Strategic Environment Of Volkswagen Samples †MyAssignmenthelp.com

Question: Discuss about the Strategic Environment Of Volkswagen. Answer: History Volkswagen was founded in 1937 in Berlin Germany by the German Labour Front, due to increased demand by the average German to own a car. The early 1930s, the automobile industry was dominated by luxury models which the average person could not afford. It was headquartered in Wolfsburg in Eastern Germany. Herbert Diess is the chairman of the board of management and in 2016 financial year led to manufacture of 6.073 million units of VW cars a significant increase from past years. However, due to challenging economic conditions and increased competition from major automobile manufactures like Toyota, Mercedes, Nissan and others the revenue shrinked to 105.651 Billion Euros for FY 2016. Net income consequently dipped to 1.869 Billion Euros in the same financial year. Although not a most memorable event, Adolf Hitler ordered that VW manufacture more vehicle to carry to adults and three children at 100km/hr as he wanted more access of cars by ordinary citizens (Polachek and Tatsiramos, n.d .). VW manufactured this vehicles and more people bought cars for their families. Although the automobile industry has been competitive in the past 50 years, strategies to be the business leader globally has led to VW repositioning itself both externally and internally for the goal. The reason for taking VW as the study corporation is because in recent times it has had several issues in technology and economic environments that has led to the so called VW Scandal which led to resignation of senior executives. Technological environment With an increase in competition, VW has been one of the companies in the automobile industry that has really benefited from an upgrade of their technology. The VW workshop or manufacturing assembly in Wolfsburg has seen tremendous change in technological upgrade to help in manufacture or more units at a lesser time. Technological processes that run in the Poznan plant of VW was designed to ensure that there is maximum care for the external environment while maximizing greater efficiency of car production. The company acquired the latest technology, utility and management system s that ensure that the environment is greatly taken care of (Samii and Karush, 2004). The technological advancement ensures that there is chemical management of substances that are applied in production of VW parts. Technology is centered on these parts namely; in reduction of carbon dioxide emission which are harmful to the biodiversity. Protection against air pollution in a bid to be environmentally friendly Waste and water management Sewage management where VW has introduced 23 measuring points that conduct constant measuring of water in the Monitoring and measurement of volatile organic substances . Economic environment This forms major part of the analysis as the environment determines the amount of profits and losses VW operates in comparative to the other companies. Increase in economic environment identifies how to understand and take advantage of some economic and social indicators. For this environment the economy reviews the issue at the macroeconomic level and then analyzes the automotive sector, which is the most important in the manufacturing industry, in terms of opportunities and threats. In relation to the global economic environment, we review what happened after the world recession . International trade and the capital market were seriously affected, the export volumes of primary products were reduced and the growth strategy was changed based on in the export of primary products by another model known as Inward Growth Policy (Schwartz, 2017). There was economic growth, however, inflation i8 was 7.35%, there was a trade deficit and devaluation i of 44.5%. In 1970 it was observed that technology and productivity was vital and that it would be the engine of growth. The economic environment affects the progress and evolution of companies. A country that has a flexible exchange rate that has it fixed or that has a tendency to high inflation that is low is different. A country that has low or high interest rates or that has a public sector of 30% of GDP or 48% of GDP is different. A country that usually shows a surplus in a current account balance is different to one that shows a deficit or has a qualified workforce that does not and, also, a country that increases its productivity significantly or does not do it is different (Worthington and Britton, 2015) For any VW manager it is important to know the economic situation that VW is going through. There must be a minimum knowledge of the economy and of the decisions that governments are expected to adopt according to a country that is in a situation of overheating of the economy or of deceleration, high growth or recession. The companies will have a better evolution in a country with a certain economic stability and a self-sustained growth, than a country with important lags in economic cycles. The economic environment of a company can be affected by internal and external factors. An internal factor that affects the business environment is the cost of labor, materials, processes and procedures. Internal factors can be improved through projects. On the other hand, external factors can also affect these environments, with the company having less control over these. The main factors that influence a company are: political, economic, social and technological (Latin America and the Caribbean in the world economy 2014, 2014) Competitive Environment Competition is something that has always existed in the business world, is something positive and that helps self-regulate the market and generate improvements. Years ago, the competition focused on getting a better or superior product for the same price. Today that competition has changed, the product is less important, now compete for the intangible of each product or service. Notice that in the current advertising, the characteristics and properties of the products are hardly praised. The announcements of car, before everything was to extol its characteristics, ABS, TDI, BSM, EPS , Until a mark was invented the ziritione. Nowadays the advertisements simply show the car, its appearance, they try to appeal to your emotions and experiences when driving it (Seth, 2015). This means nothing more than if you want to be on the crest of the wave, you have to be very competitive and be continuously improving and making proposals to the market. Some of the strategies you can carry out are: Be aware of the market. Observe trends and be able to respond to the changes you require. It is one of the pillars of the lean startup methodology. This technique implies having very short service times in the supply chain. Here forget that big companies eat girls. Today, this phrase is: "Agile companies eat slow companies." Monitor competitors regularly. This strategy will give you light in the difficult moments that you do not know where to direct your continuous improvement. With a bit of luck, if your competitors make a mistake, with this strategy you will save time and money. You already know where not to fail and what decisions do not take. Undoubtedly it will not help you to be number 1 in your sector, at most you aspire to be the second (Seth, 2015). Labor Environment The work environment must be taken care of and always monitored in order to be a successful company since it is said that "happy employees make successful companies". In reality, this factor not only makes companies successful, but also lasts for many years. How many examples can we have of companies that were born, were developed and by a bad decision that affected some work condition, they quickly collapsed and in a short time disappeared? Normally, this happens with the micro and small companies, in other cases if the companies are large, probably because of their economic power they do not disappear-, but the cost of getting back up is enormous. Sometimes as leaders we do not realize how impressive the decisions we make are towards our collaborators. What for me or my leaders may be a great idea, perhaps for associates or collaborators it is not. I do not say that everything has to be consulted with them or should be postponed if it is not an action that is going to be accepted immediately (Trevin?o and Weaver, 2003). What I mean is that you should always know the ways in which you should send all the communications to your associates. Carry out a survey about your company's work environment Motivate your collaborators; Remember, not everything should be based on money Resource Environment Another strategy to improve VWs resources within a market in many ways is to create a second brand. Creating a brand of your product is an idea not as farfetched as it seems. Especially if there is still no one working in that brand. VW label in your same market will make your main brand stand naturally as a first brand, acquiring a perception of higher quality and confidence in front of consumers. It helps not to have to fight for price, although it is a variable that should not be neglected (Hisrich and Kralik, 2016). On the other hand, if with the main brand you make a product that really has quality and extras, you are securing that superior status. With the white label you can place it just below and penetrate a segment of customers that organically would not be within reach your main brand. These are some of the tactics to be more competitive within a market. There are many more, there are even people who are only responsible for thinking and studying new innovative strategies to become more competitive (Block and MacMillan, 2003) Legal and regulatory environment For VW as an automaker, the legal and regulatory framework must be adhered to. This is in regards to safety standards, environment, taxation, social corporate responsibility and many more. Regulatory authorities have set guidelines to be followed under the motor maker act. The regulations that are followed at most are environmental so that in the course of production, the automaker does not pollute the environment. Faulty systems in the recent past have seen many of VW units being taken back as a result of lack of safety procedures. Heavy losses are uncured by the company due to civil suits instituted as class suits that are heavy on the company. If a company like VW is taken to court on numerous infringement of rights it stands to lose its reputation (Brinkman, 2014). Global Environment This is intertwined with both the economic environment and the competitive environment. If a company like VW which is a global brand depends on the global environmental outlook , it will have to work on iots global brand. The economy of the world is affected by the geo-political and social environment. Companies like Toyota which is now the leading motor maker in the world affect the units that VW will sell if the competition is right. Other like how people are fairing on economically and the taste vis a vis the competitors brand will also affect in global environment (Cherunilam, 2010). Interpretation and Analysis When defining and developing a business strategy in our company we could establish three stages. The first would consist of a strategic analysis and diagnosis, that is, an external analysis of the environment of the company in general or macro-environment, in terms of economy, technology, social structure, natural environment and an analysis of the specific environment of the company. company or sector of the geographical area in which the company operates (based on the Porter model) in which we analyze who the potential competitors are, the clients and their negotiating power, the negotiating power of our suppliers, who are the current competitors and / or the threat of substitute products.The analysis of the environment will provide us with current and future information of the external environment that surrounds the company, which allows us to make the most appropriate decisions to maintain and improve the company's competitive advantage. The internal analysis of the company will allow us to identify its strengths and weaknesses, that is, strengths and weaknesses. The strengths to take care of them and support their decisions in these strengths and weaknesses to identify the weak points in order to improve them, in relation to the competition or companies in the sector. Second, Formulation of Strategies. Based on the analysis carried out, it is about deciding how the company will achieve the set objectives, either establishing corporate-type strategies, ie, where will we compete? In what business ?, or competitive type, how are we going to compete? In this phase, we could propose scenarios and think which strategies are the most appropriate to be successful in each one of them (Brinkman, 2014) Opportunities In a highly competitive and variable environment like the current one, it is important to make strategic decisions. A strategy is the tool that makes the difference between professional companies and those with growth ambitions of those that are not. The main objective of this is "to help the company to succeed. We formulate strategies according to the possible scenario that may occur. Thus, in the event that any of the foreseen scenarios occur, the response capacity to adapt to the environment would increase. Third, Implementation of the strategy. It is about putting the designed strategy into action. It includes the decision-making and activities necessary to put it into operation. There are several tools to put it into practice, such as the creation of an Integral Scorecard, which consists of disaggregating the strategy formulated, in objectives that affect all the departments of the company (Campbell and Craig, 2016). The key for a strategy to start up correctly is that the people who are part of the organization understand it since they are the ones who have to put it into practice. Threats Managers and middle managers who establish business strategies, increase the likelihood of success of their companies and the ability to react to changes in an environment increasingly complex and constant change to which company must adapt quickly and dynamically. Being prepared and making sound decisions at the right time can help your company generate the necessary profitability. Is it really useful to prepare future plans in companies? The demographic, technological, social and regulatory changes that the world has undergone in recent years are so far-reaching that they have rendered the elaborated plans obsolete, after having dedicated important economic and human resources to them (Polachek and Tatsiramos, n.d.). This situation prompted many managers to take only tactical decisions that would allow them to survive in a difficult environment without taking strategic reflections and above all avoiding the effort to structure, define and quantify them. Maintaining this policy implies leaving the organization at the mercy of changes in the environment, without priorities or specific objectives and therefore more vulnerable to changes and new competitors. The medium term result is the progressive loss of value of the company, as well as the creation of a corporate culture exempt from accountability, where the environment has a greater responsibility over the results than the employees' own actions. Conclusion Finally, defining an adequate strategy requires having a methodology, functional experts, and incorporating in-depth knowledge of the particularities of each industry, its products, its customers and its regulation. 'A good strategy allows, in short, to guide the entire organization towards a future objective that guarantees its competitive advantage and, ultimately, the creation of value in a changing and uncertain environment (Campbell and Craig, 2016). References Block, Z. and MacMillan, I. (2003).Corporate venturing. 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