This assignment will discuss the current crisis at Volkswagan (VW) from a strategic point of view. While using materials covered during previous lectures and relating them to how they apply to VW and how VW 's strategy can be improved by using them.
The VW scandal occurred when the Environmental Protection Agency (EPA) found that many cars were being sold in America with a "defeat device" built into the diesel engine which caused the performance to be altered so it passed the emissions test when detected (BBC, 2015). The German car manufacturer has admitted cheating emissions test however, the VW bosses were aware of the device being present for over a year before it broke out to the public (Auto Express, 2016).The scandal was initially recognised
…show more content…
An article by the BBC (2015) explains as a result of this the EPA accused VW of modifying a software on their 3 litre diesel engines that are fitted on Porsche, Audi and VW models, but VW have denied these claims. The device worked because the car could detect when it was being tested, meaning it ran the engine at below normal power and performance. However when driven on the road the engine was emitting nitrogen oxide pollutants up to 40 times over what is allowed in America (BBC, 2015). The BBC (2015) article explains VW 's response to the scandal; with the new chief executive Mr Mueller stating that "My most urgent task is to win back trust for the Volkswagen Group - by leaving no stone unturned". This quote shows how damaging the scandal has been for the company and it will take a lot of work to regain consumers trust. Auto Express (2016) supports the damage to trust as it can be seen the VW sales for January were 14 percent down compared to last …show more content…
After researching the strengths, weaknesses, opportunities and threats of VW it can be seen that there are many factors to take into account when creating a new strategy. VW 's biggest strength is their strong brand image as a result of owning twelve brands in seven European countries that are all different varieties of vehicles. Some of these brands being luxury vehicles such as; Bentley, Porsche and Lamborghini (VW, 2013). However a weakness of being a massive brand is, since the scandal it has made consumers cautious of all brands related to VW. Especially with the luxury cars mentioned not being as economical as common VW vehicles in the first place. The biggest opportunity for VW at present is to prove to consumers they can create environment friendly vehicles. By doing this and marketing the car at a reasonable price they may be able to gain their market share
International organizations such as NATO and the UN are essential not only for global peace, but also as a place where middle powers can exert their influence. It is understandable that since the inception of such organizations that many crises have been averted, resolved, or dealt with in some way thro...
The cheating Scandal at Volkswagen sparked many debates and wide spread complaints on the acts itself, and how these acts are/were handled by the justice system. Among most of these complaints, one topic that was common was that most of frauds/cheatings having major effects are getting more and more frequent and are somehow getting by with almost no major moral consequences. There were also some rather interesting take on honesty that were presentenced on some of the article.
Research has proven that there are serious concerns with E15 gasoline and its effect on motor vehicles. Unfortunately, a majority of car owners have never heard of E15 gasoline and are unaware of the damage it can cause to their vehicles. Changing the quality of gasoline available to consumers without their knowledge is irresponsible and unscrupulous. The fact that the government has chosen to ignore industry concerns pertaining to this new blend of gasoline demonstrates they are not following the accepted rules of morally right behavior and therefore they are guilty of unethical behavior.
In 2014, researchers from West Virginia found out that recent models of Volkswagen vehicles were emitting up to 40 times the allowed levels of nitrogen oxides (2). These vehicles had a special software that would determine when the vehicle was in laboratory testing conditions, and the software would then alter the vehicle 's functionality to emit the legal amount of nitrogen oxides allowed by the EPA. The software was found in around half a million vehicles in the United States. In addition to the bad publicity, the Volkswagen scandal will cost the company at least $15.3 billion dollars in compensation to the owners of the affected vehicles (3). In 2016, Volkswagen engineer James Liang pleaded guilty for being a crucial part in developing the illegal software (3). The software was created because Volkswagen was unable to meet the rigorous EPA emission standards. Therefore, a small team of engineers including James Liang decided to cheat the emission exams to allow Volkswagen vehicles to be sold in the U.S.
Audi, one of Germany’s first automobile producers, has been designing and building cars since August Horch, its founder, completed his first car in 1901. Over the years following, a series of innovations and mergers have led Audi to the position it is in today. Audi’s subsidiaries include companies to facilitate international operations, part manufacturers, a vehicle customization company, a technology research company, and Lamborghini Corp, a successful sports car manufacturer. Audi’s current developments include its holding the EU Seal of Environmental Protection, and a number of technological advancements, including new car designs and a “seeing car” technology that has been nominated for the German Future award for Technology and Innovation.
Bayerische Motoren Werke AG, shortly known as BMW, is a German manufacturer of luxurious automobiles and motorcycles. BMW group is not simply one name: it is also the parent company of other premium brands such as the MINI, the Rolls-Royce and the motorcycling company Husqvarna. For the purpose of providing a maximum of details, this essay will just focus on the automobile part of BMW as it is more significant than the motorcycle segment and since they have a lot of overlapping factors.
It is not deeply rooted in the south, and even industry experts there really don’t know much about FAW-VW” (Joey Wang, 2012). From this we can see that the FAW-VW has not yet managed to expand effectively in southern China. As indicated in the primary activities analysis above, in order to save transportation costs, suppliers are mostly located in Changchun and Shenyang (two big northern factory cities), which has led to a lack of management in the southern cities. In other words, the company has lost a high percentage of market share in southern China, so expanding its market in some southern cities would be a great strategy for the company. When more people realize the value of the FAW-VW brand, the company can expand more, not only in China but throughout the world.
Another strategy used by BMW to differentiate itself from other automakers in the market is the proactive usage of technology and innovativeness in the development of products. From the early 1990’s, BMW has been on the forefront of incorporating technology in its designs in line with the technological advances of the modern world. This has led to the creation of inventive products. The uniqueness of these auto products put BMW in a position of advantage. The development of the hydrogen car as early as 2000 was an indicator of the company’s innovative strategy. In addition, the company also presents itself as environment friendly creating a whole range of vehicles in this category. This is a differentiation strategy meant to boost the company’s image and reputation amongst customers. In addition, this gives the environment conscious customers a variety of products to choose from giving BMW an upper hand in the industry.
As a result of the increased demand of cars, the competition among car companies is becoming intense. Although the market of car is the biggest growing market in the world, there are still some companies who make cars failing year after year. However, there are some outstanding car companies such as The BMW Group performing distinctly.
BMW having high market share in European and U.S luxury car markets, started facing issues with launch product qualities and also facing a fierce competition from Japanese producers. Currently the market share was still stable but the rigorous growth of Japanese producers would affect BMW in future. These Japanese competitors had set higher standards of conformance.
Porsche came out with the models of 914 and 944 because they take the consumers with lower income into account during the recession of 1970s. They redesign, reposition and reprice the vehicles so that it is allow the consumers to purchase the product for the purpose of social class, family needs or status. With this, Porsche still able to create loyal customers even if the economic situation did affected their business when they have considered their customers’ personal income, savings and interest
Perhaps the CAR could be initially launched in a small selected test market, stressing the dialogue with the customers about the value of the product and service. Afterwards, target pricing in pace with to the company’s strategic objective of a deft market penetration can beacon engineers to rebalance the technological features of the CAR. This also accommodates better for investors’ expectations of a fixed return. Moreover, it allows AUDI’s management to concert its pricing strategy and counteract unforeseen changes in the all too sensitive demand, as the link between customer value perception and product’s cost becomes alive. After all, relying solely on a forecast is not advised, as it cannot possibly capture all the dynamics of a fairly unknown market for a project which needs to age in the years to come.
Automobiles and its related manufacturing contribute to the degradation of the environment causing great concerns from consumers, governments, policy makers and environmentalists, regarding the economy and global warming. This resulted in market changes, due to new environmental laws, legislations, standards, product requirements and consumer wants. The gasoline engine produces emissions that are deadly for the environment, hence the big race by the automobile producers to develop an efficient alternative fuel/energy for powering its vehicles. Deloite (2014) ‘In 2012, new Corporate Average Fuel Economy (CAFE) standards were released in the U.S. that requires automakers to raise the average fuel efficiency of new cars and trucks to 54.5 MPG by 2025.’ (“Global Automotive Consumer Study”, 2014, p.4) The industry is engaged in research and development to develop more efficient internal combustion engines, electric vehicles (EVs), plug-in hybrids, and vehicles powered by natural gas. The government offers incentives in the form of rebates for the purchase and sale of energy efficient
The global company Mercedes-Benz is considered one of the most successful and well-known automotive companies worldwide. Since 1886, the company’s founders Gottlieb Daimler and Carl Benz made history with the invention of the automobile, including the Daimler Group, which is one the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles globally (Daimler, 2013). Their main focus is innovation, safety, technology, style, brand image, expansion, and superior automobiles by offering the best of the best to consumers worldwide. The brand’s philosophy is to continuously create radically new products to advance the cause of human mobility. It is also the number one luxury brand in the United States and Germany while continuously expanding in China and Russia as well (Interbrand, 2013). Mercedes-Benz has a great selection on divisions such as cars, trucks, vans, buses, and financial services offered to any consumer or business. Their global reach has increased tremendously by including production facilities in 17 countries on five continents and having 93 locations worldwide. As a pioneer of automotive engineering, their strategy is to continue the same pioneer role with the ongoing development of mobility, especially in the areas of safety and sustainability (Daimler, 2013). It is very essential for the company to focus on consumers’ needs and their highly well known brand in a competitive global economy. That is why the company Mercedes-Benz releases a brand new model every year to stay on top of its competitors by improving previous models. Some strategies practiced are global marketing, global product development, global product pricing, global advertising, global distribution, an...
Market Segmentation, Positioning and targeting for BMW 1.1 Introduction This report aims to examine the market segmentation, positioning and targeting of BMW (automobile company). BMW will be examined giving information about the company and where it is now and any recommendations that we feel are appropriate. 1.2 BMW Company Profile BMW was formed in 1917, from the merger of two small aero engine makers. Their famous blue and white symbol stems from the colours of the Bavarian Luftwaffe and is said to resemble the view of the one of their plane through a propeller. BMW is renowned for its sporty, sophisticated & luxury image which has been built up since the 1970's with many motor sport victories ranging from Touring Car to Formula 1.