GROUP H

qSTAKEHOLDERS
• Manelisi Rarani
• Maningi Mkhonto
• Manduleli Mquqwana
• Mphumleli Nqabeni
 INTRODUCTION
qAIM
Group H has decided to select a
Volkswagen Group for strategic
management case study analysis
and evaluation.
 INTRODUCTION
qOVERVIEW
Type Public company
Industry Automotive
Founded Germany (1937 May 28)
Founders Ferdinand Porsche, Bodo Lafferentz &Jakob Werlin
Headquarters Wolfsburg, Germany
Number of locations 61 production plants in 21 countries
Area served Worldwide
Key people Dr. Ferdinand K. Piëch (Chairman of the supervisory board)
Prof. Dr. Rer. Nat. Martin Winterkorn (CEO and Chairman of the board of management)
Products output
Production Automobiles,
6,054,829 commercial
units vehicles,
for sale in 153 engines
countries (2009)[2]
Services Financial services
Revenue €105.2 billion (2009)
Operating
Profit income €1.855 billion(2009)
€960 million (2009)
Total assets
equity
Employees €177.2
€37.43
368,500billion (2009)
(end 2009)
Divisions Automotive Division,
Financial Services Division
 INTRODUCTION
qMARKET SHARE
GLOBAL MARKET SHARE
COMPANY LAST CASH CLOSING PRICE CLOSING PRICE
HIGHEST
VARIATION
TRADE
LOWEST
FOR
PRICE
THETRADE
FOR
DAY
VOLUME
THE
(%)
PRICE
DAY
NAME SALE PRICE VARIATION FOR FOR THE DAY
TRADE ON
OF THE DAY THE DAY (CENTS) DAY SHARES
(€)

VOLKSWAG 70.41 € +1.73 +2.52 72.20 € 68.89 € 751,921

EN GROUP
 INTRODUCTION
qBRANDS
Division/Segment
Automotive Division Brand/ Business
Volkswagen
Audi Field
Passenger Cars
Skoda
SEAT
Bentley
Volkswagen Commercial Vehicles
Scania
Bugatti
Lamborghini
Financial Services Dealer and customer Financing
Division Leasesing
Direcbank
Insurance
Fleet business
 VISION

Innovative solutions for the

tasks of the future.
 MISSION STATEMENT
We are a team of highly qualified professionals,
dedicated to providing services of unparalleled quality to
our customers. To that end and through our services, we
will create a collaborative environment that:

§ Provides a quality product,

§ Creates a safe environment,
§ Enhances productivity, and
§ Enables our customers to be more successful.
 MISSION STATEMENT
qEVALUATION MATRIX
Components

Organisation Cust Pro Mar Concern Tech Phil Self Conc Conc
omer duct ket for nolo osop - ern ern
s s s Survival, gy hy Co for for
Serv Growth, nce Publi Empl
ices Profitabil pt c oyee
ity Imag s
e

Volkswagen Group Yes No No No Yes Yes No No No

EXTERNAL ASSESSMENT
qPEST

§ Political - 1970 Clean Air Act -

Energy Policy and Conservation Act
§ Economic -South America/ South Africa/
Europe/China
§ Social - Sport
§ Technological – High Breed, Electric Motor and
ethanol
 EXTERNAL ASSESSMENT
qGLOBAL SITUATIONS
Global Auto Industry Market Share by Production
Manufacturer
GM Rank
1 2008
13.00% 2009
11.90% Change in
-11% Manufacturer
Suzuki Rank
11 2008
3.60% 2009
3.80% Change in
1%
Toyota 2 11.80% 13.30% 8%
Production Chrysler 12 3.50% 2.70% -25%
Production
Volkswagen 3 8.70% 9.30% 3% Daimler 13 2.90% 3.10% 4%
Ford
Honda
PSA
Nissan 4
5
6
7 8.70%
5.40%
4.80% 7.80%
5.60%
4.80%
4.90% -13%
0%
-4%
-1% BMW
Mitsubishi
Kia
Mazda 14
15
16
17 2.10%
2.00%
1.90%
1.80% 2.10%
2.00%
1.90% -7%
2%
5%
Fiat 8 3.70% 3.60% -6% Avtovaz 18 1.00% 1.20% 9%
Renault 9 3.70% 3.50% -9% Faw 19 1.00% 0.90% -6%
Hyundai 10 3.60% 4.00% 6% Tata 20 0.80% 1.10% 36%
 EXTERNAL ASSESSMENT
qFIVE FORCES OF COMPETITION
MODEL BY PORTER
 EXTERNAL ASSESSMENT
qEFE MATRIX
Opportunities
1.Volkswagen
2. Sluggish
3.
4.
5. Group
Progress global
Increasing
European indivision China
technology
technology
economy (VGC),
expected
inhave ismore
by for
automobiles
could
to
allowed
be
lower farprofitable.
pricetheofcustomers
forces
fewer largest
oil. jointtoventure
engineers to
return
Weight
be to 0.06
0.06
0.08
0.04
0.05
Rating
2
4
3
Weighted
0.12
0.18
0.32
0.15
6.
7. Customers
8. By 2010,
China desires
south forare
andelectronics
Africa hybrid and fuel
asexpected
vibrant efficientfor
to account
markets. vehicles
nearly 40% of an 0.1
0.06
0.04 3
4
2 0.3
0.24
0.08
automaker
needed
dealer for
byservice.
auto companies.
average vehicle’s value.
Score
 EXTERNAL ASSESSMENT
qEFE MATRIX
Threats Weight Rating Weighted
Score
1. The US $ & € devalues against most major currencies since 2002 0.08 4 0.32

2. GM, Toyota, Ford and other manufacturers offer great discount. 0.06 3 0.18

3. Most South African feel foreign cars are of superior quality. 0.05 2 0.1
4. German auto union is one of the most powerful unions in the in 0.04 2 0.08
Germany
5. The US motor vehicle market has become the world’s most 0.08 2 0.16
dynamically competitive auto market since eth 1970s.
6. US Germany market shares is on a stable decline from 20.5 percent 0.01 2 0.02
in 2003 to 18 percent in 2008.
7. New Toyota manufacturing plant in Texas that will be capable of 0.1 2 0.2
producing 200.000 full-size pick-up trucks per year.
8. High inventory cost of dealers cause decrease in profit margin. 0.06 2 0.12

9. Global Recession. 0.03 3 0.09

Total 1 2.98
 EXTERNAL ASSESSMENT
qCPM
GM TOYOTA FORD VOLKSWAGEN
Critical SF Weight Rating Score Rating Score Rating Score Rating Score
Advertising 0.2 4 0.8 3 0.6 3 0.6 3 0.6
Product Quality 0.1 3 0.3 2 0.2 2 0.4 4 0.2

management 0.1 3 0.3 3 0.3 3 0.3 3 0.3

Finance position 0.15 4 0.6 3 0.35 2 0.45 3 0.3

Customer loyalty 0.1 3 0.3 4 0.4 4 0.3 3 0.4

Global expansion
Market shares 0.2
0.05 4 0.8
0.2 4
3 0.8
0.15 4
2 0.6
0.2 3
4 0.8
0.1
Total 1 3.3 2.8 2.85 2.7
 INTERNAL ASSESSMENT
qIFE MATRIX
Strengths Weight Rating Weighted
Score
Strong
Audi
Staff
VW Golf
Q5
Development
Rwinning
sales
& D department
Environmental more
anprogram
award
than 26
Protection million
awareness 0.07
0.08
0.06
0.04 4
2
3 0.28
0.12
0.24
4.5% increase in sales revenue 0.05 3 0.15
VW Financial Services increase in contracts by 5.3% 0.06 2 0.12
VW Bank
Taking over
gained
Scania
increase
as the of
new26.1%
brand 0.07
0.05 2
3 0.14
0.15
 INTERNAL ASSESSMENT
qIFE MATRIX
Weaknesses Weight Rating Weighted
Score
Bad management image 0.06 3 0.18
Quality Control 0.07 3 0.21
4.5% decrease
Decline 1.4%inindemand
of 0.4% sales revenue
vehicle for Golf
sales for
forinVW
VW
North
Passenger
America
Passenger 0.03
0.05 3
2 0.09
0.1
Operating
Cars brandprofit drop of 20.6% for Skoda brand 0.05 3 0.1
Decline of 11.9% in sales revenue for Seat brand 0.04 3 0.12
Operating profit drop of 6.7%
Total 93.5%for
forFinancial
Bently brand
Services 0.05
0.04
1 3
2 0.15
0.08
2.81
Division
STRATEGY FORMULATION
qSWOT MATRIX
SO STRATEGIES WO STRATEGIES
1. Increase
2. Continue orR&D for hydride
introduce new automobiles,
technology inpure 1. Increase
2. Create a department
or introduce for
newquality controlin
technology
battery and electric
automobiles to keepvehicles (S6, O7,
the customers and O6).and
returning (W2, O2, O4)to keep the current customers
automobiles
ST STRATEGIES
attracting new customers. (O3, S1)
WT STRATEGIES
and attract new ones to increase profit. (W3,
1. Create
2.
3.
4. Focus on
Increasea quality
marketing
developing
strong to their
HR tocutting
the
products
current
departmentedge
toin
customers
fuel
order
meet automobiles
to and
the 1.
W8,Focus on customer oriented approach
W9, O3)
also expand
compete
employees’in foreign
to other
rights markets.
andmarket. (T3,
(T2,S1)
S10)(T4, S1)
responsibilities. than on production oriented approach. (T8,
W2)
STRATEGY FORMULATION
qSPACE MATRIX
FINANCIAL STRENGTHS (FS) ENVIRONMENTAL STABILITY (ES)
Return on Asset (ROA) 1 Rate of Inflation -4
Leverage 1 Technological Changes -3
Net Income 2 Price Elasticity of Demand -3
Net Asset 2 Competitive Pressure -6 -3
Return on Equity 1 Barrier to entry into the Market -2
Financial Strengths (FS) 1.4 Environmental Stability (ES) -3

COMPETITIVE ADVANTAGE (CA) INDUSTRY STRENGTH (IS)

Market Share -3 Growth Potential 5
Product Quality -2 Financial Stability 3
Customer Loyalty -2 Ease of entry into the market 6
Technological know-how -1 Resources Utilization 3
Control over supplier & Distributors -2 Profit Potential 4
Competitive Advantage (CA) -2 Industry Strength (IS) 4.2

X-axis: 2.2
Y-axis: -1.8
STRATEGY FORMULATION
qSPACE MATRIX
 STRATEGY FORMULATION
qBCG MATRIX
No DIVISION REVENUE % REVENUE PROFITS % PROFIT % MARKET % GROWTH
(BILLIONS) SHARE RATE

1 Volkswagen 72,928 50% 2,700 34% 90 +11

Passenger Cars

2 Audi 34,196 23% 2,882 36% 25 +17

3 Škoda 8,039 6% 565 7% 24 +10
4 SEAT 5,196 4% 86 1% 10 -10
5 Bentley 1,084 1% 10 0% 15 -9
6 Volkswagen 9,607 7% 375 5% 58 -4
Commercial Vehicles

7 Scania 3,865 3% 417 5% 9 +5

8 Financial Services 10,929 7% 893 11% 56 +12
Division

Total 145,844 100% 7,928 100% - --

STRATEGY FORMULATION
qBCG MATRIX
The IFE Total Weighted S cores

1.0 0.0

+20

High 2 36%
3.0 to 1 34% 11% 7%
4.0 8 3

5%
THE
Medium Stars II Question Marks I 7
IFE
TOTAL 2.0 to 0
WEIGHTED 2.99
SCORES 6 5%
5 0%
4 1%
Low
1.0 to
1.99 -20 Cash Cows III Dogs IV
 STRATEGY FORMULATION
qINTERNAL EXTERNAL TOTAL
WEIGHTED SCORES
No DIVISION SALES % PROFIT % IFE EFE
1
2 Volkswagen Passenger Cars
Audi 72,928
34,196 50%
23% 2,700
2,882 34%
36% 3,5
3,0 3,5
3,0
3 Škoda REVENUE
8,039 6% 565 7% SCORES
2,0 SCORES
1,5
4 SEAT 5,196 4% 86 1% 1,0 1,5
5
6
7 Bentley
Volkswagen
Scania Commercial Vehicles 1,084
9,607
3,865 1%
7%
3% 10
375
417 0%
5% 1,5
2,5
3,5 1,0
2,5
8 Financial Services Division 10,929 7% 893 11% 2,5 3,0
Total 145,844 100% 7,928 100% - --
STRATEGY FORMULATION
qINTERNAL EXTERNAL
MATRIX
The IFE Total Weighted S cores
Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

3.0 2.0 1.0

4.0

High 1 34%
3.0 to 4.0

2 36% 11%
3.0 8

THE
IFE Medium 5% 5%
2.0 to 2.99 7 6
TOTAL
WEIGHTED 7%
SCORES 2.0 3

Low 4
1.0 to 1.99
1%
1.0 5 0%
 STRATEGY FORMULATION
qTHE QUANTITATIVE STRATEGIC
PLANNING Continue R&D for Hybrid
Create
Automobiles,
Department
FocusElectric
for
on quality
customercontrol
orientated
Create strong
than on production approach
approach
HR
Department to meet
employees rights

KEYS FACTORS WEIGHT AS TAS AS TAS AS TAS AS TAS

STRENGHTS
Strong R & D department 0.07 4 0.28 3 0.2 2 0.14 1 0.07
Audi Q5 winning an award 0.08 3 0.24 4 0.3 2 0.16 1 0.08
Staff
Environmental
4.5%
VW Golf
Development
increase
sales
VW Financial
Bank
Taking over more
in
Protection
sales
program
Services
gained
Scania than
as 0.08
0.04
0.05
the 0.06
increase 0.07
0.05 3
4 0.32
0.18
0.16 2 0.2
0.1 1
4
3 0.08
0.24
0.12 3
1 0.24
0.06
0.04
26
awareness
revenue
of million
increase
26.1%
new brand in contracts by
5.3%
 STRATEGY FORMULATION
qTHE QUANTITATIVE STRATEGIC
PLANNING
WEAKNESSES
Bad management
Quality Control image 0.06
0.07 3 0.21 4 0.3 2 0.14 1 0.07
4.5% decrease
Decline
Decline of 1.4%inin
of 0.4% indemand for Golf
sales revenue 0.05
0.03 4
3 0.2
0.09 2 0.1 3
4 0.15
0.12 1 0.05
0.03
Operating
Decline
Operating
Total
in North of profit
11.9%drop
profit
America invehicle
drop of
of
sales
20.6%
sales
93.5%
6.7% for
for 0.05
for
revenue
for 0.05
0.04
0.05
0.04
1
3
3
3
0.15
0.15
0.12
0.15
2
2
2
0.1
0.1
0.1
4
4
4
0.2
0.2
0.16
0.2
1
1
1
0.05
0.05
0.04
0.05
for
VW VW Passenger
Passenger CarsCars brand
brand
Skoda
for brand
Seat
Financialbrand
Bently brand
Services Division
 STRATEGY FORMULATION
qTHE QUANTITATIVE STRATEGIC
PLANNING
OPPORTUNITIES
Volkswagen
Progress
Increasing Group China
intechnology
technology (VGC),
inhave
automobilesis byfor
allowed 0.06
0.08 1
4
3 0.06
0.24
0.24 2
3
4 0.1
0.2
0.3 3
2
1 0.18
0.12
0.08 4
1
2 0.24
0.06
0.16
European
Sluggish
Customers division
global
desires expected
economy
for hybrid toand
could be more
lower
fuel 0.04
0.05
0.1 1
4 0.05
0.4 4
2 0.2
0.2 2
3 0.1
0.3 3
1 0.15
0.1
far the
fewer
By 2010,
China
forces largest
engineers
and joint
electronics
South
customers venture
toAfrica
tobe needed
are as
return automaker
expectedby auto
vibrant
to tofor
dealer 0.06
0.04 4 0.24 3 0.2 2 0.12 1 0.06
profitable.
price of
efficient oil.
vehicles
companies.
account
markets.
service. for nearly 40% of an average
vehicle’s value.
 STRATEGY FORMULATION
qTHE QUANTITATIVE STRATEGIC
PLANNING
THREATS
The
GM,
Most US
German $auto
Toyota,
South & African
€Ford
devalues
unionand
feel against
other
foreign
is market
one themost
ofmanufacturers
cars
most major
are currencies
offer
of the great
superior
powerful quality.
unions 0.08
in 0.06
0.05
0.04 1 0.04 2 0.08 3 0.12 4 0.16
The
US
New US motor
Germany
Toyota vehicle
market shares
manufacturing ishas
plant on become
a
in stable
Texas world’s
decline
that will from
be most 0.08
0.01
0.1 3 0.3
since
High
Global
Total
the in 2002
discount.
inventory
Recession.
Germany
dynamically cost of
competitive dealers
auto cause
market decrease
since in
1970s. profit 0.06
0.03
1 3.82 4 0.4
3.39 2 0.2
3.13 1 0.1
1.86
20.5 percent
capable
margin. of in 2003
producing to 18 percent
200.000 in
full-size 2008.
pick-up trucks per
year.
STRATEGY IMPLEMENTATION

qRegional

qDivisions

qDepartment
 STRATEGY EVALUATION
qBALANCED SCORECARD
Area of Objectives Measure/Target Time Expectation Primary Responsibility
People
Improve Customer Relationship 40% 2 years HR Department
Improve Employee morale 20% 1 year HR Department
Employee Training 20% 1 year Training &Development
Operations/Processes
Manufacture Electric Vehicles 30% 2 years R&D
Get Electric Vehicles into the Market 10% 1 year Marketing Department
Community/Social Responsibility
Invest more in community projects 30% 2 years Communication Department
Natural Environment
Minimize CO2 release 30% 2 years R&D
Environmental protection 40% 2 years R&D
Financial
Improve sales 20% 1 year Marketing Department
Increase in revenue 30% 2 years Marketing & Financial Departments
Reduce operating revenue 20% 2 years Marketing & Financial Departments
CONCLUSION
QUESTION???