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Volkswagen Case Study

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A brief analysis of Volkswagen case study

Volkswagen, a famous German automobile manufacturer,  was founded by the German Labor Front (Deutsche Arbeitsfront), the headquarter situated in Wolfsburg, Lower Saxony, Germany, in 1937. Volkswagen, the world's leading car manufacturer and the world's second-largest automaker, is the top-offering venture of the Volkswagen Group. People's car in German is signified by Volkswagen. Presently, its motto is "Das Auto" (The Car). Volkswagen has three cars, the Volkswagen Golf, the Volkswagen Beetle and the Volkswagen Passat, in the ten most crucial rundown. The main issues which Volkswagen has faced include:

  • Decreasing sales;
  • Rigid competition from Japanese producers;
  • New beetles' competitive costs;
  • When the price is fixed as too high, customers may trade up into a higher-priced sector and compete more with higher-end models;
  • When the price is fixed as too low, cars may not inspire dealers with a low-profit margin, thereby reducing the profitability targets of Volkswagen; and
  • Reconstruction of the image of Volkswagen by the New Beetle;

In the view of 2015, the diesel cheat scandal has harmed the Volkswagen company's reputation. The damaging and deadly impacts of nitrogen oxide as a pollutant discovered in car exhaust have led to more vigorous regulation of emissions at the Environmental Protection Agency (EPA) with due regard to preservation and greening. The management planned to discuss short-term requirements neglecting the company's growth opportunities. The company's management has taken full advantage of the trust and resources of the stakeholders. The cheat was following the EPA's rigorous measures. These strict measures are essential as the emission of nitrogen gas is dangerous to humans and leads to asthma, bronchitis, premature death, respiratory and cardiovascular diseases. Following a scandal leading to low earnings and other impacts, including legal suits, Volkswagen integrity was severely impacted. The mechanism's goal was to change the sensing of nitrogen oxide gas in Volkswagen diesel engines by exploring Volkswagen's diesel dupe in 2015. The nitrogen oxide emission tests in the laboratory were thirty-five times higher on the road and, therefore, put individual's lives at risk. Volkswagen's leadership chose to make a shortcut in their world-class brand manufacturing. This misleading scandal has led to several implications for its direct and indirect stakeholders for Volkswagen credibility.

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SWOT analysis of Volkswagen

Irrespective of the trade and industry type, any corporation that remains alive and prosperous in the top ten for almost one century should be respected. Volkswagen will hit the maximum levels of the automotive industry for a century. SWOT Analysis is an established management tool that assists Volkswagen in evaluating its success against competing companies and its market. Volkswagen is one of the world's largest automobile industries. The internal factors are recognised as strengths and weaknesses in the SWOT analysis, and the external factors are identified as opportunities and threats. The SWOT Analysis of Volkswagen is discussed below:

Strengths

· Excellent brand recognition: Volkswagen is one of the oldest car manufacturers worldwide. For one thing, most customers around the globe can choose the straightforward but iconic intertwined VW logo of the corporation.

· Impressive portfolio: These icons belong to Volkswagen's portfolio, starting from Lamborghini to Bugatti, Bentley, Audi, Skoda and Porsche. The corporation also provides ordinary people in addition to high-end sports cars and luxury brands. It cannot be ignored that Volkswagen's got something for all.

· World's best employer: As per Forbes, Volkswagen ranks worldwide at 31st position as of 2019 in the best employers' list.

Weaknesses

· Lack of diversification: The company is concentrated on improving cars for sale as it has an impeccable reputation. The Millennials and Gen Z are present and future, but they prefer sharing rides, car-sharing and renting cars. The lack of diversity of Volkswagen is thus a significant drawback.

· Emission scandal-tainted integrity: In September 2015, the reputation of Volkswagen as a trusted car manufacturer was damaged by the discovery that it installed software in its automobiles for cheating the emission testing. Following the diesel emissions scandal, Volkswagen has been penalised for paying more than € 30 billion as penalties in different nations and struggling to restore customer confidence.

· Weak marketing strategies outside Europe: Volkswagen is not vigorously marketing or promoting its brands enough outside Europe. In most instances, the enterprise works with an enterprise on the market already. For example, it works with JAC to manufacture low-cost electric cars in China.

Opportunities

· Focus on eco-friendly cars: There is a rapid growth of eco-conscious customers worldwide. Volkswagen can deposit more in hybrid and electric vehicle manufacturing to take advantage of the increased demand. Volkswagen spent the next five years expanding its electric cars to €60 trillion.

· Diversify portfolio: As millennia become more and more common, the demand for simple, affordable and durable mobility will grow. With Volkswagen already producing large cars, it is all about building an application for car sharing, rideshare or car rental and encouraging millennials in droves.

· Expand in emerging markets: In the developed world, the car market is very competitive with very few profits. It is the time to tap into Asia, Africa, the Middle East and Latin America's expanding buying power.

Threats

· Increasing competition: Car manufacturers such as Tesla, Zorya and Koenigsegg are competitive with their market share of Volkswagen sports and electric sports cars, and at the same time, they are fighting with old competitors, such as Toyota, Ford and Hyundai.

· Ongoing lawsuits: In the European Union, the UK, France and the United States, Volkswagen is involved in emission civil suits. The revenues of Volkswagen are attacked with upcoming court decisions with millions of losses.

· Global recession: Volkswagen's car sales are attacked with the ongoing downturn following this uncertain period. In the first quarter of 2020, the outbreak slowed down sales by 8% year on year.

 

However, Volkswagen can improve its weaknesses and consolidate its upcoming market position by enhancing its standards and fixing emission-related issues.

PESTLE analysis of Volkswagen

Volkswagen's PESTLE analysis investigates the brand's business practices. The PESTLE Analysis of Volkswagen investigates several external factors, such as political, economic, social, and technological, that affect its trade activities and legal and environmental factors. The PESTLE Analysis shows the various extrinsic situations affecting the brand's business. PESTLE analysis is an indispensable structure for corporations like Volkswagen to recognise the trends in the market and constantly enhance its trade. The analysis of PESTLE is also regarded as the analysis of PESTEL. However, the PESTLE analysis of Volkswagen is discussed below:

Factors

Implications

Political factors

In the PESTLE Analysis of Volkswagen, the political factors can be explained as follows:

· Volkswagen is one of the world's leading automobile producers. The new structure of the UK government to end deals and discounts by 2040 for diesel and oil cars. Another activity was "Street to Zero", carried out by the UK Government. In any case, half new vehicles available for sale as a piece of the Road to Null activities became the aim of the United Kingdom government. It is fully electric, half and half or going to run on obstetric fills. It has led to a pattern of reduction in oil and diesel vehicles. The prevailing problem in the world of legislative matters in Volkswagen is the present political strains surrounding business between the US and the EU in particular. The US administration has taken steps to increase the force tariff. Thus, in the whole business in the 21st century, political powers have expanded their prominence.

Economic factors

In the PESTLE Analysis of Volkswagen, the economic factors can be explained as follows:

· Volkswagen, the largest auto manufacturer of the European Union, felt the rotation of financial troubles due to an external disturbance caused by the high inflation of the Brexit, with the purchasers' expenditure decreasing substantially, leading finally to a reduction sought for a new vehicle.

Social factors

In the PESTLE Analysis of Volkswagen, the social factors can be explained as follows:

· Social powers play an essential role in the enhancement of this century in all industry efforts. Social patterns represent changing tendencies and inclinations of people, which are also impacted by client social elements.  The interest of Volkswagen in exchanging and praising vehicle projects has broadened, making transport less costly and valuable.

Technological factors

In the PESTLE Analysis of Volkswagen, the technological factors can be explained as follows:

· Innovation has been a focus of the car business continuously, and Volkswagen has been focused on technology development. The biggest test that Volkswagen's innovative technology faces is simply improving the motor vehicle.

Legal factors

In the PESTLE Analysis of Volkswagen, the legal factors can be explained as follows:

· A vehicle organisation like Volkswagen has a large number of legal elements to address. Work, business, position and driver safety are also included in the chances. They now have a lot of cash on the diesel arrangement. Volkswagen uses thrashing gadgets to escape the evaporation test.

Environmental factors

In the PESTLE Analysis of Volkswagen, the environmental factors can be explained as follows:

· The automotive industry has enormous environmental elements. In a section of the industry sectors, brands have tremendous disciplines which do not satisfy the criteria. The contamination legislation has proved to be rigorous worldwide. The organisation was charged with the loss of millions when it could not comply with the outflow guidelines distributed in the automotive industry.

In conclusion, it can be stated that Volkswagen's PESTLE Analysis mentioned above highlights the numerous components which affect its business performance. This understanding assists in assessing the criticalness of external commercial factors for any brand.

 Also, the PESTLE analysis helps to analyse the various external factors that can affect the business of the Airline company Virgin Atlantic.

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