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Latest posts by Jonathan Kush (see all)

    Volkswagen AG may still be the world’s second largest automaker in the world after Toyota but negative macro trends and interferences from its external environment could take a toll on the company’s performance this year drastically changing the auto landscape. Such interferences include Trumps 20% tariff threat on all EU made cars which he wants implemented by November 2018. The UK, Volkswagen’s second biggest market in Europe, recently introduced a new initiative that will end sales of diesel and petrol cars by 2040. If fully implemented, at least 50% of news cars sold in the UK must be ultra-low emissions by this date. For Volkswagen and other automakers, the threat is clear; move to electric or perish. The company has also paid more than $25bn in fines and damages related to its 2015 ‘diesel-gate’ scandal, an amount that excludes the threat of future financial compensation from civil litigation.

    These are some of the macro factors looked at in this report using PESTEL and SWOT to determine how Volkswagen can leverage its internal core competences like supreme innovation, engineering, manufacturing and assembly to position itself better in the future despite adverse macro influences as well as take advantage of new macro opportunities.

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    Volkswagen strategy Case Study


    Key Learning Outcomes

    By the end of the case, students should be able to:
    • Understand the broad macro-environment of Volkswagen and the automobile industry in terms of political, economic, social, technological, environmental and legal factors (PESTEL/PEST/STEEPLE).
    • Use our swot analysis example to gain an overall understanding of Volkswagen's strengths and weaknesses and strategic options arising from the opportunities and threats that have been identified from the Pestle analysis example on it's business environment.
    • To apply strategy business models and frameworks such as Pestle/Pest/Steeple, Swot etc to real company cases.

     

    Analyse the internal and external environment of Volkswagen using Pestle & Swot 2016-2018.

    1.0 INTRODUCTION


    Volkswagen AG is the world’s second largest automaker in the world after Toyota. According to Statista (2017), Volkswagen had a global market share of 7.2% in the global automobile industry behind leader Toyota (9.2%). Group revenue in 2017 was €230.7bn on operating profit of €17bn (Annual Report 2017). The German automobile group saw a 6.2% increase in 2017 revenue from 2016, thanks to a strong performance in BRIC nations especially China where it has been doing extremely well for the last 3-5 years (B).

    Established in 1937, Volkswagen produces and sells passenger cars under various brands such as Audi, Bugatti, Porsche, Bentley, SEAT, Škoda Lamborghini, and Volkswagen as well as motorcycles under the Ducati brand (Annual Report 2017). For over two decades, it has established and maintained the largest market share in Europe reaching production output of 4.7 million vehicles in Europe in 2017 out of 10million sold globally.

    However in 2018, the company was fined €1bn by public prosecutors in Germany for issues related to the 2015 diesel emissions scandal. This adds to other fines it has already paid in other countries including North America where it paid damages of more than $25bn and a $2.5bn fine in 2017. This even excludes the threat of more financial compensation from civil litigation (McGee 2018).

    These are some of the macro factors that will be looked at in this report while internal factors include the fallout from the emissions scandal in 2015. The report will use both PESTEL and SWOT to determine how Volkswagen can leverage its internal core competences like engineering, manufacturing and assembly to position itself better in the future despite adverse macro influences as well as take advantage of macro opportunities.

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