Learn Business Strategy

Task 1

1.1 How business mission, vision, objectives and goals and core competencies inform strategic planning when formulating strategic plans

VW AG is world's largest automotive manufacturing company that delivers superior quality auto-mobile products for it business consumers. Different types of passenger cars including Bentley, Bugatti, Lamborghini, Audi, Porsche, SEAT, Skoda and Volkswagen marques; motorcycles under the Ducati brand; and commercial vehicles under the MAN, Scania, Neoplan and Volkswagen Commercial Vehicles marques are sold by the venture. Overall operations of the company have been divided into two major departments and it includes finance department and automotive divisions.

Strategic approach is used by the company for meeting its required objectives and it aids in ensuring long term growth and success of the firm. Currently there are 340 subsidiary companies of VW AG and it is operating its functions in more than 150 countries. There are 100 production facilities of the company across 27 nations and it has two joint ventures in China. Mission, vision, goals and objectives of an organization provides directions about executing all the necessary business functions in successful way. It provides pathway on the basis of which all the operational activities of the business are executed.

Mission:- VW AG is working with the mission to be a leading automotive company by offering superior quality of automotive products to the consumers of business. This mission of the company will be achieved by making use of strategic approach and proper planning will be done so that required objectives of the enterprise could be accomplished. Major focus will be given for making use of advanced and innovative technology so that new innovations in the existing product range can be made.

Vision:- VW AG is working with a vision to provide value to the customers so that their needs and requirements can be meet. Moreover, organizing is aspiring for creating benchmark in auto-mobile industry by offering affordable price products for the consumers of business. Identification of opportunities that is available in market will be done and it will aid for capturing large market area.

Objectives:- Company is carrying out its operational process with the objective to make use of advanced and innovative technology so that new attributes and features can be added in the existing product range and new products can be launched in market. Second objective of the company is to provide values to the shareholders of the business and giving them best value for money. Third objective of the company is to increase its existing market area by 5 % in coming next year. All the three objectives will be achieved by making strategic plans for performing business functions in organized manner.

Goals:- Goal of the company is to reduce its existing investment cost so that profitability and financial revenues of the company can be enhanced. Along with this CSR policy also have been formed so that positive changes can be made in the lives of community people by sharing some part of the benefits with them.

1.2 Analysis of factors that needs to be considered when formulating strategic plan for business

There are diverse range of factors that needs to be considered while formulating strategic plans for the VW AG business. Formulating business plans requires a strategic approach and it is vital that all the external and internal factors that gives impact on the process of formulation of strategic plan should be considered.

Internal factors are as mentioned:-

Organizational structure:- Division of task and work to the staff members defines about organizational structure. It is important that job responsibilities should be properly assigned to staff members so that they should be properly made aware about the work that they need to complete. Hierarchical organizational structure has been adopted by the company and in this flow of communication goes from top management to lower management level.

Organizational culture:- People working in company carry different attitude, values, norms and beliefs which gives impact on the overall organizational culture and due to that performance of the company gets influenced.

Human resources:- Skills and capabilities of an individual gives impact on the execution of business functions and due to that impact is being observed on profitability of the company. It is essential that people working in the companies should posses required skills and competence so that they can play a pivot role in meeting the goals and objectives of the company.

External Factors:-

Market competition:- Globalization has created huge market competition and due to that impact has been observed on strategic planning process of the company. It is vital that action plans should be made for gaining competitive advantage for the entity.

Technological changes:- Regular advancements are happening in technical sector and it is giving impact on the strategic planning process of the business. It is critical that new and advanced technology should be used for performing the business functions in effective way.

Economic conditions of the nation:- Changes in economic conditions of nation affects the strategic planning process. It is vital that focus should be given for meeting with the inflation and deflation situations and it will aid for mitigating the risk that are associated with the changing economic conditions of nation.

1.3 Effectiveness of techniques used while developing business plan.

It is critical that effective tool and techniques should be used for developing the business plan for the entity. Business strategies for VW AG will be made by making use of Ansoff matrix.

Ansoff matrix:- In this method four different areas are covered that includes Market development, Diversification, Market penetration, Product development.

Action plans are made for making plans for these four elements. By making use of this technique risk for the business can be reduced and it will support for enhancing the profitability of the firm. Emphasis can be given for developing the products of the firm and new attributes and features can be added in the existing product range. Along with this specific group of consumers will be identified so that buyers can be targeted for selling the products and services that are offered by the company. Ansoff matrix provides an effective medium for carrying out the business activities in successful manner.

Task 2

2.1 Analysis of strategic positioning of VW AG by carrying out an organizational audit

SWOT analysis is an effective technique that could be used by the business organizations for carrying out the organizational audit. It supports for assessing the weak performing areas and on the basis of that measures can be taken for making improvements in the overall performance of the business.

SWOT analysis for VW AG is as follows :-

Strength:- It is a leading auto-mobile manufacturing company of the world and it has the widest brand portfolio among all the auto-mobile companies that are working across UK. Company has made new joint ventures with local Chinese auto-makers that helps for enhancing the existing business of the company.

Weaknesses:- Neghative publicity has given impact on the brand image of the firm and it has the highest recall rate in U.S. Market. Company has vary little expertise in making battery driven vehicle and low market share are posses by company in U.S. Automotive market.

Opportunities:- Company has opportunity for enhancing its existing market in new areas so that profitability can be enhanced. Demand for autonomous vehicle is rising and company can make use of this opportunity for selling their product in market (Auzair, 2011).

Threats:- Automotive industry is facing intense competition and due to which challenges are faced by firm in maintaining its existing market share (Hoejmose, Brammer and Millington, 2013). Along with this intense competition is also giving impact on the business performance and along with this increasing government regulations are also giving impact on the overall performance of the business.

2.2 Environmental analysis

External environmental factors gives impact on the overall performance of the business so it is vital that measures can be taken for carrying out the environmental audit. PESTLE analysis provides details about external factors that affects the overall performance of the business. PESTLE analysis for the VW AG is as follows :-

Political:- Rules and regulations that are formed by the government are mandatory to be followed (Haley, Haley and Tan, 2011). Changes in the political situations in the country also affects the sales performance of the business.

Economical:- Changes in the economical condition of nation affects the purchasing power of the people and due to this sales of the product in the company gets affected (Issa-Salwe and et.al., 2010).

Social:- changes in needs. Preferences, attitudes and beliefs of the consumers affect the strategy planning process and due to that impact is being observed on the functioanl activities that are performed in the entity.

Technological:- Regular innovations in the technical sector gives impact on the overall performance of the business. It is critical that innovations and new techniques should be adopted so that advanced and innovative auto-mobile products can be offered to consumers (Casadesus-Masanell and Ricart, 2010).
Environmental:- Currently company has faced threats from US Environmental protection agency for installing illegal software to cheat the emission test (Klettner, Clarke and Boersma, 2014). Along with this clean air in London campaign also has given instructions for auditing the VW activities in UK.

Legal:- it is critical that all the business activities should be performed in legal and lawful manner so that risk and threats available for business can be mitigated.

2.3 Significance of stakeholder analysis while formulating new strategies

Stakeholders analysis aids for assessing the impacts given by different individuals on the overall performance of the business. Various stakeholders of VW AG are as mentioned :-

Shareholders:- Necessary funds that are required for performing the business functions are provided by the shareholders. Company provides them with the value on money that is being invested by them.

Staff members:- Positive support is given by employees for completing the assigned work and job responsibilities in successful way (Elliot, 2011). Strategies can be implemented successfully by making use this approach and skills and capabilities posses by staff members play a pivot role in implementing the strategy successfully.

Consumes:- Auto-mobile products that are manufactured by VW AG are purchased by buyers and it is required that their needs and preferences should be considered while implementing the strategy successfully (Robinson, Sherwood and DePaolo, 2010).

Suppliers:- Raw material provided by suppliers should be of good quality so that superior quality products can be made and it will help for selling large amount of products to the consumers of business.

Government:- Taxation policy and other norms that have been created by government are essential to be followed for implementing the strategy in successful way.

2.4 New strategy for VW AG

VW AG will make use of price skimming strategy so that market share of the company can be enhanced and it will support for gaining competitive advantage for the business. Initially price of the auto-mobile products will be kept lower and slowly the prices will be increased (Mithas, Tafti and Mitchell, 2013). It will support for involving medium group, lower group and upper group consumers for selling the products of the company. When auto-mobile products of the company will be sold in the reasonable price rates than it will become easier for attracting all age income group consumers for selling the products and services that are being offered by the company.

More number of consumers can be added in the existing buyer list and profitability and share prices can be enhanced by making use of this approach. Initially when the prices of auto-mobile products will be kept low than it will support for recovering the investment cost that has been made for carrying out the manufacturing and other operational process. Middle group consumers can also be targeted along with upper income group consumers and it will support for making sharp increments in the existing products and services that are being offered by the firm. Huge market share can be gained by making use of this approach.

Task 3

3.1 Appropriateness of alternative strategy relating to market entry, substantive growth and retrenchment for VW AG

Top management of VW AG has adopted price skimming strategy for meeting with the required goals and objectives of the firm. It will help for enhancing the profitability of the company by involving a strategic approach. Along with this it is critical that alternative strategies should also be determined so that objectives that have been formed could be achieved in effective way. Different alternative strategies that could be used by the company are as follows-

Market entry strategy:- It is vital that effective strategies should be made by VW AG so that effective measures can be taken for entering into new market area. Along with this action plans can be made for entering into new market for targetting consumers. Direct exporting is the most feasible options that is available with the company (Bentley, Omer and Sharp, 2013).

It will help for saving the manufacturing cost and profitability and revenues can be enhanced by adopting effective marketing strategy. Moreover, tie-ups and alliances can also be made with other business houses so that auto-mobile products can be sold to large number of consumers. Target market area can be covered and consumers can be attracted towards the vehicle products that are offered by the company (Blackburn, Hart and Wainwright, 2013).

Substantive growth strategy:- Acquisition of a new firm can be done and it will help for making increments in existing resources of the acquired firm. Similarly franchising can also be done and more number of people can be sold the products that are offered by the company. Along with this this growth strategy will support for making enhancement in the existing consumer base and increasing the profitability and revenues that are earned by the company.

Limited growth strategy:- VW AG can adopt market growth penetration strategy so that overall investment price for performing the business functions can be reduced. With this big market share can be achieved by making use of this approach and it will aid for gaining limited growth for the business.

Retrenchment strategy:- Under this company can go for reducing the overall investment coat so that challenges and risks that are associated with the business can be reduced.

3.2 Justification for selection of the strategy

It is critical that strategic approach should be used by management of VW AG for reducing the challenges and risks that are faced by the company. Market penetration strategy has been selected in which focus has been given for selling large volume of auto-mobile products to big consumer base in target market.

New market areas can also be identified and on the basis of that action plans can be made for targetting and attracting the consumers for selling the products that are offered by the firm. With this market penetration strategy will support for reducing the risk and challenges that are associated with implementing price skimming strategy in the business (Ackermann and Audretsch, 2013). Moreover, initially price skimming strategy has been adopted by the company and if this fails than market penetration strategy is the best available strategy that could be used by the company. Along with this method will help for reducing the overall investment cost and on the basis of that manufacturing activities can also be reduced so that profitability of the company can be enhanced.

Task 4

4.1 Roles and responsibility of personal in-charged with the strategy implementation

It is critical that people associated with the implementing the strategy should play their part well. It will support for achieving the required objectives by implementing the strategy in effective manner. Staff members should be given specific job roles and they should be directed for completing their assigned work on due time.

Human resource manager is accountable for ensuring that all the individuals that are responsible for implementing the strategy should posses required skills. Allocation of task and responsibilities is also done by the manager (Reinhardt and Stavins, 2010). Finance manager is responsible for making it ensure that proper funds and resources are available for implementing the strategy. People working at top management level needs to ensure that appropriate directions and instructions are given to employees so that all the functional activities can be directed towards a common goal.

Operational manager is accountable for executing all the functional activities in strategic manner (Verreynne and Meyer, 2010). Marketing manager is responsible for ensuring that attractive promotional and advertising strategies should be made so that consumers can be targeted for selling the auto-mobile products and services of the firm. It is critical that required raw material should be purchased and purchasing manager is responsible for achieving this objective.

4.2 Estimated resource requirement for implementing a new strategy for VW AG

All the strategies that have been formed in the business can be accomplished if only proper resources are allocated for implementing them. Human resource is the biggest requirement without which it is not possible for achieving the required objectives from the strategies.

Along with this skills and capabilities are also required in an individual so that al the tasks and activities that are required for successful completion of strategy could be achieved. Raw material and machines and equipments are required and proper funding is also required so that strategies and action plans can be implemented in successful way (Boyer, 2010). Marketing department requires funding so that advertisement and promotional campaigns can be performed successfully in the company.

4.3 Evaluation of contribution of SMART targets to achievement of strategy implementation in VW AG

SMART objectives are defined as a appropriate planning that is done for achieving the required goals and objectives of the firm in successful way (Organizational structure. 2016). Step by step and organized process is used in these objectives so that required objectives of the company can be achieved successfully. SMART objectives for VW AG are as follows :-

Conclusion

Summing up the present report it can be concluded that it is critical that business strategies in an organization. It is critical that strategies should be formed in the organization by making use of strategic approach. Mission, vision, objective and goals of the firm needs to be clear so that company can achieve success and gain competitive advantage. SMART objectives aids in completing al the operational activities in systematic manner. Market growth strategies supports for enhancing the existing consumer base and achieving the long term growth and success for the business. Along with this external and environmental factors that gives impact on the business performances needs to be considered while making strategies for the business.

References

• Ackermann, S. J. and Audretsch, D. B., 2013. The economics of small firms: A European challenge (Vol. 11). Springer Science & Business Media.
• Auzair, S., 2011. The effect of business strategy and external environment on management control systems: a study of Malaysian hotels. International Journal of Business and Social Science.
• Bentley, K. A., Omer, T. C. and Sharp, N. Y., 2013. Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research.
• Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development.
• Boyer, J., 2010. Business Intelligence Strategy: A Practical Guide for Achieving BI Excellence. Mc Press.

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