Volkswagen Case

Volkswagen literally meaning “Peoples car” was started in Germany in 1937 when hugely successful designer of that time Ferdinand Porsche decided to build a car for the masses. The first production of VW cars in 1940 now has become a transnational group Volkswagen Aktiengesellschaft owning marquee brands like Audi, Bugatti, Lambhorghini, Bentley and Skoda among cars and Man in trucks and quite recently Ducati in motorcycles. The company sold over 8 million vehicles worldwide employing 500,000 people and earning profits of over 15billion euros. It not only diversified in automobile but looked to strengthen its competitive position by establishing the Volkswagen Bank not only to finance vehicles but also financial services and insurance products. To study such an international expansion undertaken over many decades by setting up Greenfield operations, distribution networks, acquisition, picking up stake and foraying into allied industries would provide a unique opporunity to understand why and what companies undertake internationalization.

Drivers of internationalization

Initially the drivers of internationalization in the post World War II era, was to seek markets to exploit domestic advantages. The company had set standards for productivity and realized it had a product that had universal appeal. So initially it started exporting to neighboring European nations and then to North America. It also started acquisition of brands to bring in wide range of product offerings across various geographies. In 1969 it acquired Audi and in 1990s Lambhorghini. By 2012 it had acquired Ducati, and its product stable had everything from a people’s car to exotic cars like Bugatti.

Sources of competitive advantage

Volkswagen’s strength lies in synergizing the needs and development of products across its subsidiaries. It is able to manage its value chain by providing the administrative and