Globalizing Volkswagon

Strategic Management & Policy

Globalizing Volkswagen

In 2001, Volkswagen was the market leader with their crafty automobiles being marketed all over the world. Despite a troubled past, VW managed to find narrow market niches and create competitive advantages that led them to be the fourth highest auto-maker in the world in 2001. Their biggest markets include Europe, Germany, North America, Asia, South America, and Africa. They have sixty-five models of vehicles including some of the most prestigious brand names like Audi, Bentley, Bugatti, and Lamborghini. Though they have experienced difficulty in the past, they have recently positioned themselves to be globally successful in the future.

Ferdinand Piech, CEO of VW and Audi, has led his company to spark new innovations and has created new technology that differentiates his cars from the rest. He organizes secret meetings and has his managers drive prototype cars so they can collaborate. Piech discovered that in the past, his cars were too complex to mass produce, and therefore costly. He decided to use a manufacturing scheme called "platforming to drive down costs." Piech simply put the same base in most of his cars, then changed the body styles and focused more on the details to produce differentiated cars. Consumers did not know the difference.

Volkswagen has a great position geographically as well. They have over twenty-five plants in seventeen different countries, and employ thousands of people. With all the manufacturing, VW still manages to keep costs low. They position their plants near suppliers to keep shipping down, and in Germany they worked with labor unions to introduce a new flexible production schedule. Instead of stockpiling cars in inventory, VW manufacturers work more heavily in the peak season of sales in order to keep up with trends and consumer tastes. This has proved to make VW more efficient and yet again keep the cost of working capital low.

After Ferdinand Piech made his manufacturing sector more efficient he needed another project to spark interest into the minds of his consumers. He built a 420 million Euro theme park in Wolfsburg, Germany called "Autostadt.". In the summer of 2000, more than two million visitors came to check out Volkswagen's product line, learn about Volkswagen's heritage, and find a thrill of discovery. I believe this is a huge marketing scheme that has worked to perfection. They still manage to make profit by charging fourteen Euros for entrance.

Volkswagen's management style also separates them from the rest of the field.