Dieselgate - Heavy Fumes Exhausting the Volkswagen Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dieselgate - Heavy Fumes Exhausting the Volkswagen Group
At the end of September 2015, Matthias Mueller stepped in as CEO for the Volkswagen Group, days after Martin Winterkorn resigned over the biggest automotive emissions scandal the world had ever seen. Weeks before, the United States Environmental Protection Agency confirmed the result of investigations proving that Volkswagen had installed software in its most successful diesel engines, which were cheating on the test stand and manipulating results. The successful rapid expansion of Volkswagen's TDI models in the US market was based on fraud. Across brands, about 11 million of the Group's diesel vehicles worldwide were later discovered to have had the cheating device installed. This shattered the worldwide brand and developed into a threat to the formerly pristine image of "Made in Germany" products. Mueller, a veteran of the Volkswagen group, took charge in maneuvering Volkswagen Group out of the crisis, finding technical solutions and regaining the trust of customers, authorities and employees. The Group claimed that the scandal was the result of a chain of errors dating back to 2005. The case illustrates how a failure of proper corporate governance, over-ambitious target-setting and an authoritarian management culture can lead a successful company into crisis. It also leaves us to ponder why a corporate leader in social responsibility could be linked to such a massive scandal.
Swot Analysis of "Dieselgate - Heavy Fumes Exhausting the Volkswagen Group" written by Marcus Schuetz, Claudia H. L. Woo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Volkswagen Mueller facing as an external strategic factors. Some of the topics covered in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group case study are - Strategic Management Strategies, Crisis communication, Crisis management, Ethics, Manufacturing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Dieselgate - Heavy Fumes Exhausting the Volkswagen Group casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
there is backlash against globalization, increasing commodity prices, etc
Introduction to SWOT Analysis of Dieselgate - Heavy Fumes Exhausting the Volkswagen Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Volkswagen Mueller, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Volkswagen Mueller 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group can be done for the following purposes –
1. Strategic planning using facts provided in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group case study
2. Improving business portfolio management of Volkswagen Mueller
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Volkswagen Mueller
Strengths Dieselgate - Heavy Fumes Exhausting the Volkswagen Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Volkswagen Mueller in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group Harvard Business Review case study are -
Training and development
– Volkswagen Mueller has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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.
Low bargaining power of suppliers
– Suppliers of Volkswagen Mueller in the sector have low bargaining power. Dieselgate - Heavy Fumes Exhausting the Volkswagen Group has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Volkswagen Mueller to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Volkswagen Mueller is present in almost all the verticals within the industry. This has provided firm in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Volkswagen Mueller digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Volkswagen Mueller 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.
Cross disciplinary teams
– Horizontal connected teams at the Volkswagen Mueller 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.
Ability to lead change in Leadership & Managing People field
– Volkswagen Mueller 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 Volkswagen Mueller in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Volkswagen Mueller
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Volkswagen Mueller does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– Dieselgate - Heavy Fumes Exhausting the Volkswagen Group firm has clearly differentiated products in the market place. This has enabled Volkswagen Mueller to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Volkswagen Mueller to invest into research and development (R&D) and innovation.
Analytics focus
– Volkswagen Mueller 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 Marcus Schuetz, Claudia H. L. Woo 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.
High switching costs
– The high switching costs that Volkswagen Mueller has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Volkswagen Mueller is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Volkswagen Mueller is one of the most innovative firm in sector. Manager in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Dieselgate - Heavy Fumes Exhausting the Volkswagen Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dieselgate - Heavy Fumes Exhausting the Volkswagen Group are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, it seems that the employees of Volkswagen Mueller 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.
Skills based hiring
– The stress on hiring functional specialists at Volkswagen Mueller has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Volkswagen Mueller has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, is just above the industry average. Volkswagen Mueller 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.
High cash cycle compare to competitors
Volkswagen Mueller 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Volkswagen Mueller is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Volkswagen Mueller 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.
Slow decision making process
– As mentioned earlier in the report, Volkswagen Mueller has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Volkswagen Mueller even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Slow to strategic competitive environment developments
– As Dieselgate - Heavy Fumes Exhausting the Volkswagen Group HBR case study mentions - Volkswagen Mueller 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 dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Volkswagen Mueller supply chain. Even after few cautionary changes mentioned in the HBR case study - Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Volkswagen Mueller vulnerable to further global disruptions in South East Asia.
Opportunities Dieselgate - Heavy Fumes Exhausting the Volkswagen Group | 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Volkswagen Mueller can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Volkswagen Mueller 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.
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 Volkswagen Mueller 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.
Manufacturing automation
– Volkswagen Mueller can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Leveraging digital technologies
– Volkswagen Mueller 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.
Building a culture of innovation
– managers at Volkswagen Mueller 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 Leadership & Managing People segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Volkswagen Mueller can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Volkswagen Mueller 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 Volkswagen Mueller to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Volkswagen Mueller can use these opportunities to build new business models that can help the communities that Volkswagen Mueller operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Volkswagen Mueller can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Volkswagen Mueller is facing challenges because of the dominance of functional experts in the organization. Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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.
Using analytics as competitive advantage
– Volkswagen Mueller 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Volkswagen Mueller to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Volkswagen Mueller has opened avenues for new revenue streams for the organization in the industry. This can help Volkswagen Mueller to build a more holistic ecosystem as suggested in the Dieselgate - Heavy Fumes Exhausting the Volkswagen Group case study. Volkswagen Mueller can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Dieselgate - Heavy Fumes Exhausting the Volkswagen Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group are -
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. Volkswagen Mueller 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 dependence on third party suppliers
– Volkswagen Mueller 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Volkswagen Mueller.
Regulatory challenges
– Volkswagen Mueller 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 Leadership & Managing People industry regulations.
Environmental challenges
– Volkswagen Mueller 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. Volkswagen Mueller can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Technology acceleration in Forth Industrial Revolution
– Volkswagen Mueller has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Volkswagen Mueller needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Stagnating economy with rate increase
– Volkswagen Mueller 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Volkswagen Mueller 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group .
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. Volkswagen Mueller needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Volkswagen Mueller with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Volkswagen Mueller can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Volkswagen Mueller needs to make to build a sustainable competitive advantage.
