Pgbm16 - Global Corporate Strategy

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Name                        : Cheah Jo San

Student ID                : 109052935

Module Code                : PGBM16

Module Name        : Global Corporate Strategy

Lecturer                : Dr. Shahrul Yazid Bin Yahaya

Table of Contents:                                                                                 Page 1 - 1

Executive Summary                                                                                 Page 2 - 2

1. Question 1: Expansion Strategies and Global Competitiveness                        Page 3 – 4

1. What is Strategy 2018?
2. Recommended Strategies

1. Question 2: Nature of Competitive Landscape                                        Page 5 - 9

1. Largest Competitors in US (Toyota & General Motors)
2. High Material Cost, High Demand and Oversupply of Vehicles
3. Safety First, but Staying Connected
4. Competitive Profile Matrix (CPM) – Critical Success Factors (CSFs)

1. Financial Strength
2. Market Share
3. Brand Image

1. What led to the Volkswagen ‘Dieselgate’ scandal?  
2. Porter’s Five Forces of Competitive Position

1. Threat of New Market Entrants (Low)
2. Bargaining Power of Supplier Power(Low)
3. Bargaining Power of Buyers (Medium)
4. Threat of Substitutes (Low)
5. Competitive Rivalry between Existing Players (High)

3.0 Question 3: Internal Analysis on Strategic Capability                                 Page 10 - 11

3.1 Internal Analysis on Volkswagen (SWOT Analysis)                

3.2 Competitive Advantage and Core Competencies of Volkswagen (VW)

3.3 Challenges in recruiting and retaining a skilful workforce

4.0 Question 4: What is Corporate Social Responsibility (CSR)?                        Page 12 - 15

4.1 Agency Theory & Stakeholder Theory

4.2 CSR Strategy adopted by Volkswagen

4.3 VW on Dealing with Harsh Business Environment Relating to Relevant CSR Theories

List of References                                                                                Page 16 - 17

Executive Summary

The VW group is made up of two divisions that include the automotive and the financial division. Passenger cars, commercial business and power engineering business area together comprise the automotive division. The Diesel Scandal had significant effects on the brand image and perception but left the company with an important message that VW should be extremely careful about compliance. However, VW had portrayed itself as a strong brand and showed its capability to withstand competition and challenges faced in the harsh environment. Currently, the group is undergoing a major shift which involves both changing culture internally and business structure that would portray the group’s commitment to have better business practices and compliance globally. This analysis will provide insights on the internal and external environment faced by VW Group, to critically analyse what went wrong in its strategy and suggestions moving forward.

1.0 Expansion Strategies and Global Competitiveness

1.1 What is Strategy 2018?

The “Strategy 2018” is a strategy under previous Volkswagen (VW) Group CEO Martin Winterkorn with four key targets intended to drive the Group to become the top of the global automobile industry. There are four key elements on the strategy rhombus, first of which is to expand the product range under the Group’s portfolio to increase sales growth. Secondly, it aims to spur innovation by deploying intelligent innovations and technologies to become a world leader in customer satisfaction and quality in the automobile industry. Thirdly, it intends to be the top employer that attracts motivated and committed employees in realising the corporate goals and to obtain sustainable return for a solid financial position for the entire group. The “Dieselgate” scandal revolves around VW programming its engines to control emissions during laboratory testing and driving but the fact is that the nitrogen oxide emissions are as much as 40 times higher. VW admittedly used the defeat device to improve performance on paper and change consumer’s perception regarding diesel technology engine.  

1.2 Recommended Strategies

Following the US Environmental Protection Agency’s (EPA) announcement that VW had been installing sophisticated software to cheat diesel emission tests, the management of VW should step up immediately and handled the issue via different corporate communication strategies before it grows into a bigger loss for the company. Greyser (2009) mentioned that negative event comes unexpectedly with the potential to bring an organization into reputational crisis and thereby imperil its future profitability, growth and survival. How VW handles the crisis is essential as the stakeholders may imply whether the firm can recover from the crisis or not. As such, Coombs (2007) argues that companies need to be more open and sincere with information to their stakeholders in order to help them to cope with the psychological threat from the crisis, in VW’s case, how VW is able to help them to overcome the emissions glitch they are experiencing to make things right. To regain consumer trust, VW should follow on Toyota’s footsteps, leading an active crisis communication strategy to control the tense situation, at the same time, strengthening its initial “Strategy 2018” goal of becoming a world leader in customer satisfaction and quality by providing a better after-sales service to its affected customers. Coombs (2015) suggests that a full apology should be used on crisis that are man-made error, because organizational publics and the society value apology, and is the first step in rebuilding relationships between organization and victims of the crisis. (De Cremer, Pillutla & Folmer, 2011)