increased pollution led to
adverse effects on the birth of children, where most of the kids had low birth weights and high
infant mortality rates (Colvin, 2020). The negative impacts of the scandal continue to hurt the
company's firm reputation sustainability (FRS). The scandal led to increased air pollution due to
the increased emission of pollutant gasoline from different car models, increasing the adverse
health effects on the lives of children. In addition, the cheating software in emission testing
continues to hurt the company's reputation among the public. The cheating software scandal
evidenced Volkswagen as an untrustworthy and dishonest company that is focused on its
profitability at the expense of its customers (Allam et al., 2020). Thus, the reputation of
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Volkswagen determines the number of customers who purchase sustainable products. Some
customers are likely to avoid buying the company's product due to its previous cheating scandal
on the sustainability of its product is still hurting the company's reputation sustainability.
Environmental Analysis
Volkswagen is one of the leading companies in the global automobile industry. As one of
the global market leaders in the global automobile industry, the company has a larger market
share in the highly competitive automobile industry. The company produces an estimated one
million vehicles annually and usually shares position one or two with Toyota on the annual
production and sale of vehicles (Chen & Zhong, 2022). This environmental analysis reports on
the company's opportunities, Threats, and Market competition.
Opportunities
The company has various opportunities in the evolving global automobile industry.
Firstly, the company can leverage the increased electrical mobility in the manufacture of electric
vehicles. The market demand for electric vehicles is anticipated to increase by 35 % in 2023,
where more than 14 million electric vehicles are anticipated to be sold from the 10 million
electric vehicles sold globally in 2022 (Agnelli et al., 2023). Volkswagen is currently focusing
on the production of electric by focusing its investment strategies on the production of electric
vehicles. The company is focusing on reducing the production of fossil vehicles to promote its
sustainability efforts. Volkswagen has ambitious future plans outlined in its strategic reports on
how the company wants to use electrical mobility to transform the production of electric
vehicles, which are in high demand.
Secondly, the company is leveraging technological advancements to promote its
operational effectiveness and efficiency. The integration of digital technologies in electric
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vehicles has gained massive popularity, which is fueling the demand for these vehicles. For
example, the company has integrated the driving assistance software, which is essential in
promoting driving safety and improving the driving experience (Chen & Zhong, 2022). The
integration of modern software and technological advancement is vital in accelerating demand.
Threat
The diesel gate scandal continues to be a major threat to the company's reputation. The 2015
scandal has continued to haunt the company's progress due to the perceived adverse social effects
of the scandal on the customers (Allam et al., 2020). In addition, the company is still dealing
with the financial losses caused by the emission cheating scandal. The scandal has ruined the
company's reputation, thus hindering its competitiveness against its competitors. Secondly, the
company is experiencing various regulatory threats which may hinder its market diversification
strategy. The automobile industry has a complex regulatory framework which makes it
extremely difficult for the company to expand its production in new markets (Turna, 2022). The
regulatory threats also include pending litigation claims by the company's customers about
various product qualities.
Firm Level Analysis
The company has various strengths and weakness which impacts its internal operations.
The internal components of the company's environment show the factors which can be controlled
by the company to maximize its effectiveness.
Strengths
The strengths of the company include its brand equity, technological advancement and
innovation, global presence, and wide product portfolio. The company enjoys robust brand
equity as one of the global leaders in the automobile industry. The company's robust image and
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high-quality cars make it attractive to its present and potential customers. Volkswagen cars are
popular in different market segments making the company popular in the market (Chen &
Zhong, 2022). Secondly, the company has invested heavily in technology, which is essential in
promoting its competitive advantage in the global automobile industry. For example, the
company has invested in Cariad's new software, which is essential for driving assistance. In the
year ending 2020, Volkswagen spent an estimated 13.9 billion Euros in research and
development to promote its technological advancement (Turna, 2022). The company's
technology is focused on the full transition of the company from a fossil fuel car dealer to an
electric vehicle car company.
Weaknesses
However, the company has some weaknesses which hinder its operation efficiency. The
weakness of Volkswagen includes its weakening brand reputation and increased operating
expenses. The diesel fiasco has been a major issue affecting the company's brand reputation
among its customers (Allam et al., 2020). the adverse effects of the diesel gate scandal are
continuing to affect the company's operations, thus proving to be a major obstacle in promoting
the company's operational efficiency. The scandal resulted in various legal battles which have
continued to hurt the company's global markets. Secondly, the increased economic impacts of the
Covid-19 pandemic proved to be a major bottleneck in the company's operations (Chen &
Zhong, 2022). The effects of the pandemic, coupled with global inflation, have continued to
increase the company's operating expenses, thus lowering its profitability.
Competition Analysis
The level of market competition in the global automobile industry has been on the rise in
recent years. The majority of Volkswagen's competitors, such as Tesla, SAIC Motors, and BYD,
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have incorporated technology in the production of electric vehicles, thus making the market
highly competitive (Carlier,2023)
. The increased demand has made the company invest heavily in technological research and
development to protect the company's market share. According to the company, it aims to spend
an estimated 89 billion euros in the next five years on technological research and development to
help it in coping with the changing competitive forces in the market (Volkswagen, 2022).
Increased investment in the company's brands and research and development will be pivotal in
helping the company to gain a competitive advantage in the global automobile market. Currently,
Volkswagen has the second largest market share, behind the Japanese automobile company
Toyota (Agnelli et al., 2023). However, the company needs to formulate different sustainable
strategies to help it in coping with massive competition from Hyundai, Nissan, Honda, and Kia.
Figure I: The Global Market Share for the leading automobile companies in the world
(Carlier,2023)
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Strategic Action Plan
Environmental Sustainability
The company needs to formulate and implement various environmental sustainability
measures to accelerate the attainment of its Carbon neutral status. The company will focus its
efforts on the markets where the environmental sustainability goals have not been implemented.
For example, Volkswagen needs to implement the utilization of green energy in its Chinese
markets by the end of 2024 to promote environmental sustainability (Zhang et al., 2021). The
company will promote the implementation of its environmental sustainability goals by recruiting
a climate activist in its department to guide the transformation of the company to focus more on
the implementation of its goals to incorporate green energy in its manufacturing practices. The
recruitment of a climate change activist to head the company's sustainability department will be
pivotal in challenging and accelerating the company's efforts to implement its sustainability goals
in promoting the 100% integration of renewable energy in the company's plants in the European
Market before the end of 2023 (Volkswagen, 2022). The recruitment of the climate change
activist will also accelerate the company's efforts to roll out electric cars, thus increasing its
competitive advantage. In addition, the company will recruit recyclable battery experts who will
work round the clock producing the recyclable batteries, which are a vital part of the company's
strategic sustainable objectives.
Reputation Change Management
The company needs aggressiveness in the implementation of its sustainability ideas
which have derailed at the implementation stage. Promoting accelerated environmental
sustainability will help the company to repair its damaged relationship with customers and the
public. A sustainability director will be reporting directly to the director on the progress made in
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the rollout of electric vehicles to help the company in attaining its goal of selling 1 million
electric cars by 2026 (Volkswagen, 2022). Thus, the sustainability leader will be required to set
semi-annual and annual targets for the rollout of electric vehicles across the company's portfolio
base. Increasing the rollout of electric vehicles in the next three years will help the company to
repair its damaged relationship with the public caused by the diesel gate scandal of 2015 (Zhang
et al., 2021). In addition, the new leader will be pivotal in accelerating the company's
decarbonization and integrity strategy, which is aimed at repairing the firm's brand image and
reputation.
Recommendations
The company should allocate more resources to the implementation of the company's
sustainable goals. Increased financing and human resources will ensure that the company is able
to attain its sustainable goal within the set deadlines. In addition, increasing financing will help
the company to increase its recruitment of competent teams which will accelerate the rolling out
of the electric vehicles to match its competitors in the electric vehicles segment. Increased
investment in the manufacture of electric vehicles will make the company environmentally
sustainable due to the reduction in the manufacture of fossil fuel motor vehicles.
Secondly, the company should consider formulating different tactics to guide the
company in implementing different sustainable goals and objectives. The tactics will be pivotal
in accelerating implementation, which is the major concern in the company's sustainability
challenges. The formulation of different tactics, such as addressing the supply chain challenges
in accessing essential materials such as semiconductor chips, will be pivotal in helping the
company to address the emission issues. The company should consider promoting environmental
education among its employees, customers, and other stakeholders as a means of improving the
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firm's sustainability reputation. In addition, the company can improve its reputation by
implementing different corporate social responsibilities revolving around environmental
conservation. The corporate social reputation of the company is important since it helps in
attracting customers to buy its products.
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References
Agnelli, A., Costa, H., & Dussaux, D. (2023). The economic benefits of early green innovation:
Evidence from the automotive sector.
Allam, I., Scagnelli, S., & Corazza, L. (2020). Sustainability reporting, a new type of companies'
hypocrisy: Zara and Volkswagen cases. Responsible Business in a Changing World: New
Management Approaches for Sustainable Development, 195-211.
Carlier, M. (2023, March 17). Automobile market share worldwide: Key brands 2022. Statista.
https://www.statista.com/statistics/316786/global-market-share-of-the-leading-
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Chen, J., & Zhong, M. (2022, April). Research on Volkswagen's Development Strategy During
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Development (ICSSED 2022) (pp. 705-710). Atlantis Press.
Colvin, G. (2020, October 6). Volkswagen emissions damages are still rolling in 5 years later.
Fortune. https://fortune.com/2020/10/06/volkswagen-vw-emissions-scandal-damages/
Kapustin, N. O., & Grushevenko, D. A. (2020). Long-term electric vehicles outlook and their
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Llopis-Albert, C., Rubio, F., & Valero, F. (2021). Impact of digital transformation on the
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Tachibana, C. H. (2022, August 4). VW emissions scandal affected infant and child health. Penn
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Turna, G. B. (2022). How "Dieselgate" Changed Volkswagen: Rushing to Erase the Traces of
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Volkswagen. (2023). History. Volkswagen Group Homepage.
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