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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 have been taking a toll on the German automaker, changing the auto landscape and industry structure. 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 that could undermine Volkswagen. But the more critical factors, that are also major determinants of industry profitability include the five forces and their impact on indivdual firms. In this report, we look at the five forces and how they are affecting Volkswagen AG.

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    Volkswagen Strategy Case Study


    Key Learning Outcomes

    By the end of the case, students should be able to:
    • Analyse the UK automobile industry and how the five forces have affected Volkswagen and rivals and the impact on industry structure, attractiveness, and profitability.
    • Analyse the various strategic business units in Volkswagen's portfolio and assess which ones are the stars and cash cows generating the most value, or the question marks, and dogs that may need further investment or divesting to achieve a balance of the portfolio.
    • To apply strategy business models and frameworks such as Porters five forces to real company cases.

     

    Analyse Volkswagen using Porters five forces and assess how the five forces affect Volkswagen and the Automobile industry in the UK.

    1.0 INTRODUCTION


    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.

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