Innovation and fostering corporate entrepreneurship

Volkswagen is a highly innovative company. Innovation is one of the competitive advantages they have against their competitors. Normally they are the company to introduce a new feature in the industry and make it a must for the other brands such like- sliding doors, used not only in the automobile industry, cruise control, DSG- manual gearbox with automatic management, which changed the gear world forever, park assistant and so many more.

The company owns several research laboratories. Thy also work in cooperation with several good universities to exchange ideas, bring new people into their world and use fresh ideas. New technology is mainly developed for the motorsport world first. Their motorsport department is one of the best in the world even though it is not as famous as Ferrari or Mitsubishi. This is the department to create and experiment with new ideas and test them in the toughest environment. 

The fact that other brands gave up and just decided to use Volkswagen technology is indicative that the company has a lot to offer in the technology world. Volkswagen is not only looking for innovations in the technology used, they are also in search for managerial and service innovation. New specialized software for the company branches is released regularly. Even though, innovation is the job is specific teams and departments, that does not make the company less innovative than Google or 3M for instance. Innovations in the environmental issues such as long life services and bluemotion technology is something that distinguish the company from the rest. The fact that they did not follow the world craze about electric cars and hybrids, which are in fact not that ecological, they decided to follow their own part and make their automobiles really ecological and economical at the same time and became tho first brand to offer an engine that consumes just 1l/100 km, which should be like 240 miles for a gallon of petrol. If that is not innovation, nothing else is.

Creating learning a organization

Volkswagen is a learning company. They have a spacial learning department. Every employee is required to go trough certain training and even get certified for certain positions. Knowledge is spread through those trainings, internal trainings, magazine is being published every month on different topic, intranet is available for every employee with online educational sessions. There are lots of videos and literature for everybody to educate themselves. Additionally, the software built for the employees to work with like ETKA and ELSA consist of lots of information about the product. How to build or repair that step by step. Additionally, the technology is shared among all of the brands part of Volkswagen. 

Organizational design

Volkswagen. We have already talked about all of the Volkswagen brands in the post about diversification. The organizational structure is divisional- all of the brands are independent. However, strategic groups are formed and knowledge is spread through the company. Research centers are working for all of the brands and innovational technology is incorporated in all of them. The interesting and unique thing about the organizational structure is that not only the divisions are independent but even structures inside them have relatively high independence- production plants and importance and other structures can decide for themselves and in some cases they have to negotiate deals as if they are separate companies. The independence is a positive characteristic as each department can aim at the best goals possible. However, there are supervisors who manage and coordinate the work in all of the departments and make sure they are not working against each other.

Creating Value in Global Markets

Volkswagen works on all markets around the world. However, the products and brands it offers are not the same everywhere. For instance Skoda and Seat are not offered in the USA. Reaons for the product difference is customers' expectations, geographic and political differences. Small cars like Up! and Polo are not offered in the USA because customers expect and want bigger size cars like the Jetta, which is a best seller. The equipment offered in the EU is different from the one offered in the USA because of the ecological norms all of the cars in the EU should fulfill. 

Volkswagen uses different strategies to make the products cycles longer. The Clasico offered in Mexico is model which is no longer offered in Europe. However, it is only simillar but not exactly the same. Along with it, the new models are also offered. Another strategy used is a transfer to another brands. The product are not the same but they use the same technology, production line, logistics and strategies. After a car is no longer offered in Volkswagen, it is offered as a new Seat model. I want to point out that the car is not exactly the same, but enought ideas and elements are used in order to make the production cheaper. 

Creating value through diversification- Volkswagen group

Volkswagen is part of Volkswagen Group. There are nine automobile brands in the group: Volkswagen, Volkswagen Commercial Vehicles, Audie, Seat, Skoda, Bentley, Bugatti, Lamborgini and Skania. All of the companies are automobile manufacturers but they have different strategies. Some like Volkswagen use differentiation and others like Bentley and Bugatti use focus strategy and even some like Skoda might be considered as a cost leader companies. In this way Volkswagen diversifies its products horizontally and is able to offer products for different markets and different customers, which increases the income, the company's strength and increases risk. 

However, Volkswagen does not stop with its diversification here. The company is also famous for its vertical diversification. Volkswagen recently bought 90,1% of Italdesign so that the company can add one of the best design studios and enrich its already good design department.

You might be surprised but there is Volkswagen Bank. A company like Volkswagen saw that it would benefit a lot from having a financial institution within the company, which would fund customers of the company to buy new cars from the brand. I would also fund Volkswagen franchisees. 

Even more impressive to some of you there is Skoda University. The university is a proper university, not just a training center and students receive degrees there and have the chance to receive experience in the company during their education. 

Another diversification is Volkswagen Motorsport. The company develops racing cars, organizes racing events, trains drivers, it is one of the main innovation development places for Volkswagen and one of the best promotions for them as well. 

Autostadt

I have already talked about Autostadt in my previous blogs. I want to include it in this one, too because it as an interesting example for diversification. Who could think that an automobile company could benefit from a facility, which resembles Disneyland. It is a center with a museums, shopping malls, hotels, concert halls, impressive parkings as you can see on the picture on the left, test drive facilities and even a factory. The idea is that people's love to the brand would bring them to that place so that would have the great the chance to get a closer look into all of the Volkswagen Group brands, enjoy performances sponsored and organized by the company and even receive their new car they have previously ordered. The facility is a great motivational center, too. After any of the employees or customers have been there at least one, they get attached and considerably involved in the VW world.

Volkswagen Group has a strategic partnership with Porche. Both companies own significant stock share of each other and they both benefit from that. Porsche has the rights to represent Volkswagen in some countries and be the coordinator for its franchise. 

And again Porsche has its awn bank for its services.

Creating and sustaining competitive advantage

Volkswagen uses Differentiation in order to be the market leader. The company's products are unique- most of the technologies are invented and used only by VW. Non-price attributes are used for which customers are willing to pay premium. The products and cervices are not cheap and are known to be used by people who want good and reliable product they can successfully use for their job or personal life. If you have work to do, go and buy Volkswagen. Now.

When it comes to product life cycle, Volkswagen is the best. The company releases new models every 4-5 years. They don't change the model brand but they introduce innovations in technology and design. The strategy is good because people change their cars in almost the same period, which means that the company provides them the new model to buy when they decide to change. At the same time it is a good financial strategy, as it is unacceptable to sell a new car and already used cheaper car with big price difference.  On the other hand introducing improvements works for differentiation, too, as that shows that the company cares about their customers and works hard to be the most innovative company.

Favourite commercials

I just want to share with you my favourite Volkswagen commercials which always inspire me and remind me why I love the brand. Here they are. Which one is your favourite?