Strategy Briefing Paper - Essay Example

THE STRATEGY OF VOLKSWAGEN GROUP Introduction The decline in performance, from the first position in to the third position in 2012 in the automobile industry provides good evidence on the increasing pressure on the position of the Volkswagen Group in the industry (Ying 2007). China has been the largest market for the company’s products but the membership of China to the World Trade Organisation in 2001 has opened up the market for all the international car manufacturers leading to increased competition (Yan, Ren & Wang 2007).

This calls for the need of the company to revise its strategy to comply with the new market demands so as to deal with this rapid increase in competition in the world market. The Automobile Industry According to Nishino (1996), there is rapid expansion in the automobile industry around the world because of the growth in the demand of passenger vehicles and the overall increase in the demand for cheaper automobile components. Governments continue to make efforts in encouraging the growth of the industry in their countries.

The demand for high quality vehicles is increasing because of the growth of the population of the middle class population in many countries making the purchase of a vehicle to become a sign of financial accomplishment (Goldberg 1995). As pointed by Berry, Levinsohn & Pakes (1995) the increase in the demand for automobile components has built pressure on automotive producing companies to look for alternatives of reducing the cost of production and embrace more economic methods of production. Through the process of globalisation of the world economy, governments and trade organisations continue to encourage lowering of tariffs and reduction in trade restrictions.

This continues to make the industry more competitive as each international car manufacturing company has equal access to the market. Each company is therefore expanding its production to enhance their presence in the world (Orsato & Wells 2007). The focus is mostly on the supply of vehicles that meet the expectation of consumers and at the lowest costs. Apart from cost, the major focus is also on air pollution, energy efficiency and brand meaning (Kolk & Pinkse 2004).Conclusion The company should come up with models that are more efficient in terms of fuel consumption and low emission of carbon dioxide to match the current demands of customers and enhance the reputation of its brands all over the world.

The company has successfully been applying the culture of acquiring other players in the industry as a means of growing and expanding its operations. To enhance the rate of growth, the company has to continue acquiring these competitors to help access important markets in the world. The company is an important supplier of passenger vehicles and therefore has to increase the production of passenger vehicles to take advantage of the increasing demand for passenger vehicles in the world. The company must take advantage of the growth of the middle class population around the world and diversify its products to produce brands that are most appropriate for them.

For the company to grow faster it must expand its market share by producing new brands that target different classes of people. Each brand must have the right features that will enable that particular group of consumers to understand the brand and drive some sense that the brand belongs to them. This will help to enhance customer loyalty and hence maintain the company’s market share. BibliographyBerry, Steven, James Levinsohn, and Ariel Pakes 1995, ‘Automobile prices in market equilibrium’, Econometrica: Journal of the Econometric Society, Vol 63, no 4, pp. 841-890.Goldberg, Pinelopi Koujianou 1995, ‘Product differentiation and oligopoly in international markets: The case of the US automobile industry’, Econometrica: Journal of the Econometric Society, Vol 63, no 4, pp. 891-951.Kolk, Ans, and Jonatan Pinkse 2004, ‘Market strategies for climate change’, European Management Journal, Vol 22, no. 3, pp. 304-314.

Nishino, Atsushi 1996, ‘Capacitors: operating principles, current market and technical trends’, Journal of power sources. Vol 60, no. 2, pp.137-147.Orsato, Renato and Peter Wells 2007, ‘U-turn: the rise and demise of the automobile industry." Journal of Cleaner Production, Vol. 15, no. 11, pp. 994-1006.Yan, Bing-xiang, Rong-ming, Ren, and Man-tian Wang 2007, ‘AHP and Fuzzy Evaluation of the Competitiveness of Chinas Auto Industrial Clusters’," Journal of Southwest Jiaotong University, Vol. 4, pp. 15-16.

Ying, Wang 2007, ‘An Analysis of the Performance Level of Auto Industry in China Based on the Industrial Cluster Theory’, Journal of Anhui University (Philosophy & Social Sciences), Vol.1, pp. 22.