Swot Analysis of "Volkswagen de Mexico's North American Strategy (B)" written by Helen Shapiro, Gordon Hanson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mexico's Volkswagen facing as an external strategic factors. Some of the topics covered in Volkswagen de Mexico's North American Strategy (B) case study are - Strategic Management Strategies, Globalization, Labor, Operations management and Global Business.
Some of the macro environment factors that can be used to understand the Volkswagen de Mexico's North American Strategy (B) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing energy prices, central banks are concerned over increasing inflation, geopolitical disruptions, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Volkswagen de Mexico's North American Strategy (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Volkswagen de Mexico's North American Strategy (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mexico's Volkswagen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mexico's Volkswagen 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 Volkswagen de Mexico's North American Strategy (B) can be done for the following purposes –
1. Strategic planning using facts provided in Volkswagen de Mexico's North American Strategy (B) case study
2. Improving business portfolio management of Mexico's Volkswagen
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 Mexico's Volkswagen
Strengths Volkswagen de Mexico's North American Strategy (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mexico's Volkswagen in Volkswagen de Mexico's North American Strategy (B) Harvard Business Review case study are -
Sustainable margins compare to other players in Global Business industry
– Volkswagen de Mexico's North American Strategy (B) firm has clearly differentiated products in the market place. This has enabled Mexico's Volkswagen to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Mexico's Volkswagen to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Mexico's Volkswagen is one of the leading recruiters in the industry. Managers in the Volkswagen de Mexico's North American Strategy (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Mexico's Volkswagen in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Mexico's Volkswagen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mexico's Volkswagen 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Mexico's Volkswagen digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mexico's Volkswagen 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.
Highly skilled collaborators
– Mexico's Volkswagen 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 Volkswagen de Mexico's North American Strategy (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Mexico's Volkswagen is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Mexico's Volkswagen is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Volkswagen de Mexico's North American Strategy (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Mexico's Volkswagen is present in almost all the verticals within the industry. This has provided firm in Volkswagen de Mexico's North American Strategy (B) 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.
Training and development
– Mexico's Volkswagen has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Volkswagen de Mexico's North American Strategy (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Mexico's Volkswagen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Mexico's Volkswagen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mexico's Volkswagen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Mexico's Volkswagen are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Volkswagen de Mexico's North American Strategy (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Volkswagen de Mexico's North American Strategy (B) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Volkswagen de Mexico's North American Strategy (B), is just above the industry average. Mexico's Volkswagen 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.
Need for greater diversity
– Mexico's Volkswagen 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.
Low market penetration in new markets
– Outside its home market of Mexico's Volkswagen, firm in the HBR case study Volkswagen de Mexico's North American Strategy (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Volkswagen de Mexico's North American Strategy (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Volkswagen de Mexico's North American Strategy (B) can leverage the sales team experience to cultivate customer relationships as Mexico's Volkswagen is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Volkswagen de Mexico's North American Strategy (B) HBR case study mentions - Mexico's Volkswagen takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Mexico's Volkswagen 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.
No frontier risks strategy
– After analyzing the HBR case study Volkswagen de Mexico's North American Strategy (B), it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Helen Shapiro, Gordon Hanson suggests that, Mexico's Volkswagen is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Mexico's Volkswagen has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Volkswagen de Mexico's North American Strategy (B) should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Volkswagen de Mexico's North American Strategy (B) 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 Mexico's Volkswagen 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Volkswagen de Mexico's North American Strategy (B) 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 Mexico's Volkswagen has relatively successful track record of launching new products.
Opportunities Volkswagen de Mexico's North American Strategy (B) | 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 Volkswagen de Mexico's North American Strategy (B) are -
Manufacturing automation
– Mexico's Volkswagen 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Mexico's Volkswagen can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Mexico's Volkswagen can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mexico's Volkswagen 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, Mexico's Volkswagen is facing challenges because of the dominance of functional experts in the organization. Volkswagen de Mexico's North American Strategy (B) 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.
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. Mexico's Volkswagen can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Mexico's Volkswagen to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Mexico's Volkswagen can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Mexico's Volkswagen has opened avenues for new revenue streams for the organization in the industry. This can help Mexico's Volkswagen to build a more holistic ecosystem as suggested in the Volkswagen de Mexico's North American Strategy (B) case study. Mexico's Volkswagen can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Mexico's Volkswagen in the consumer business. Now Mexico's Volkswagen can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mexico's Volkswagen 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.
Using analytics as competitive advantage
– Mexico's Volkswagen has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Volkswagen de Mexico's North American Strategy (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mexico's Volkswagen to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mexico's Volkswagen can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Volkswagen de Mexico's North American Strategy (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Mexico's Volkswagen to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats Volkswagen de Mexico's North American Strategy (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Volkswagen de Mexico's North American Strategy (B) are -
Environmental challenges
– Mexico's Volkswagen 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. Mexico's Volkswagen can take advantage of this fund but it will also bring new competitors in the Global Business industry.
High dependence on third party suppliers
– Mexico's Volkswagen high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Mexico's Volkswagen 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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Mexico's Volkswagen in the Global Business sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Mexico's Volkswagen has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Mexico's Volkswagen 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.
Shortening product life cycle
– it is one of the major threat that Mexico's Volkswagen is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Mexico's Volkswagen business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Mexico's Volkswagen 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.
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. Mexico's Volkswagen 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mexico's Volkswagen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Mexico's Volkswagen needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mexico's Volkswagen 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mexico's Volkswagen 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 Volkswagen de Mexico's North American Strategy (B) .
Weighted SWOT Analysis of Volkswagen de Mexico's North American Strategy (B) 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 Volkswagen de Mexico's North American Strategy (B) 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 Volkswagen de Mexico's North American Strategy (B) 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 Volkswagen de Mexico's North American Strategy (B) 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 Volkswagen de Mexico's North American Strategy (B) 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 Mexico's Volkswagen needs to make to build a sustainable competitive advantage.
