Volkswagen Group: Innovative Firms in Emerging Market Countries - Essay Example

Volkswagen Group: Innovative Firms in Emerging Market CountriesVolkswagen’s current situationAs of mid 2014 Volkswagen AG was valued at a market capitalization of $119.05 billion and had 572, 800. It had a revenue base of $261.55 billion and a debt of $167.43 billion. Its total assets are valued at $446.92 billion and a profit of $12.04. Its brands include Volkswagen Passenger Cars, Lamborghini, Scania, Porsche, and Bentley. Currently, the Group has 107 production plants in 19 European countries and 8 other countries in Asia, the Americas, and Africa.

The Group engages in insurance activities, banking and leasing services, fleet management, and dealer and customer financing (Volkswagen 2013, n.p). A keen analysis of the company and the automotive manufacturing industry reveals interesting insight. The automotive manufacturing industry According to the PESTEL analysis model the legal aspect of business is steering a change of the automotive manufacturing industry’s focus on the high upper class to the growing middle class from Russia, India, China, and Brazil (Fischer et al 2013, p.4). Trends in the industry include market growth in emerging nation; focus on innovative vehicle design; connected car technologies; and mobility-as-a-service (United Nations 2010, p.38). According to Porter’s five forces model, buyers’ power in the automotive manufacturing industry is a strong success factor.

Volkswagen Group’s competitionFord Motor Company is leading competitor for Volkswagen Group. FORD brands include Ford and Lincoln that is ranked one of the most luxurious brands in the world. Half of Ford’s sales come from North America (Ford Motor Company 2014, n.p). General Motors (GM) is second in Volkswagen’s competition. GM brands include GMC, Chevrolet, Cadillac and Buick. GM is still rising above the aftermath of Chapter 11 bankruptcy protection (General Motors Company 2014, n.p).

Daimler AG is Volkswagen’s third most important competitor. Daimler’s brands include Maybach and Mercedes that are among top recognized luxury car brands. It has a distinguished name in the making of commercial vehicles with its Fuso, Sprinter, and Mercedes-Benz heavy trucks ranking high (Daimler 2014, n.p). It has presence in 40 countries and 40% of its sales are from Europe (Heneric et al 2005, p.39). ConclusionsIt can be concluded that Volkswagen Group has a good standing in the automotive manufacturing industry.

However, going by the VRIN framework there is a need for the Group to raise the value of its products in comparison to those of its competitors. One can tell that it is a value chain but probably its research and development unit needs to work round the clock to see to it that Volkswagen cars are installed with and are compatible with customer-specific plug-ins. Its strategy to target similar customer groups might be fruitful especially but it could need insight from Porter’s focus generic strategy.

Volkswagen’s extensive presence worldwide is an important strength for the Group. Nonetheless, to position itself more appropriately for the future, it would need to devise ways of surviving adverse industry trends. One such way is to come up with light car brands using light weight materials in order in order to evade the disadvantage of urban driving regulations. Additionally, intensive marketing in the emerging markets would help the Group garner a good market share (Amann & Cantwell 2012, p.181). Environmental-friendliness is one of the factors that are highly considered in the purchase of a car in the modern day (Ryan & Turton 2007, p.203). Reference ListAmann, E.

& Cantwell, J. 2012. Innovative Firms in Emerging Market Countries. Oxford, Oxford University Press. P. 181. Daimler AG Company. 2014. Hoover’s Inc. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.Daimler_AG.f364353346228963.htmlFischer, R., Thakur, A., Stoll, J. & Barroso, F. 2013. KPMG’s Global Automotive Executive Survey 2013. KPMG International. Pp. 1 – 62. Ford Motor Company. 2014. Hoover’s Inc. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.

FORD_MOTOR_COMPANY.7e957f44fa904756.htmlGeneral Motors Company. 2014. Hoover’s Inc. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.GENERAL_MOTORS_COMPANY.6cd6506127863276.htmlHeneric, O., Licht, G. & Sofka, W. 2005. Europe’s automotive industry on the move: competitiveness in a changing world. Heidelberg, NY: Physica-Verlag. Pp. 39 – 40. Ryan, L. & Turton, H. 2007. Sustainable automobile transport: shaping climate change policy. Cheltenham, UK: Northampton, Mass.: E Elgar. P. 203. United Nations. 2010. Foreign Direct Investment in Latin America and the Caribbean 2008.

United Nations Pubns. P. 38. Volkswagen. 2013. The Group. Retrieved from http://www.volkswagenag.com/content/vwcorp/content/en/the_group.html