Dieselgate - Heavy Fumes Exhausting the Volkswagen Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
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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 - – cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, technology disruption, challanges to central banks by blockchain based private currencies, increasing commodity prices, talent flight as more people leaving formal jobs,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, 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 -
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.
Successful track record of launching new products
– Volkswagen Mueller has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Volkswagen Mueller 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.
Effective Research and Development (R&D)
– Volkswagen Mueller has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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.
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.
Learning organization
- Volkswagen Mueller 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 Volkswagen Mueller is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dieselgate - Heavy Fumes Exhausting the Volkswagen Group Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Highly skilled collaborators
– Volkswagen Mueller 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Volkswagen Mueller in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, in the dynamic environment Volkswagen Mueller has struggled to respond to the nimble upstart competition. Volkswagen Mueller has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Volkswagen Mueller, firm in the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Volkswagen Mueller 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Marcus Schuetz, Claudia H. L. Woo suggests that, Volkswagen Mueller 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.
Increasing silos among functional specialists
– The organizational structure of Volkswagen Mueller is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Volkswagen Mueller needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Volkswagen Mueller to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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 -
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.
Developing new processes and practices
– Volkswagen Mueller can develop new processes and procedures in Leadership & Managing People 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.
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.
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 Volkswagen Mueller in the consumer business. Now Volkswagen Mueller can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Volkswagen Mueller 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, Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Better consumer reach
– The expansion of the 5G network will help Volkswagen Mueller to increase its market reach. Volkswagen Mueller 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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Volkswagen Mueller 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. Volkswagen Mueller 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.
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.
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 -
Consumer confidence and its impact on Volkswagen Mueller 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.
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 .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group, Volkswagen Mueller may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Volkswagen Mueller in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Volkswagen Mueller in the Leadership & Managing People industry. The Leadership & Managing People 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.
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.
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.
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 Volkswagen Mueller business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.