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Strategic management - Essay Example

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STRATEGIC MANAGEMENT Table of Contents Table of Contents 2 Introduction 3 Market Identification 4 PESTEL Analysis 6 SWOT Analysis 9 Conclusion 12 References 14 Introduction Volkswagen Aktiengesellschaft (AG) is engaged in the business of manufacturing and sales of automobiles all over the world…
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Download file to see previous pages The products of the company are sold in the market with various brand names like Audi, Skoda, SEAT, Bentley, Bugatti, Volkswagen Commercial Vehicles, Lamborghini, Bugatti, and so on. The company’s business activities are mainly operated in the geographical locations of North America, Europe, Asia-Pacific, and South America. The organisation is headquartered at Wolfsburg, Germany and was founded in the year 1937 (Yahoo Finance, 2012a). The shares of Volkswagen are publicly traded in the Frankfurt Stock Exchange with the ticker symbol “VOW”. The company is found to have strategic alliances with other leading companies like Porsche AG, Chrystal Group, Daimler AG, etc. At present it is considered to be the market leader in the car manufacturing industry of Europe (Yahoo Finance, 2012b). This study entails about identifying and evaluating the business strategies followed by Volkswagen to maintain its leadership position in the market. Various strategic tools like PESTEL and SWOT analysis have been performed in this study to gain understanding and knowledge about the micro and macro environment factors having an impact on the company and how it has managed to become profitable and sustainable in the given market environment. Market Identification Volkswagen Group operates its business in the global automotive industry and has successfully managed to maintain its leadership position in the market through effective management of available resources in the industry. Porter’s five forces model helps an organization to assess the competitive forces which exists within the industry (Hill & Jones, 2012, p. 49). The forces which help in the process are named as a) threat of new entrants, b) threat from the substitute products or services, c) bargaining power of the suppliers, d) bargaining power of the consumers, and e) competition within the industry (Society for Human Resource Management (U.S.), 2006, p. 38-39). As regards the Volkswagen Group, comprehensive analyses of these market forces existing in the global automotive industry have been discussed as given below: A. Buyer Power: The buyer power in the automotive industry is weak because it is mainly dominated by a small number of car manufacturers like Volkswagen, Ford, and General Motors. The primary buyers are the dealers and they are forced to sell the product brands that are preferred by the consumers in a particular market. Moreover, it is difficult for the dealers to integrate backwards because of different nature of the industry that requires high capital investment to manufacture products that are sold by them to the end customers. B. Supplier Power: The key inputs that are required by the automobile manufacturers like Volkswagen include certain commodities like metals and other fabricated components. These raw materials are sourced by the car manufacturers from outside suppliers who are mostly large multinational companies having a strong presence in the market. This increases the supplier power in the market. However, the supplier power is weakened due to low differentiation of raw materials required by the car manufacturers. Hence, overall the supplier power is moderate in nature. C. Threat of New Entrants: If we speak of the threat of new entrants in the market it can be adjudged as low because brand value plays a vital role in the industry and it is difficult for the new players to establish their brand reputation immediately after entering into the market. Companies ...Download file to see next pagesRead More
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