Volkswagen: Key Issues and Problem Faced by the Company - Research Paper Example

Table of Content: 1st Chapter - Introduction Company Profile ment of the Problem Significance of the Study Research Aim Research Objectives Research Questions Report Structure 2nd Chapter Case brief: Description of the situation (Background of the study) Key Issues and Problem faced by the company 3rd Chapter Problem statement and plan of analysis Literature review-Identify resources/ techniques helpful for analysing the case study. (The concepts, theories, models, research relevant to the case) Proposed plan of analysis Sources of data 4th Chapter Analysis and findings An assessment of the current situation: Using the concepts, theories, models referred and discussed in chapter 3 Critical evaluation using adequate examples and good independent ideas 5th Chapter Propose solution to problem/s discussed Integrated assessment of the analysis - generate ideas or alternative solutions Choose a “best fit” solution from the options discussed Recommendations Decide on an action plan of Limitations of the study Scope for further research 1st Chapter - Introduction Company Profile: Working under the logo of “People’s car and Das Auto” Volkswagen is a name and brand to reckon with in the field of automobile excellence. Volkswagen enjoys a name of quality and history in terms of automobile industry. Its original existence stretches to the days of pre Second World War impetus in the field of industry and manufacturing sector. Volkswagen is the brainchild of German automobile manufacturers from the days that saw massive development in the heavy manufacturing industry. Out of many service lines and brands within the Volkswagen chain, Beetle comes as one of the most talked about and most long durable option towards small to medium scale purchase of customers. Beetles go in to the list as the name of quality, excellence and grace despite its simplicity. For an overall quality, out of the top ten cars selected, Volkswagen shares the honours of top three to its name. The company has had its gradual course of expansion and re definition of various time periods and this has often led to re defining the concepts and dynamics as well. Volkswagen has given sufficient support to the economy of German through the course of history when it was faced with challenges in the form of post Second World War situation and economic crunches that kept coming in time to time. Statement of the Problem: Revamping and re introducing the Beetle is a whole lot challenge in the form of winning the commercial promotional aspect and occupying interest in the market. Reduction in market presence largely in North America is a constraining factor towards Volkswagen in general and Beetle promotion in particular. Significance of the Study: The significance of the study is to assess the overall situation; it serves for a good business, managerial and marketing strategy. In the field of business and service industry, the products re launched lead to the extra challenge of living up to the extra challenge of regaining and living up to the expectations and quality that is associated with the former product or service. The overall significance is on account of determining the challenges, the methods to be undertaken and the overall progress and output product through the course of action, policies and processes towards recapturing the market. Market loss comes due to number of factors. The determination of these factors is highly important with regard to gaining the grounds again. Further significance of the study is on account of looking into the reasons why the market share was lost largely in North America towards the latter part of 20th century. Research Aim: The research aims at to undertake a step wise process and determine the variables, functions and elements in the overall process that are necessary to be taken into account while taking upon a challenge such as this one where the past glory has to be rejuvenated. Identify the core elements and processes with due consideration of business and marketing factors that will lead to good practices in the long run. Determine the market segment that would be attracted to it and also the particular section of society targeting that would lead to better yield from the overall marketing plan. Research Objectives: Overcoming the so called mission impossible Recapturing the lost market of Volkswagen in off shore Identifying the factors that led to market share loss Formulating formal research methods To formulate a durable commercially and economically viable marketing plan towards the project accomplishment. Assessing the variables and ground factors contributing towards the potential success of the project at hand. Evaluating the challenges and obstacles faced. Undertaking a concrete strategy and mechanism towards converting the paper and table presented goals accomplishment into realistic and ground based accomplishments. Research Questions: Research questions would largely rotate around the aims and objectives that are aforementioned. A formal questionnaire would be attached along by the end of the research study to highlight the method of research and the kind of questions to be asked from the valued customers. This can be done so in number of ways with one of the options of that being a formal questionnaire and other methods of research. Quantitative research is the process of research undertaken by the company with regard to the overall aim at hand. Report Structure: The overall report is divided into five broad sections. Each encompasses an essential part of the research towards determining the current day standing of the Beetle and the aims to be undertaken overall. The structure would encompass assessment based studies, past practices determination, the annual profits analysis, the overall marketing trends determination as prevalent in the modern day. 2nd Chapter Case brief: Description of the situation (Background of the study) Volkswagen has remained a top quality brand name in the field of automobile industries. While initially started off from Germany and restricted in its working to Europe. Towards the second part of 20th century in 1955 under the leadership of Dr. Carl H. Hahn and the proponents of the company decided to undertake the process and journey beyond the continent into the North American part of the world (Lal, 2005). The North American continent consists of large potential of client market in the form of United States of America alone, along with the Canadian market that is largely promising. The overall venture was a productive one and paid dividends in terms of the marketing strategies and business adventures. The overall client bench safely reached up to over a million and it was all flourishing. This was largely due to number of globally recognized and approved models such as Beetle, New Passat and other VW marked automobiles. However, towards the later part of the 20th century, the trends saw a different pattern and the overall sales and productivity of the Volkswagen suffered a dip with regard to its sales. This eventually led to a direct outfall upon the number of customers. At one time, having over one million client bench was reduced to a meagre fifty thousand owners and users of Volkswagen automobiles. This came as a direct alarm. The alarm led to subsequent revamping of the policies and actions that would lead to gaining back the lost market share. This came about in the form of policies and revising the overall plan of action that was previously in act and led to an overall growing performance and increased dividends. In less than a decade, Volkswagen was a force and brand to look out to for the purpose of fulfilling the mid end needs of customers who may opt for a car that may fulfil their daily routine needs. Key Issues and Problem faced by the company: The keys issues faced by the company include the loss of trust. The absence of the strong market oriented skills and trends that could lead to driving the customers back and the overall expansion of market. The introduction of new products, new automobile industries and the growth of General Motor like brands are few of the challenges and questions faced by Volkswagen administration to ponder over. Under a basic rule of management and marketing, a satisfied customer brings along three to five customers. On the other hand and to the total contrary action and phenomenon a dissatisfied takes away three to five customers with himself. Hence, the over eighty percent of the market loss in technical and critical terms mean loss of over a potential 200 plus customers and customers bench in true sense. This is a situation and scenario that presents a dismal state of affairs and such scenario needs strict and out of the box measures and techniques which may enable achieving success and regaining the lost market. The following are few of the reasons that led to the overall decline in the trends and the subsequent loss of market strength that was previously enjoyed by Volkswagen. The first and foremost was the two markets difference in terms of the currency. While the dollar gained strength, and the variation in the European economy leading to an imbalance in the previously balanced scenario and handling of marketing trends. The introduction and tilt of new automobile manufacturers in the American markets brought about a new and parallel threat. This came about in the form of Japanese automobile manufacturing industries brought about further competition and Volkswagen came to a situation where it was incurring costs over every single automobile being manufactured. Other global trends such as the dip in the market rates of oil prices and other prevailing variable trends that were not there in the hay days added to the overall troubles of Volkswagen. Others predict the failure and the doom to the dynamic natured market trend and the expectations of the American clients. Volkswagen could not live up to it in totality and led to saturation and loss of previously gained market share. The situation grew to such a horrifying scenario that there were speculations and cries of if Volkswagen would withdraw its name from the North American markets and lead to restricting itself back to the European markets where it had originally originated from. Eventually leading to people and critiques dubbing it as an affair of loss of love from the North American customers end. 3rd Chapter Problem statement and plan of analysis: Revamping and re introducing the Beetle is a whole lot challenge in the form of winning the commercial promotional aspect and occupying interest in the market. Reduction in market presence largely in North America is a constraining factor towards Volkswagen in general and Beetle promotion in particular. Finding methods that would enable winning back the trust of the customers, enacting effective and successful business plans and determining futuristic plans and actions constitute the problem statement. The problem at hand is loss of customers trust, loss of market dominance and the absence of effective policies and actions. Plan of analysis: The plan of analysis constitutes the study and determination of the factors that led to the overall decline and demise in the industry. This comes in the form of a holistic approach. The holistic approach constitutes the study of the internal factors and external factors that led to the overall failure of the Volkswagen as a brand and nearly led to the possibilities of closing the business door in North America. Assessment of the policies, determination of the think tanks actions and futuristic mindset and the possible lapses on their behalf is also a factor to be evaluated against the performance of the individuals in the company. The interview so conducted had two variables determined against it. The first one was that of customers viewing of the brand and their views about its function, performance and brand name as a whole. The second deliverable factor and variable was that of how people saw Volkswagen in comparison with other automobile manufacturing companies that are on the road in North American states. Literature review: The first of Volkswagen was heard by the Americans towards the end of Second World War when Beetle was formally introduced in the American automobile market in 1949. Developments and changes kept coming along. These came along in the form of modification and upgrading Beetle over every year along with the introduction of Rabbit, Volkswagen Microbus and other similar mid line products and automobiles that suited the needs of the middle class Americans. For larger part of the 1960s decade, Volkswagen had an absolute smooth sail until 1968 and the market was booming in terms of the clients share and overall expansion. The amount of sales of items reached up to multiple hundred thousand plus figure. Nationwide spread and promotion of the products and features that came along with the Volkswagen were introduced to the people and this had highly successful impact upon the overall sales rates. The overall strategy was marked by excellence and efficiency with regard to the advertisement campaigns, the customers’ satisfaction and quality provided. The practices undertaken by Volkswagen with regard to the advertisement were first of its kind and set high standards for other competitors at that time. The journey had been set strong into action towards 1959 in the form of advertising in the major United States newspaper in the form of The New York Times. Proposed plan of analysis: Assessment of the consumer and service providers’ relationship mechanism. Further to determine the factors that leads to overall successful partnership between the two and the assessment of internal factors and external factors. The techniques and research method undertaken include number of steps. These include survey, interviews, and practical undertaking of the overall project in the form of checking the performance through own experience. For this purpose, over fifty thousand of run miles on the road were undertaken for the purpose of checking against the customers’ complaints and possible reasons that may be investigated for improvement and potential pitfalls. Sources of data: The sources of data are gathered through the various forms of research. These include the interviews, the surveys, the first hand collection of information and opinion about the road performance of Volkswagen. The other set of data comes along in the form of comparison and study of sales of items and service products produced over the years. This study entails items and quantities starting from 1949 to 1997and the broad line two types. Type 1 and Type 2. The broad line sources of data are presented in the chapter 4th of overall study that will give a clear insight into the methods undertaken for the purpose of resolving the problem at hand. Other deterministic elements assessed include the internal trends of the company, its comparative analysis with the rival automobile industry players that have developed over period of time. 4th Chapter Analysis and findings This portion of the study contains findings based on the actual observations and market studies. Various patterns, and exhibits have been collected with regard to the determination of trends. These patterns are taken over on account of comparison and individual studies stretching from the year 1995 December to 1997 December. Over these two years, number of consistent patterns and variables are studies against the overall performance of Volkswagen. This study will allow for understanding and coming up with more effective policy in the long run. The first exhibit pertains to the comparison of Volkswagen with itself. This is a study and finding based on patterns between a period of 24 months between December 1995 and December 1997. The variables and percentages set forth against them include the total number of Ad Recall, the opinion of people about the products, the rate and percentage of the awareness prevailing among the common users of the Volkswagen. The second exhibit gives an account of the rivalry and the competition Volkswagen faces in terms of the major competitors in the automobile industry of United States of America. The top brands and top competitors include Nissan, Toyota Motors and Saturn. The pattern shows the year 1995 and early 1996 presenting very discouraging trends for Volkswagen. This was largely the time period when Beetle has totally diminished from the market and Volkswagen was in thinking if it should pack up its bags in the North American markets. The later trends towards 1997 September to December shows an increase in the trend towards improvements and overall market re capture. This came about in the rate of an overall 10 to 12 percent increase from 45 percent to 57 percent rate sale and purchase. Marketing and advertisement as an agent and determining factor: It is by now an established fact that part of the reason to the loss of market of Volkswagen in North American domain was its poor marketing skills and lack of attention being paid to the advertising domain. This is reflected through the figures and findings in the form of the tabled findings. These findings present the level of awareness against each of the item in the brand. This comes in the form of comparison between Volkswagen, Nissan, Toyota and Saturn. The table shows sparkling difference with regard to the percentage awareness each of these brands and automobile possessed. Hence this was one of the key areas that was to be improved if Volkswagen wanted to see a resurge in the business and automobile sector of North American markets. An assessment of the current situation: Using the concepts, theories, models referred and discussed in chapter 3 Critical evaluation using adequate examples and good independent ideas: Volkswagen and the departmental specialists of Beetle must take into account the studies and models of other automobile companies. They must develop the pattern and working procedures which allow for thinking out of the box and performing in a manner that will allow for a long lasting success and efficient outlook in terms of the deliverables against the goals at hand. Further, expanding the network beyond the North America and looking to expand it in to South America, and also exploring Canadian markets also serve as the potential domain in which the company can profit and benefit from the overall global prevailing trends and marketing orientations. The case of Toyota motors and sticky clutch plates: The manner in which Toyota Motors and Honda have gone on to become the most dominant force in the North American automobile industry, their patterns, their policies towards new launches and revamping the previously existing models and brands must be looked into for the purpose of bringing about development. Since Toyota motors also recently had an event of recall due to sticky clutches and clutch plates. The manner in which they undertook the whole scenario and found a solution without losing on much of the customers’ bench can be followed for an example in comparison to how Beetle may gain ground and find its standing and command again in the North American markets. Fairly consistent pattern of success of Nissan motors is another example. The introduction of new concepts such as electric motors, and eco friendly motors must also be looked into for the purpose of bringing about innovation and attracting the customers through a different set of rules and deliverables. 5th Chapter Propose solution to problem/s discussed: The overall situation requires deep assessment and evaluation of the scenario. The decisions to be taken must be in accord with the professional ethics and company rules and regulations. Since Volkswagen implies strict rules in general towards quality and service delivery, the same must be incorporated to assess the situation in this particular scenario. The solutions so presented must have a mix of processes, policies and patterns that need to be undertaken. The solutions further, need to be taken on the basis of the past patterns, past processes, present day standing and the long term goals and objectives determination. One other area that must be taken into account with regard to the future goals and future considerations is that of external elements. Since it can be easily evaluated that the external elements played a large role towards the demise and decline of Volkswagen, it is therefore imperative to assess the future policy with regard to keeping the external elements in mind and devising policies that will enable overcoming the challenges. Winning the heart and minds of the people, bringing them back to the family of Volkswagen needs very well thought out advertisement schemes. These schemes can be spread upon from door to door campaigns to online to global car show exhibitions to many more similar accounts and features that will enable reaching to the masses and providing them the real picture of present day Volkswagen automobiles that aim at regain the lost position in the market. Make beetle all more revamped, restructured and re-designed. Convert the challenge into the opportunity. This can be done so by making the Beetle more elegant in its appearance, making it more user friendly. Another added aspect can be the potential environment friendly operations. It is a fact that the modern times are driven by the constraints and considerations driven towards eco- friendly automobiles, introducing a new line of discontinued Beetle may lead to more successful and potentially productive re birth of Beetle brand in North America. Identifying the class and target client: Identification of the particular target client group will allow for focusing on the particular strength. This will allow knowing what they want to see and expect from the upcoming and new trends in the automobiles. This will further enable creating the automobiles that can be termed as specifically designed for the particular target group in the automobile industry. Choose a “best fit” solution from the options discussed: The best fit option would be to bring about an newly revamped Beetle that is in line with the needs of the modern day. Since people are quite familiar with the previously existing Beetle, they will find it easy accepting it again provided it offers new features and reliability in terms of long term choices. Recommendations: A set of proposals will provide a better future strategy. These include revamping the overall model and design of Beetle automobile. Prior to the official launch and formal release of the particular brand and New Beetle model, large amount of customer interaction, asking them for opinion about the design considerations, bringing about customers stance and views is an important area to look into. Providing an array of colours with regard to gaining and attracting for the interest of the all kinds of users from young age to old age to the newly married couples and college going students. Decide on an action plan of Limitations of the study: The action plan based on the studies and research undertaken in the previous stages of the project constitute the actions which range from winning back the hearts of the people, to revamping the designs, to investing more, and creating value for money, along with introducing advanced digitally equipped advertisement techniques and methods. This will enable an easy reach to the customers and the subsequent output would be a customer centric product in the form of New Beetle. Scope for further research: Further research would include taking into account the matters of future interest. Such as the developing trends in the automobile industries. To expand the overall nature of Research and Development in the industry that works strictly on the lines of bringing about a cutting edge in terms of the products, and models to be produced. Innovation, along with customers’ consideration is the key. Teaming up with group of experts who may give a clear indication of changing trends in the markets along with the warning against trends and patterns such as the currency depreciation and other elements that the companies have little country against, yet they can brace themselves against it to create more concrete policies that would protect against large amount of damages as a whole. References: Lal, R. (2005). The New Beetle. Harvard Business School. Read More