Comparison of the Operations Strategy of Volkswagen, BMW, Porsche - Book Report/Review Example

A comparison of the Operations Strategy of Volkswagen, BMW, Porsche Prof K. Nikolopoulos, Dr. Eng., ITP, P2P Tuesday 30th September, 17.00 Executive Summary This paper presents a comparison of the operations strategies of Volkswagen, Porsche and the BMW companies. Operations strategy is vital for any company that aims at surviving in the business environment. This results from the fact that the present day market is constantly changing and the resource availability as well. Through the operations strategy, business executives embrace the fact that all aspects in the business environment are interrelated. This is to mean that business executives have to ensure that they scrutinize all aspects of the business to assess where the company strengths lies. In the event that a company sacrifices some aspects of its operation, it would probably be creating a way towards its the success. Focusing on operations means that the future of the company is evaluated. The objectives and aims of the company can also be achieved in the process. A comparison of the Operations Strategy of Volkswagen, BMW and Porsche 1.0. Introduction Volkswagen, Porsche and the BMW companies are leading car manufacturing companies in the globe today. These companies have set operating strategies that have aided in the success of the companies. This paper presents a comparison of the operations strategies of the three companies in an attempt to assess their contribution to the continued existence of the companies. 2.0. The Operations Strategy and the key Operational Performance Objectives of Volkswagen, BMW and Porsche 2.1. The Operations Strategy and the key Operational Performance Objectives of Volkswagen As seen in the research conducted by Schmidt (2008), it is valid to argue that the operation strategy of Volkswagen has been changing with time. These changes have been witnessed in terms of product specification and service delivery, marketing of the products and services and marketing it operation. In terms of making huge savings, it is evident that VW Company has sought to share its platform in an attempt to save as much as expected in the course of manufacturing their cars. Schmidt (2008) indicates that VW renovated its platform sharing approach that has seen the company save about 1,000 dm for ever car assembled. This is to mean that the company is a notch higher in terms of savings. Automatically, this will keep the company running due to a reduction in the costs incurred in the course of manufacturing. On another view point, the operations strategy of VW has sought to ensure that the company engages in combined productions. According to Schmidt (2008), these joint productions will not aim at producing vehicles of the same sizes and models, but will see manufacturing of vehicles that have various components in their many brands. Economies of balances come into play in this context, as the company not only focuses on making huge savings in the course of production, but also manufacturing car brands that will suit the needs of different clients (Volkswagen, 2013). The company’s strategy also aims at adopting eleven module systems as opposed to the existing four. Through this strategy, the company aims at higher returns on investment. From Schmidt’s (2008) work, it is this strategy that has seen the expansion of VW’s profit margins from car sales. Additionally, vehicle servicing, financial services and production of new cars are yet other approaches targeted by the company. The work of Marsh (2012) indicates that the VW Company unveiled its fourth grand plan that would see the car manufacturing architecture based on the seat casing, engines and transmission packages improved. The wheelbases and track widths were to be reproduced, and the inner pressings rebranded (Marsh, 2012). This means that the company will have better products for its clients as well have minimal time for repair. This platform strategy will automatically ensure that the economies of scale are attained in regard to the costs incurred. For the future of the company, Volkswagen’s (2013) annual report indicates that the company plans to investigate the customer response regarding its products by 2018. This will lead to an improved mode of satisfying its clients based on their feedback. The report also recounts that the company is on the move to hire the most competent human resource that can fit in the production of the company (Volkswagen, 2013). From the above analysis, it warranted to argue that Volkswagen operations strategy is focusing on propelling the company forward and ensuring its survival in the industry even with the tough times in the market. The above graph gives a logical explanation of the profits of the Volkswagen Company. The figures have escalated greatly till 2014. Figure 1. Adopted from: Volkswagen. 2013. Key Figures. Retrieved from:http://www.volkswagenag.com/content/vwcorp/content/en/the_group/key_figures.html#field1=maincategory_4_5 2.2. The Operations Strategy and the key Operational Performance Objectives of BMW The case of BMW is no different. As seen in the compilation of BMW Group (2012), BMW has continually re-formulated its strategy so as to fit in the constantly changing global market. With the economic uncertainties, BMW has sought to boost its profits and enhance its value through adopting changes that will see its survival. Among the changes that have been adopted by the company include structural and technological changes that will aim at focusing on the pillars of profitability, technology access, client satisfaction and determining its future (BMW Group, 2012). BMW Group (2012) also indicates that BMW focuses on its premium segments so as they can remain the world’s leading provider of premiums products and services for its clients. On the contrary, the BMW has adopted a sustainability management approach. BMW Group (2012) indicates that BMW has taken up the process of leveraging novel business opportunities as well as overcome the business challenges. Through sustainability management, BMW has managed to deal with scarcity of resources and climate change. By 2020, the company aims at being the leader of premium products (BMW Group, 2012). Besides the sustainability aspect BMW has sought to train its workforce so as their capability can be augmented. Through the workforce awareness, the occupational ability and training programs will be of quality. The stakeholders have also not been left out in the operations strategy of the company. BMW Group (2012) reports that, BMW has continually engaged in dialogue with its stakeholders in an attempt to identify the trends, which will lead to realization of its current activities and resolutions. Among the stakeholders involve the media, the capital markets, NGOs amongst others. It is through the stakeholder engagement that the company has managed to determine its targets as well as prioritize its stakeholder investment (BMW Group, 2012). Among the key principles of the company include growth, profitability, influencing its future and focus on its customers (BMW Group, 2012). These principles are in tandem with those of Volkswagen. 2.3. The Operations Strategy and the key Operational Performance Objectives of Porsche Just like BMW and Volkswagen, Porsche’s strategy focuses on its clients. Additionally, Porsche has attempted to adopt growth as one of its key principles. Through this approach, Porsche’s management has invested deeply in the inventive technology that led to creation of new products and imparting skills in its workforce. From this assessment, BMW and Volkswagen also follow a similar trend. Studies conducted by Porsche (2014) indicate that the company aims at expanding its infrastructure through focusing of its workforce by the yearv2018. This explains that the Porsche Company is directed at improving its processes and ensuring its returns remain standard. In fact, Porsche (2014) argues that Porsche Company has what is required to exist in the market. Among the strategic goals involve targeting the emerging markets, employing qualified staff and producing fast class vehicles (Porsche, 2014). Double digit expansion has been witnessed in Porsche thanks to the operations strategy in the company. As opposed to the earlier discussed companies, Porsche focused on the strategy of higher deliveries. With this strategy in place, Porsche has managed to increase its deliveries three times more since the year 2011 (Porsche, 2014). The higher deliveries approach has also been linked with the production of new models that suit the needs of its high clientele base. The quality of engines and car designs has also led to a boost in the delivery of these vehicles throughout the world. For instance, in the US, Porsche has continued to accrue profits from its large market (Porsche, 2012). In terms of strategic objectives of the future, Porsche has the objective of designing the best sporty product that will sell throughout this year. If this ensues, it is apparent that the company will have high profits as opposed to Volkswagen and BMW. The company actually insists on the fact that its production team will be set to deal with the demand of its sporty vehicle (Porsche, 2012). Based on the strategic operations the expected results in the Porsche Company is to increase the amount of its sales that will lead to an increase in its revenue. Porsche (2012) indicates that the company is burdened by huge expenses in the course of its production and improving its existing brands. The cost of management is high but still the company attempts to have huge sales on its operations. The profits that stood at 27% increase from 2012 are likely to increase with the present innovations (Porsche, 2012). The chart indicates that Porsche has a huge liking as the best luxury vehicle in 2011. Figure 2: Retrieved from: Cain, T., 2011.  Sporty Car Sales and Premium Sporty Car Sales in America - April 2011. Good Car Bad Car 9th May, 2011. 3.0. Conclusion Conclusively, the paper has attempted to focus on the strategic operations of Volkswagen, Porsche and BMW car companies. From the work, it is valid to argue that the three companies operate on three common aspects- profitability, focus on its clients and adopting technology that will steer its operations forward. However, BMW and Porsche adopted a different approach. BMW focused on sustainability management while Porsche is more detailed on the kind of products they aim at producing and how they will venture into the market. However, it is worth appreciating the place of strategic operations in these companies as it has helped them venture the markets as well as face the concerns that face them in terms of surviving with the constraints of the present day market. The three companies indeed have a bright future ahead. References BMW Group, 2012. Adding Value Sustainable Value Report 2012. Munich: Bayerische motoren Werke Aktiengesellschaft. BMW Group. 2012. Company Portrait. Strategy. Retrieved from: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.html Cain, T., 2011.  Sporty Car Sales And Premium Sporty Car Sales In America - April 2011. Good Car Bad Car 9th May, 2011. Marsh, A., 2012.Volkswagen Group next generation platform strategy is complete. Auto Industry Insider, 2nd February, 2012. Porsche. (2012). Annual report 2012. Retrieved from: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2013/03/Porsche_Annual_Report_2012.bin.html/binarystorageitem/file/Porsche-Download_e.pdf Porsche. 2014. Strategy. Retrieved from: http://www.porsche.com/uk/aboutporsche/overview/strategy2018/ Schmidt, G., 2008. The Changing Structure of the Automotive Industry and the Post-Lean Paradigm in Europe: Comparisons with Asian Business Practices. Tokyo: Kyushu University Press. Volkswagen. 2013. Key Figures. Retrieved from:http://www.volkswagenag.com/content/vwcorp/content/en/the_group/key_figures.html#field1=maincategory_4_5 Volkswagen. 2013. Strategy. Group Strategy 2018. Retrieved from: http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.html Read More