Marketing Global Case Study

Good evening, my name is Yoshi and today I will be discussing case study 16.1 “Volkswagon aims for the top” (Next slide). To begin today’s presentation, I will introduce the case with a brief overview which identifies the critical facts and relevant information of the case. In this, I will address Volkswagen’s company background,  their strategic elements of competitive advantage, the implications of past global expansions and, finally, their product strategy and their effects on  foreign markets. This will be followed by addressing the specific question from the case. I will conclude today’s presentation with a Q&A to clarify any further questions you may have. (Next Slide)

To begin today’s presentation, I will be breaking down the core aspects of the case study. This case is based on the dominating german automaker Volkswagon also known as VW, and focuses on global strategies that has made the company what it is today. Establishing in 1937, the original headquarters lies in Wolfsburg, Germany.  (Next Slide) Volkswagon  is a well established global company that has established to become a household name in 153 countries and is considered ranked Ranked second among global automakers. (Next slide)

To gain a further insight into how VW has gained its current market position, the case highlights historical situations. This has progressed over 40 years ago where past CEO’s have displayed momentous leadership skills and company changing strategies. Carl Hahn has been credited for his vision in developing the first truly global strategy, which was initiated in 1970. This campaign focused on expanding and selling the newer model of the renowned beetle model by switching German plants to entirely focus on manufacturing this successor. While main parts such as the transmission and engine were made with german quality, the finished car was assembled in foreign markets such as the United states and Brazil. Due to external pressures from domestic unions and alleged consumer confusion, the visionary strategy failed. Although its operations continued to expand, the first major venture outside Germany, was initiated decades later under its cooperation with Spanish car manufacturer subsidiary SEAT. With this partnership, Hahns made the executive decision for the company to focus on boosting profit margins through identifying low cost  production plants in Spain. Initially this partnership allowed for VW to provide their trademark quality german parts and offload them to SEAT, where they focus on low cost, small car mass production. Their main purpose of establishing in spain was due to the of  50% lower labour rates than west germany, this initially provided the company to reduce production costs while focusing on meeting European demand. (next slide)

Succeeding Hahn in 1993, the newly designated CEO Ferdinand Piech was an autocratic leader that took immediate action when appointed. A few of the initiatives that Piech advocated, with the help of the new production chief, were drastic cost minimising strategies, acquisition of luxury automakers and breaking long term contracts with suppliers in Germany. (Next Slide)  

Transitioning into the 21st century, the case further highlights the appointment of Martin Winterkorn, who was named CEO in 2007. Being delegated such an important position, Winterkorn moved swiftly to continue on the legacy of VW’s predecessors, while also focusing efforts in product strategy. The key strategic elements that gave VW a competitive advantage, was Winterkorn executive decision to revamp those iconic past models such as the Jetta, the classic beetle and the Passat. The company attributes its major success over these models as all three cars have now reached the top 10 list of best selling vehicles. Volkswagon in the past had aimed to pursue the north american market, however the sole U.S plant in pennsylvania, closed in 1998 due to difficult currency exchange making exporting unprofitable. However,  Volkswagen are now presently focusing on growing in the United States, with executives acknowledging that if they are to increase the number of vehicles sold, they must make cars that appeal to American drivers. With that in mind, The Jetta was redesigned in 2011 to be more modern and americanized, the classic beetle being absent, it aimed to capture modernized nostalgia with the release of the Third generation in key markets such as China, Europe, Mexico and United states. The Passat aimed to utilise fuel efficiency, being a diesel powered car was released to sway target markets attitudes.(Next Slide)