Globalizing Volkswagen: Creating Excellence on All Fronts SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Globalizing Volkswagen: Creating Excellence on All Fronts
The Beetle made Volkswagen (VW) a household name all over the world for more than 50 years. But in the early 1990s, the VW Group, with its Audi, Seat, and Skoda brands, was in bad shape: a high cost base, costly duplications between the different car brands, and a weak model line-up had led profits to decline by 85% in 1992. At this point, Ferdinand Piech, CEO of Audi, was asked to take over as CEO of the VW group. The company ended 1993 with a loss of almost 1 billion eurodollars. In 2001, the group's net income increased to a record-breaking 2.9 billion eurodollars. Between 1993 and 2001, sales were up from 39.1 billion to 88.5 billion eurodollars, with international sales increasing from 55% to 72%. VW Group's turnaround included making Audi a premium brand, saving Seat from near bankruptcy, and transforming Skoda Auto from a cheap eastern European car maker into a respected player. According to Business Week, VW was "one of the world's best car companies." Describes the transition from 1993 to 2001. Takes readers through VW's successful implementation of a platform manufacturing system, its globalization strategy, the move upmarket, and many innovations along the business system.
Swot Analysis of "Globalizing Volkswagen: Creating Excellence on All Fronts" written by Z. Jan Kubes, George Radler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vw Eurodollars facing as an external strategic factors. Some of the topics covered in Globalizing Volkswagen: Creating Excellence on All Fronts case study are - Strategic Management Strategies, Change management, Competition, Costs, Cross-cultural management, Globalization, Innovation, Leadership, Social responsibility and Global Business.
Some of the macro environment factors that can be used to understand the Globalizing Volkswagen: Creating Excellence on All Fronts casestudy better are - – cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Globalizing Volkswagen: Creating Excellence on All Fronts
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Globalizing Volkswagen: Creating Excellence on All Fronts case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vw Eurodollars, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vw Eurodollars operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Globalizing Volkswagen: Creating Excellence on All Fronts can be done for the following purposes –
1. Strategic planning using facts provided in Globalizing Volkswagen: Creating Excellence on All Fronts case study
2. Improving business portfolio management of Vw Eurodollars
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vw Eurodollars
Strengths Globalizing Volkswagen: Creating Excellence on All Fronts | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vw Eurodollars in Globalizing Volkswagen: Creating Excellence on All Fronts Harvard Business Review case study are -
Diverse revenue streams
– Vw Eurodollars is present in almost all the verticals within the industry. This has provided firm in Globalizing Volkswagen: Creating Excellence on All Fronts case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Vw Eurodollars is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Z. Jan Kubes, George Radler can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Operational resilience
– The operational resilience strategy in the Globalizing Volkswagen: Creating Excellence on All Fronts Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Vw Eurodollars digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vw Eurodollars has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Global Business industry
– Globalizing Volkswagen: Creating Excellence on All Fronts firm has clearly differentiated products in the market place. This has enabled Vw Eurodollars to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Vw Eurodollars to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Vw Eurodollars has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vw Eurodollars has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Vw Eurodollars is one of the most innovative firm in sector. Manager in Globalizing Volkswagen: Creating Excellence on All Fronts Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Vw Eurodollars in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Vw Eurodollars
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vw Eurodollars does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Vw Eurodollars has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vw Eurodollars to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Global Business field
– Vw Eurodollars is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Vw Eurodollars in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Vw Eurodollars has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Globalizing Volkswagen: Creating Excellence on All Fronts HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Globalizing Volkswagen: Creating Excellence on All Fronts | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Globalizing Volkswagen: Creating Excellence on All Fronts are -
Lack of clear differentiation of Vw Eurodollars products
– To increase the profitability and margins on the products, Vw Eurodollars needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Globalizing Volkswagen: Creating Excellence on All Fronts HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Vw Eurodollars has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Globalizing Volkswagen: Creating Excellence on All Fronts, in the dynamic environment Vw Eurodollars has struggled to respond to the nimble upstart competition. Vw Eurodollars has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Vw Eurodollars has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts, it seems that the employees of Vw Eurodollars don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Vw Eurodollars has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts, is just above the industry average. Vw Eurodollars needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Vw Eurodollars is dominated by functional specialists. It is not different from other players in the Global Business segment. Vw Eurodollars needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vw Eurodollars to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Vw Eurodollars has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Vw Eurodollars 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Vw Eurodollars has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Globalizing Volkswagen: Creating Excellence on All Fronts | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Globalizing Volkswagen: Creating Excellence on All Fronts are -
Manufacturing automation
– Vw Eurodollars can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Vw Eurodollars can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Creating value in data economy
– The success of analytics program of Vw Eurodollars has opened avenues for new revenue streams for the organization in the industry. This can help Vw Eurodollars to build a more holistic ecosystem as suggested in the Globalizing Volkswagen: Creating Excellence on All Fronts case study. Vw Eurodollars can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Vw Eurodollars has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vw Eurodollars in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Buying journey improvements
– Vw Eurodollars can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Globalizing Volkswagen: Creating Excellence on All Fronts suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Vw Eurodollars can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Vw Eurodollars can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vw Eurodollars can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vw Eurodollars is facing challenges because of the dominance of functional experts in the organization. Globalizing Volkswagen: Creating Excellence on All Fronts case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vw Eurodollars can use these opportunities to build new business models that can help the communities that Vw Eurodollars operates in. Secondly it can use opportunities from government spending in Global Business sector.
Better consumer reach
– The expansion of the 5G network will help Vw Eurodollars to increase its market reach. Vw Eurodollars will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vw Eurodollars to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Vw Eurodollars to hire the very best people irrespective of their geographical location.
Threats Globalizing Volkswagen: Creating Excellence on All Fronts External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts are -
Technology acceleration in Forth Industrial Revolution
– Vw Eurodollars has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Vw Eurodollars needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vw Eurodollars in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vw Eurodollars with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Consumer confidence and its impact on Vw Eurodollars demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Vw Eurodollars business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vw Eurodollars can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts .
Stagnating economy with rate increase
– Vw Eurodollars can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Vw Eurodollars needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Vw Eurodollars can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Vw Eurodollars will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Vw Eurodollars needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing wage structure of Vw Eurodollars
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Vw Eurodollars.
Weighted SWOT Analysis of Globalizing Volkswagen: Creating Excellence on All Fronts Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Globalizing Volkswagen: Creating Excellence on All Fronts needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Globalizing Volkswagen: Creating Excellence on All Fronts is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Globalizing Volkswagen: Creating Excellence on All Fronts is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Globalizing Volkswagen: Creating Excellence on All Fronts is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Vw Eurodollars needs to make to build a sustainable competitive advantage.
