Automotive Production Levels

According to Edmunds 2012 analysis report on the Volkswagen Passat, Volkswagen Group took another step toward achieving its ambitious goal to sell 1 million vehicles in the U.S. by 2018 when it announced another production boost at its Chattanooga, Tenn., plant. Volkswagen, which has invested $ 4 billion in the facility that opened last year, will add 800 new jobs, bringing total plant employment to 3,500 workers.

The added employees will boost production of the 2012 Volkswagen Passat. February was the biggest month for Passat sales, which totaled 8,189 units since August 2003. However despite strong sales demands for the car is high a month and the supply is low. Volkswagen executives states, "The Passat is flying off dealer lots."

The law of demand, in economic terms shows how much of a product consumers are willing to purchase, at different price points during a certain period. As price falls, the corresponding quantity demanded tends to increase. The higher the price of a product, the less it is demanded. When the price is reduced, demand increase. (mindtools.com)

In looking at the demand for more Passat sales, the demands for more of them are needed, the price is low and more employees (supplier) are needed and will help boost production.

Equilibrium is where supply meets demand. It is the point where the quantity demanded equals the quantity supplied. This means that there's no surplus of goods and no shortage of goods. A shortage occurs when demand is greater than supply. To meet the market demand, The Volkswagen Passats must make more Passats. In order to do so they must add more employees to meet that demand. Edmunds, 2012, reports that CEO of Volkswagen Group of America states that additional workers will allow formation of a third team so the plan can operate on an innovative schedule that extends its weekly production capacity while reducing the amount of overtime work for the existing team members.

In making sound strategic decisions based on the equilibrium price and demand. The Volkswagen group knows that if they continue to keep prices at a low market value, add more employees to make more Passats they can increase productivity as well as increased sales. The Volkswagen vehicle sales quarter in Germany shows that in 2010 (old) they sold 1,779 and 2011(new) they sold 2,067. The calculate elasticity of demand shows that the differences is 288.

The change in quality demand is 0.162 and the change in price elasticity is 5.621. In the second quarter that did just as well. These facts tell the Volkswagen group management that if sells continue to climb at a 16% from 2010-2011 meaning that the demand for more of their cars are increasing and they will continue to make huge profits at this rate. (Volkenwagen.com)

First, identifying competitive advantages is a product or service that an organization's customers place a greater value on than similar offerings from a competitor. Unfortunately, competitive advantages are typically temporary because competitors often s0eek ways to duplicate the competitive advantage.

When an organization is the first to market with a competitive advantage, it gains a first-mover advantage which occurs when an organization can significantly impact its market share by being first to market with a competitive advantage. For example, FedEx created a first-mover advantage by creating its customer self-service software, which allows people and organizations to request parcel pickups, print mailing slips and track parcels online.

Other parcel delivery companies quickly began creating their own online services. Today, customer self-service on the internet is a standard for doing business in the parcel delivery business. Michael Porter's five forces Model states that when a company is challenge with new entrant into the market he must develop buyer power which is one of the five forces model of challenging competitive advantages (Baltzan and Phillips, 2009).

To make it more attractive for customers to buy more Passat, the Volkswagen group must make it more attractive for customers to buy such as discount. For example, they can offer rewards such as the first 100 customers that purchase will receive an all-around trip to Jamaican along with discounts and rewards. Another one of the five forces is Threat of New Entrants is when it is easy for new competitors to enter a market and low when there is significant entry to barriers to entering a market.

With a new competitors entering the car market with the same elasticity of demand calculated as Volkswagen quarterly calculation of sales then Volkswagen's