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 - – wage bills are increasing, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, technology disruption, there is backlash against globalization, central banks are concerned over increasing inflation, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, 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 -
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.
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.
Ability to recruit top talent
– Volkswagen Mueller is one of the leading recruiters in the industry. Managers in the Dieselgate - Heavy Fumes Exhausting the Volkswagen Group are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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.
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.
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.
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.
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.
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 -
Lack of clear differentiation of Volkswagen Mueller products
– To increase the profitability and margins on the products, Volkswagen Mueller needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Aligning sales with marketing
– It come across in the case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Dieselgate - Heavy Fumes Exhausting the Volkswagen Group can leverage the sales team experience to cultivate customer relationships as Volkswagen Mueller is planning to shift buying processes online.
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 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.
Products dominated business model
– Even though Volkswagen Mueller 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 - Dieselgate - Heavy Fumes Exhausting the Volkswagen Group should strive to include more intangible value offerings along with its core products and services.
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 operating costs
– Compare to the competitors, firm in the HBR case study Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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 Volkswagen Mueller 's lucrative 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.
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.
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 -
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.
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.
Buying journey improvements
– Volkswagen Mueller can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dieselgate - Heavy Fumes Exhausting the Volkswagen Group 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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 .
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Volkswagen Mueller is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
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.