Company of the following case

VOLKSWAGEN
INNOVATIVE GROUP STRATEGY “TOGETHER 2025+”

Prepared for the class of

PLANNING AND STRATEGIC CONTROL

hold by professor

Dr. ALFONSO VARGAS-SÁNCHEZ

written by student

Onilov Victor

at the UNIVERSITY OF HUELVA

study year 2019/2020 (I semester)

 Contents

Summary................................................................................................................................................................... 3
1. Presentation of the group strategy............................................................................................................. 4
2. The main objectives of the Group Strategy “TOGETHER 2025+”...................................................4
3. Strategic Map of the Group Strategy “TOGETHER 2025+”................................................................5
4. Strategy building blocks.................................................................................................................................. 9
Annex 1.................................................................................................................................................................... 10
Annex 2.................................................................................................................................................................... 10
Annex 3.................................................................................................................................................................... 11
Annex 4.................................................................................................................................................................... 11
Tasks........................................................................................................................................................................ 12
References............................................................................................................................................................. 12

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 Summary

We are living now in a fully innovative world, around us all the things are very smart
and wise. All the machines have been invented for our convenience, to do our life a little bit
easier and better. Creating a car, people have got the best way to move fast and
comfortable, it became an important transport means. As we all know, to have a car
nowadays is not only a sign of fashion and trend, it is a necessity. But how can we get all
together cars and at the same time without any problems for our environment because
that’s an important condition for our life forward. It was also an important point for
company I have chosen and its innovative strategy for future generation – Volkswagen’s
strategy “Together 2025+”.

All of us know this big and very popular German Company – Volkswagen, one of the
oldest and major car manufacturer from Germany. Its history begins in 1937, when the
German Government officially decided to found this automobile manufacturer to mass
produce a low priced “people’s car” - the meaning from German language of “Volkswagen”.

It was a sunny day of summer on June 1934 when Ferdinand Porsche – an Austrian-
German automotive engineer, received a contract from the German Leader of the National
Socialist (Nazi) Party – Adolf Hitler to design a special car - “people’s car” after the same
model of Porsche’s car - Type 12. The first type of this kind of car was made by Ferdinand
Porsche and named - Volkswagen Type 1 (Annex 1).

The first and the most important strategy of the Volkswagen Company at the
beginning, like Adolf Hitler said: “We must develop mass production of an affordable
means of transport that could sell for less than 1.000 Reich marks (about 150 dollars at the
time)”.

The first attempt to develop a means of transport affordable and useful – could it mean a
cost leadership strategy for that old time for Volkswagen?!
Till the World War II, the Volkswagen Company owned by the German Government
were working for getting to all the people an affordable car, but that big conflict halted the
production process. After the war, on old ruins they began to rebuild the German auto
industry, in a new way, with new ideas and with new people. From the post war period till
2017 the company developed in a dynamic way, being influenced by different economic
and political aspects. From 2017 to present the company is continuing actively to develop,
but more focused on the electric vehicles, because they care about environment problem
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and electric vehicles are a good solution. Here we get, to the main subject of this case study
– innovative Volkswagen’s group strategy – “Together 2025+”.

1. Presentation of the group strategy

Volkswagen has always made individual and affordable mobility possible for
millions of people – “people’s car”. Under this new group strategy – TOGETHER 2025+
“Shaping mobility – for generations to come” the company answers to the innovative and
advanced challenges and trends. Within this strategy the company is saying: “Our goal is to
make mobility sustainable for us and for future generations” 1, it means that they are going
to maintain their level, to offer further mobility to the present and future generations. Also,
they promise: “Our promise: With electric drive, digital networking and autonomous
driving, we make the automobile clean, quiet, intelligent and safe” 2, it means a high quality,
the “spearhead” in innovation that will make the automobile more safety for the customers
and environment and more individual.

2. The main objectives of the Group Strategy “TOGETHER 2025+”

The group strategy “TOGETHER 2025+” is based on four target dimensions:

 Excited customers – represent the main part of company’s “DNA”. With

their

mobility they want to offer to the customer through the different type of cars
individual freedom and social participation now and in the future. They are

https://www.volkswagenag.com/content/onkomm/brands/corporate/world/presence/en/group/strategy.
html
2

https://www.volkswagenag.com/content/onkomm/brands/corporate/world/presence/en/group/strategy.
html
4
 oriented to new customers and they are trying to keep them loyal, because only
they recommend products further.

 Excellent employer – for maintaining good results and sustainability

Volkswagen needs competent employees. By that group strategy Volkswagen is

trying to promote staff satisfaction, motivation and good atmosphere in the
internal working environment. They try to attract and retain the best specialists.

 Role for the environment, safety and integrity – on this way Volkswagen

is trying to assume the responsibility as one of the biggest car manufacturer

about the engine with CO2 emission and this switching to the electro vehicles.
They promise that till 2050, the entire Volkswagen Group will be a CO2 neutral
company. As Volkswagen’s brand chief - Herbert Diess said in 2016: “By 2025,
Volkswagen wants to “sell one million electric vehicles per year, and become the
worldwide market leader in electro-mobility”3 and it sounds like one of the
main objective of this group strategy, to change slowly the company to the best
side.

 Competitive profitability – like all the companies, Volkswagen’s one of the

main objective is to make bigger and bigger profit and growth. Through this
objective they are trying to invest more in their strength and the same time
vigorously addressing to their deficits. The three pilings of this objective are:
efficiency, productivity and profitability using in 100% their possible resources.

We can see that they have 4 main objectives, each objective relates to one of the four

perspectives. Also we can draw a strategic map of this group strategy.

3. Strategic Map of the Group Strategy “TOGETHER 2025+”

At the beginning, the first and the most important objective „Excellent employer”
related to the Learning & Growth Perspective is to change the employees structure, better
training and other kind of educational activities related to the job positions. Attracting and
retaining the best specialist in specific field.

3
https://www.forbes.com/sites/bertelschmitt/2016/11/23/volkswagens-brand-strategy-finally-something-
that-makes-some-sense/#284409b962e4
5
 The second objective „Role for the environment, safety and integrity” is related
to the next, Internal Processes Perspective. All the changes in the internal processes for
making the best things for the environment, for safety and integrity of their customers are
possbile only with Excellent Employees.

Volkswagen Company also have some targets for Internal Processes Perspective
presented by the company for Forbes Magazine, indicators presented by Volkswagen in
this case are: BEV (Battery-Powered Electric Vehicles) Unit Sales As a % Of Net Sales,
Net Units Sales (Mil) and BEV Unit Sales. All the indicators are related to Electric Vehicles.
It will become an important model of car that will be produced in the future by Volkswagen
Company. For example: BEV Unit Sales As A % Of Net Sales will increase around 20% or 2
mil. cars from the total number of cars sold by Volkswagen in 2015.

Targets and Indicators for Internal Processes Perspective for the following years
according to Group Strategy “TOGETHER 2025+” in Volkswagen Company

Sou
rce: https://www.forbes.com/sites/greatspeculations/2016/06/21/volkswagens-strategy-2025-focuses-on-
a-greener-future-for-the-company/#5bb816c45ffc
Developing electric vehicles, establishing mobility solutions, and dabbling in autonomous
driving, could help Volkswagen shrug off the negative impact of the dieselgate scandal and
become more „green and eco” for the environment?!
The third objective”Excited Customers” is related to the Customer Perspective. All
the changes in the company in: technological, ecological and others aspects make the
customer excited about the future products. It is possible only because of the changes and
because the company is taking care about environment, safety and integrity, these make
customers to remain loyal to the brand.
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From this side they said: “We want Volkswagen to be a company with integrity through and
through and to be respected in the best sense of the word. To meet this requirement, we
have created the Group-wide integrity and compliance program Together4Integrity”4. The
logo of this program - (Annex 2)

The program “Together4Integrity” represents a common path oriented the same

time to every employee, to every customer and also to every shareholders and business
partners. They summarized all the promises to the Volkswagen’s “family” in a short list and
there are the following:

 “We take on responsibility for the environment and society.

 We are honest and speak up when something is wrong.
 We break new ground.
 We live diversity.
 We are proud of the work we do.
 WE not me.
 We keep our word.”5

The fourth objective of the Volkswagen’s strategy is related to Financial Perspective

and looks like “Competitive profitability”, it means to use 100% of company’s resources
effectively and get a competitive profitability. The Financial Perspective is the last one
because Volkswagen like all the others profit organization are looking for growth and
increase in profitability. From financial parts of this group strategy they expect in the
future some encouraging numbers, we can see them below.

We have the most important changes (targets) expected from the group strategy
presented by Volkswagen Company for the next 5 years. There are some the most
important indicators from financial perspective: Operation return to scales, ROI or Return
on Investment, CAPEX ratio, R&D cost ratio and Cash Flow. All the indicators in the
following years will increase, according to the targets, except R&D cost ratio and CAPEX
ratio, they are going to decrease because of increase of the Internal Processes Objective – to
use more effectively internal resources.

4
https://www.volkswagenag.com/en/group/strategy.html
5

https://www.volkswagenag.com/content/onkomm/brands/corporate/world/presence/en/group/strategy.
html
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Targets and Indicators for Financial Perspective for the following years according to
Group Strategy “TOGETHER 2025+” in Volkswagen Company

Source: https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-confirms-strategic-
financial-targets-of-together-2025-5579
Strategic Map of Group Strategy “TOGETHER 2025+”

Perspectives Objectives

Competitive
Financial profitability

Customers Excited customers

Role for the

Internal Processes environment, safety
and integrity

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 Learning & Growth Excellent employer

Source: Made on base of objectives presented on Volkswagen’s website 6

4. Strategy building blocks

In order to exploit efficiently all the internal resources through group strategy, the
Volkswagen Company decided to focus on 5 main areas of actions and they have elaborated
for each area a module and for each module a goal (Annex 3):

1. Best Governance – it consists on a crucial changes in the internal structure - to

streamline the structure and to make more decentralized the decision-making processes.
They are working for increasing the trust and the transparency of the main processes
related to the customers and stakeholders. This aspect’s key words are - Focused, lean,
trustworthy. It is represented by the first image in – Annex 4.

2. Best Performance – it consists on establishing of efficiency, productivity and

profitability by 2025. In this module they set themselves a very ambitious financial targets,
to work harder and to make better and better performance year after year. This aspect’s
key words are – Efficient, profitable, sustainable. It is represented by the second image
in – Anne 4.

3. Best Brand Equity – it consists on realigning and sharpening the brand portfolio.
They are continuing to work on the ideal brand portfolio for 2030 based on future trends
and customer needs. This aspect’s key words are – Sharpened brands, full potential. It is
represented by the third image – a diamond in – Annex 4.

4. Software-Enabled Car Company – it consists on working to make the best

software core for the Volkswagen’s Group vehicles. By 2025, all the Volkswagen’s vehicles
will run on their own software – the special operation system made for cars and not only.
The aspect’s key words are - On the way to becoming a Tech-Company. It is represented
by the fourth image – a car with a chip inside in - Annex 4.

5. Excellent Leadership – is consists on improving the organizational culture to a

new one – cooperative and integrated management culture. “By 2025, Volkswagen will set

6
https://www.volkswagenag.com/en/group/strategy.html
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an example for others with open, partnership-based, value-based leadership” 7. The aspect’s
key words are - Versatile, integrity, strong leader. It is represented by the fifth image –
an image with 3 people in the middle in – Annex 4.

Annex 1

First version of “people’s car” – Volkswagen Type 1 designed by Ferdinand Porsche in 1934

Annex 2

The logo of the Volkswagen’s Company program “Together4Intergrity”

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https://www.volkswagenag.com/en/group/strategy.html
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 Annex 3

The fifth main blocks of the Group Strategy “TOGETHER 2025+”

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 Annex 4

The fifth main areas of actions of the Group Strategy “TOGETHER 2025+”

Tasks

1. The first and the most important strategy of the Volkswagen Company at the beginning,
like Adolf Hitler said: “We must develop mass production of an affordable means of transport
that could sell for less than 1.000 Reich marks (about 150 dollars at the time)”.

The first attempt to develop a means of transport affordable and useful – could it mean a
cost leadership strategy for that old time for Volkswagen?

2. Developing electric vehicles, establishing mobility solutions, and dabbling in

autonomous driving, could help Volkswagen shrug off the negative impact of the dieselgate
scandal and become more „green and eco” for the environment?

3. Are the targets from financial perspective really to achieve for the Volkswagen Company
through this group strategy?

4. Are the main areas of acting chosen by the Volkswagen Company the right ones? How do
you think?

5. Is this group strategy right defined? Can it be successful in the following years?

References

1.https://www.volkswagenag.com/content/onkomm/brands/corporate/world/presence/
en/group/strategy.html
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2. https://www.forbes.com/sites/greatspeculations/2016/06/21/volkswagens-strategy-
2025-focuses-on-a-greener-future-for-the-company/#23048c505ffc
3. https://www.volkswagenag.com/en/group/strategy.html
4. https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-confirms-
strategic-financial-targets-of-together-2025-5579
5. https://www.forbes.com/sites/bertelschmitt/2016/11/23/volkswagens-brand-
strategy-finally-something-that-makes-some-sense/#284409b962e4

6. https://en.wikipedia.org/wiki/Volkswagen

7. https://en.wikipedia.org/wiki/Ferdinand_Porsche

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