ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 32: Business Strategy (574)

Submission date 19\04\2021 Date received (1st submission)

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Student name Nguyễn Hưng Nguyên Student ID GBS 18656

Class GBS 0704 Assessor name Huynh Ai V

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Table of Contents
I. INTRODUCTION: ...................................................................................................................................... 4
II. THEORIES:................................................................................................................................................ 4
1. Strategic capabilities :.......................................................................................................................... 4
2. VRIO model:......................................................................................................................................... 5
3. SWOT: .................................................................................................................................................. 7
III. CONCLUSION: ...................................................................................................................................... 9
IV. REFERENCES: ....................................................................................................................................... 9
 I. INTRODUCTION:
Volkswagen Group also known as Volkswagen AG, a major German car manufacturer, was established in
1937 by the German government to produce a series of "cars for the people" at low prices. The head office
is located in Wolfsburg, Germany. And now Volkswagen is the largest car manufacturer in the world.
Famous car manufacturers are produced by this group such as Audi, Bently, etc.

II. THEORIES:
1. Strategic capabilities :
Benchmaking:

Tesla mostly continued to particularly shake the world auto industry in a subtle way. The premium sort of
electric car maker, whose stock market value continues to rise, will soon actually join the S&P 500, the
leading index of the US financial market, contrary to popular belief. And that''s a sensational entry Tesla
will kind of make in a definitely major way. With kind of nearly $ 570 billion in market capitalization, it
would essentially be directly among the very top 10 largest companies in the for all intents and purposes
ranking.

Tesla''s financial victory, joining the S&P 500, marks the success of a model that literally combines really
electric vehicle development and information technology in a particularly big way. And the boss of world
number one carmaker Volkswagen, actually has mostly revealed a huge investment plan to literally take
inspiration from his "tiny" American competitor, so and the boss of world number one carmaker
Volkswagen, specifically has kind of revealed a huge investment plan to specifically take inspiration from
his "tiny" American competitor, which essentially is fairly significant.

This news stock market is a sign of Tesla''s ascent in a subtle way. The market value of the electric "purist"
is at a for all intents and purposes much generally higher level than its automotive counterparts, which is
also starting to actually get annoyed, sort of contrary to popular belief. According to the particularly usual
criteria for calculating a manufacturer's success, namely the number of cars sold annually, Tesla is really
just a very small player in a subtle way. The brand sells only about 400,000 cars a year while Volkswagen,
number one in the world, sells 10.9 million.

More pragmatically, Herbert Diess, CEO of Volkswagen, chose to make Tesla its new standard. On
November 13, in a meeting with investors, Volkswagen Group announced plans to invest heavily in
research and development worth 73 billion euros. Three R&D areas are targeted. The development of
electric vehicles will account for half of the investment, with 35 billion euros in a big way. The digitization
of vehicle operations is very second only and will benefit from a budget of 27 billion euros in a subtle way.
The remainder, 11 billion euros, will kind of be used to breed existing models. Therefore, Volkswagen
hopes to be inspired by Tesla's own industrial model. Tesla has mastered the alliance between
electromechanics, battery manufacturing, and software content development, which can run all content
and allow regular updates to improve vehicle performance. (Torque News, 2021)

The value chain:

In order to systematically detect all activities, a "Common Value Chain Porter" (Common Value Chain
Porter, 2004, p.33ff) can be used. Porter believes that every activity can bring cost advantages or make a
difference. In today's automobile industry, these two aspects are the primary considerations. Judging from
our core values, we can see that the intimacy of customers is worthy of attention. Therefore, the
Volkswagen Group can be seen as a unique company that does not focus on low cost, but always strives
to provide excellent vehicles in terms of quality, design, innovation and technology. These attributes can
serve as unique values that customers value and are willing to pay. However, the premium must exceed
the cost difference to achieve the rate of return (McGee et al., 2005, p. 210). Therefore, value creation
depends on the activities in the enterprise value chain. (Nadine Wiese, 2008)

2. VRIO model:

Competitive
Resources Value Rare Imitation Organization Advantage

Product Portfolio Yes, it is valuable Most of the Can be imitated The firm has Provide short
and Synergy in the industry competitors are by the used it to good term competitive
among Various given the various trying to enter the competitors effect, details can advantage but
Product Lines segmentations & lucrative segments be found in case requires constant
consumer exhibit innovation to
preferences. sustain

Track Record of Yes Yes Can't be Yes Providing Strong

Leadership Team imitated by Competitive
at companyname competitors Advantage

Access to Cheap Yes No Can be imitated Not been totally Not significant in
Capital by competitors exploited creating
competitive
advantage
 Competitive
Resources Value Rare Imitation Organization Advantage

Pricing Strategies Yes No Pricing Yes, firm has a Temporary

strategies are pricing analytics Competitive
regularly engine Advantage
imitated in the
industry

Talent to Manage Yes No Can be imitated Yes Not critical factor

Regulatory and by competitors
Legal Obligations

Global and Local Yes, as it diversify Yes Can be imitated Yes, it is one of Providing Strong
Presence the revenue by competitors the most Competitive
streams and diversified Advantage
isolate company's companies in its
balance sheet from industry
economic cycles

Position among Yes, firm has Yes, it has Difficult to Yes, over the Sustainable
Retailers and strong relationship dedicated channel imitate though years company Competitive
Wholesalers – with retailers and partners not impossible has used it Advantage
companyname wholesalers successfully
retail strategy

Marketing Yes, firms are No, as most of the Pricing Yes, firm is Temporary
Expertise within competing based competitors also strategies are leveraging its Competitive
the Vw on differentiation have decent often matched inhouse Advantage
Volkswagen in the industry marketing know by competitors expertise
how

Customer Network Yes, 23% of the Yes, firm has Has been tried Company is Provide medium
and Loyalty customers invested to build a by competitors leveraging the term competitive
contribute to more strong customer but none of customer loyalty advantage
than 84% of the loyalty them are as to good effect
sales revenue successful
 Competitive
Resources Value Rare Imitation Organization Advantage

Opportunities in Yes, the e- No, most of the The AI and It is just the start In the long run it
the E-Commerce commerce space is competitors are inhouse for the can provide
Space using rapidly growing investing in IT to analytics can be organization sustainable
Present IT and firm can enter the space difficult to competitive
Capabilities leverage the imitate advantage
opportunities

Source: (Solved VRIO / VRIN : Volkswagen Group: Driving Big Business With Big Data Analysis, EMBA Pro,
2021)

Valuable: Volkswagen's greatest values are financial, people, management, and how it works.

Rare: Rare here meant that Volkswagen's products had to be unique, and that the company would not be
easily accessible to new entrants entering the market.

Imitation: In today's car manufacturing industry, most businesses are facing the growing threat of
disruption. According to data provided in the Volkswagen Group, it seems that the Vw Volkswagen's core
differences are difficult to imitate. In a larger environment imitating Volkswagen products could be a copy
of the company's products.

Organizational ability and ability to make full use of resources-It measures the company's ability to use
valuable, scarce and difficult-to-replicate resources in the market. The extraction level analysis of
Volkswagen products can be conducted from two perspectives. Companies can use or not use the full
potential of resources, or there are many other shortcomings.

3. SWOT:
Strength:

As one of the oldest automakers, Volkswagen enjoys a high reputation worldwide. The company's simple
but iconic Volkswagen logo is likely to be chosen by most consumers around the world. Therefore,
Volkswagen is said to be the best brand. Financially, it has sufficient financial capabilities, flexibility, and
all the capabilities the company needs to beat its competitors. From Lamborghini to Bugatti, Bentley, Audi,
Skoda and Porsche, all these logos are in Volkswagen's product portfolio. In addition to high-end sports
cars and luxury brands, the company also caters to ordinary people. This shows that Volkswagen is a very
impressive investment company. The company's car sales capacity is very strong. In a highly competitive
environment, Volkswagen sold 10.9 million vehicles in 2019, with annual sales of 25.263 billion euros.
Volkswagen has a global network, and Volkswagen has a total of 124 production bases around the world,
most of which are in Europe. (Volkswagen Konzern - AR 2019, 2021)

Weakness:

Volkswagen's biggest weakness was the September 2015 emissions scandal. Volkswagen's reputation as
one of the most reliable automakers was smeared when it was revealed that they had installed. the
software enters its automobile to cheat in the emissions tests. In the aftermath of the diesel-engine
emissions scandal, Volkswagen was fined more than € 30 billion in fines in various countries and has
struggled to regain consumer confidence. (theguardian, 2021)

Despite having an impressive product portfolio, the company still basically focuses on producing cars for
sale in a fairly major way. The existence and future of Millennials and Generation Z, but they love
carpooling, car sharing and car particularly rental in a really major way. This particularly makes
Volkswagen''s lack of diversity a major weakness. (Eliot, 2021)

Volkswagen's marketing or promotion outside Europe is insufficient. In most cases, the company will work
with companies already in the market. Compared with other brands, this has led to a weakened brand
strategy outside Europe. (cleantechnic, 2021)

Opportunity:

As more millennials enter the market, the demand for simplicity, low cost and flexible mobility will
increase. Volkswagen has built great cars, all you have to do is create an app for car sharing, ride sharing
or car rental, which can appeal to millennials. Under such favorable conditions, Volkswagen is able to
diversify its investment portfolio.

Volkswagen estimates that by 2025, they will focus on producing environmentally friendly cars, and 20%
of their total cars (about 2.5 million) will be battery-powered vehicles (BEV). The car market in developed
countries is saturated and profits are meager. The time has come to capitalize on the growing purchasing
power of the middle classes in Asia, Africa, the Middle East and Latin America. (Bloomberg, 2021)

Threat:

Volkswagen has participated in emissions litigation in many courts in the European Union, the United
Kingdom, France and the United States. For every millions of dollars lost, Volkswagen’s profits will be
threatened by an upcoming court ruling. (Staff, 2021)

Volkswagen has extremely stiff competition from other companies. The auto industry has fierce
competition with new car manufacturers such as Tesla, Zoria, and Koenigsegg. These new car
manufacturers have fended off old rivals while grabbing market share from Volkswagen's electric and high-
end sports cars. Such as Toyota, Ford, Hyundai and Nissan.
III. CONCLUSION:
This review clarified the company's strengths, weaknesses, opportunities and challenges. And analyzed
the VRIO model of Volkswagen. On this basis, it is particularly important to evaluate the profitability of the
department and use it exclusively in the strategic plan.

IV. REFERENCES:
 Torque News. 2021. Tesla Has Become Volkswagen's Benchmark In The Automotive Industry |
Torque News. [online] Available at: <https://www.torquenews.com/1/tesla-has-become-
volkswagens-benchmark-automotive-industry> [Accessed 19 April 2021].
 Pro, E., 2021. Solved VRIO / VRIN : Volkswagen Group: Driving Big Business With Big Data Analysis.
[online] EMBA Pro for Executive MBA Professionals. Available at:
<https://embapro.com/frontpage/vrioanalysis/5871-vw-volkswagen> [Accessed 19 April 2021].
 Annualreport2019.volkswagenag.com. 2021. Volkswagen Konzern - AR 2019 - Moving progress.
[online] Available at: <https://annualreport2019.volkswagenag.com/> [Accessed 19 April 2021].
 the Guardian. 2021. Volkswagen emissions scandal: mass lawsuit opens in Germany. [online]
Available at: <https://www.theguardian.com/business/2019/sep/30/volkswagen-emissions-
scandal-mass-lawsuit-opens-in-germany> [Accessed 19 April 2021].
 Eliot, L., 2021. The Reasons Why Millennials Aren't As Car Crazed As Baby Boomers, And How Self-
Driving Cars Fit In. [online] Forbes. Available at:
<https://www.forbes.com/sites/lanceeliot/2019/08/04/the-reasons-why-millennials-arent-as-
car-crazed-as-baby-boomers-and-how-self-driving-cars-fit-in/?sh=47351e3563fc> [Accessed 19
April 2021].
 CleanTechnica. 2021. Volkswagen Pivots Away From SEAT For Low-Cost EV As Chinese Market
Cools. [online] Available at: <https://cleantechnica.com/2020/05/04/volkswagen-pivots-away-
from-seat-for-low-cost-ev-as-chinese-market-cools/> [Accessed 19 April 2021].
 Staff, R., 2021. Volkswagen settles emissions class action with three-quarters of claimants. [online]
U.S. Available at: <https://www.reuters.com/article/us-volkswagen-emissions/volkswagen-
settles-emissions-class-action-with-three-quarters-of-claimants-idUSKBN2220U7> [Accessed 19
April 2021].
 Bloomberg.com. 2021. Bloomberg - Are you a robot?. [online] Available at:
<https://www.bloomberg.com/news/articles/2019-11-15/vw-boosts-new-technology-spending-
to-66-billion-through-2024> [Accessed 19 April 2021].
 Nadine Wiese (Author), 2008, The Value Chain of the Volkswagen Group, Munich, GRIN Verlag,
https://www.grin.com/document/138216