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correction.docRecommendation for Improving the Performance of Volkswagen
Date: February 15, 2017
Prepared for:
Written for:
Prepared by: Haochen Du
Executive summary
This report highlights some of the recommendations on how the Volkswagen Company can redeem its image despite the diesel scandal and outlines some of the major strengths that the company can use to overcome some of the threats and weaknesses that continue to face its business. The Volkswagen Company has been in the auto industry for several decades and maintained promising global reputation and financial profitability, but the company still suffers from some weaknesses, and addressing these weaknesses is vitally important for the continuous growth of the company, especially considering the fact that global competition in auto industry is becoming increasingly intense. Some of the major recommendations for the Volkswagen Company highlighted in the paper include joining an internationally recognized autonomous verification agency, which helps to repair Volkswagen image after the scandal, investing more on green technology through production of electric vehicles, which enable Volkswagen to return to its strength of making electric vehicles, and focusing on emerging economies in Africa and Asia to expand markets, which can generate more revenues for the company. It is expected that proper implementation of the above strategies is likely to yield better returns and enhance the stability of the organization going into the future.
Table of Contents
1 Overview
3 2.0 Consider Joining Internationally Recognized Autonomous Verification Agency
5 3.0 Focus on Electric Vehicles and Other Green Technologies
6 4.0 Invest in Emerging Markets
1.0 Introduction
Overview
The initial analysis of the Volkswagen Company portrayed it as a very promising investment destination despite having some recent weaknesses that threaten the company investment. It has been in existence for more than sixty years and has heavy investments in different regions in the world. It has several key strengths, among them a strong and reputable brand that has been built over decades. The financial performance of the company is still promising with indicators that some of its production segments improved with regard to sales generated while others dwindled due to the recent emission scandal that the company is facing (Johnson and Timothy 275-285). It is now time to adjust things to set straight the Volkswagen business, and concerted efforts need to be made towards improving the weaknesses that the business faces. This research focuses on several recommendations which perhaps if well implemented can help to make the Volkswagen Company more likely to be successful in the future. The research focuses on building on the company strengths to overcome the weaknesses and forge ahead through planning to overcome any threats ahead.
Recent Scandal
The Volkswagen diesel cars scandal has made many consumers worry about the future of the company and caused severe negative impact on the image of the company among consumers and the government. It is perhaps one of the greatest weaknesses of the company that must be urgently dealt with to rebuild the brand name of the company. The sales for the diesel vehicle segments of the company has reduced tremendously after several of the countries that provided the market for its commodity banned any importation or sale of those vehicles (Pedrazzi, Giorgio 113-120). The company has since become the main target of environmental compliance investigations in several other countries including Germany, Canada, United Kingdom, France, and South Korea among several other countries
2.0 Consider Joining Internationally Recognized Autonomous Verification Agency
To help redefine itself and revive from the bad publicity, Volkswagen needs to partner with an internationally recognized autonomous verification agency. There are several internationally reputable bodies such as (FLA) fair labor association, FTC among other internationally recognized regulatory bodies that are less likely to be compromised and which can help rebuild trust and confidence with the company compliance standards. The reputation of the company has been already being negatively impacted by the scandal, and a lot of work lays in rebuilding consumers’ trust. Despite the repeated assurances of improvement such as immediate actions of recalling the products and paying penalties, the company needs to make the public aware of their willingness to implement change, which is not typically an easy process. Consumers do not have confidence in their products and hence to help rebuild trust, their products must be above board in terms of inspection and compliance standards (Johnson and Timothy 275-285).
Most of these internationally recognized verification agencies such as the FLA or FTC are known for their independency in addressing the deceptions and consumer protection. They have their procedures and policies for sustainable compliance, ethics expected in doing any business, and even offer assistance in developing ways to comply with environmental regulations. If Volkswagen joins some of these international independent standard verification agencies, it is more likely to benefit from gaining trust from its customers for its above-board products (Zhou, Angie 35). The partnership is also likely to help the company to appear in the top list of the best companies globally regarding compliance with the environmental laws and its corporate responsibility activities. This will help it win rewards and recognition, which serve as an independent verification to allow consumers to regain its confidence in the Volkswagen Company. The indices of performances for companies being evaluated by such independent bodies are re-evaluated on an annual basis and thus help the participating companies engage in fierce standard compliance competition to secure the top rank and build their brand image globally. If Volkswagen joins such agencies, then the company is more likely to benefit through redeeming its public image and rebranding.
3.0 Focus on Electric Vehicles and Other Green Technologies
The real solution to the automotive industry lays in providing green technologies that reduce the amount of heat and greenhouse gages emitted into the air. Volkswagen must refocus its energy on producing electric cars which are more efficient in generating less heat and greenhouse gases. It is apparent that a lot of research and development needs to be directed in the coming three-to-five-year strategic plan of the company in an attempt to electrify virtually all the car models the company produces. Fortunately, the company attempted to re-focus on electric vehicles since 1970. In 2013, for instance, the company embarked on electrifying almost every segment of its products. As the company has already done extensive research in the area, it has more advantages than other companies in the industry, for it does not need to start from scratch. It can improve, thus, through allocating more resources to produce more electric cars and shift the focus to its core productive advantage (Burki and Khan 838-839).
4.0 Invest in Emerging Markets
Competition in the automobile industry is high, and Volkswagen is a great brand that can do well in new markets. The company should also focus on emerging markets, and Africa is the best destination for most of the countries may have less stringent environmental regulations. It is important to note that Volkswagen has emerged as a global brand without controlling market share leadership in the United States. This indicates that expanding its markets to Africa and other emerging economies will give it an upper advantage in generating more revenue to stabilize its financial challenges posed by the recent diesel scandals. The company needs to focus on countries such as sub-Saharan Africa, and for example to revive its assembly factories in sub-Saharan Africa. There is a rising middle-class consumer segment in most of the major economies in Africa thus providing a large potential for marketing of its products in such regions. The emerging economies are the future of globalization and offer unlimited opportunities for most of the multinational companies (Pedrazzi and Giorgio 113-120).
5.0 Conclusion
In conclusion, there are several strategic plans Volkswagen could adopt to use its strengths to overcome its weaknesses to enhance the chance of its future success. Volkswagen has been faced with a recent scandal of its vehicles failing to comply with environmental regulation. The impact of this has been felt through reduced sales of its diesel vehicles under controversy and a strong focus on the company environmental policy in other major market segments. A huge task lays ahead to rebuild the trust and tarnished brand. Cooperation with globally reputable autonomous regulatory agencies, expanding investment in emerging economies, and heavy investment in green technologies can help move the company forward despite its current challenges.
6.0 Works Cited
Boulanger, Albert G., et al. "Vehicle electrification: Status and issues." Proceedings of the IEEE 99.6 (2011): 1116-1138.
Burki, Talha Khan. "Diesel cars and health: the Volkswagen emissions scandal." The Lancet Respiratory Medicine 3.11 (2015): 838-839.
Johnson, Timothy V. "Review of diesel emissions and control." International Journal of Engine Research 10.5 (2009): 275-285.
Pedrazzi, Giorgio. "Civil and Consumer Law." The Dieselgate. Springer International Publishing, 2017. 113-120.
Zhou, Angie. "Analysis of the Volkswagen Scandal Possible Solutions for Recovery." (2016).
7.0 Appendix
Leading automakers in manufacturing of electric vehicles
Boulanger, Albert ., et al. 1117.
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