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?

Tangible resources

Volkswagen is the leading innovator in the industry, which means that knowledge is a big part of their resources. There are so many brands that are Volkswagen property as DSG, TDI, GTI, TSI- innovative technologies and the model lines like- Jetta, Passat, Tiguan, Phaeton, Touareg. Innovation is a key activity in the company because that is how they plan to complete their strategies.

Human capital is important for Volkswagen. Their success is based on the qualifications and personal commitment os around 400,000 people. The need of a top team is recognized as its core features are said to be high level of competence, dedication, inventiveness and fitness. Competence is created from good basic training and a life-long willingness to learn. Dedication ideally means entrepreneurial thinking and action, not only by management staff. Volkswagen needs top performance. A strategy called "flow channel" provides best performance and at the same time prevents employees to be overstretched or under stretched. Another principle the company follows is "Lead, Demand and Promote" which means leading by example. A "mood barometer" was introduced recently- gives employees the opportunity to anonymously voice their opinion and so to become actively involved in the organization of the company.

Personnel development and women advancement are other core values the company has. Volkswagen recruits personnel from the earliest  age- kids can start learning skills and begin part of the company as soon as summer job in high school. The company works with several university research laboratories were students can give ideas and work on real project that will be used by the company. Furthermore, the company has its own university in Europe, where part of the education is practical in their plants or offices. The company is aiming to be the "best employer" in the world and that is why it offers attractive employment, job security, good working climate, personal development opportunities and others. Most importantly, the company management treats everybody as individual personality and provides various social benefits as mobility throughout the company, fitness and health assistance, family improvements and planning, etc.

Volkswagen- the company of the future

Volkswagen looks forward the future and is aware of its responsibility for people, the environment and society. See how VW makes the world a better place here: 


http://www.volkswagenag.com/content/vwcorp/info_center/en/video/11/01/volkswagen_group_video.html

Internal Analysis- Value-Chain Analysis

Volkswagen produces most of the units needed for the production of an automobile. However, most of the details part of those units are produced by other companies. The company has plants in all of the continents and each plants produces only for the local market. One reason for that decision is lower expenses when details and cars are not shipped longer distances and the other is helping the local economy. The decision the other companies took is to produce different models in different plants. However, VW factories manufacture many models at the same time.Another majour product Volkswagen supplies to its customers is the original parts. The company has several  majour warehouses in different areas and every single dealer orders separately and directly to VW, which make the transportation of the parts much faster.A new factory was recently built In Chatanooga, which was not only the next VW factory but it introduced a lot of environmental friendly technology. See more details here: http://www.youtube.com/watch?v=sDLNcxrkIpQ

Volkswagen's assembly line is the longest in the automobile world because of the number of operations needed to produce a car. Most of the operations are done by robots which decreases waste, enery and time needed. However, people still work in the assembly line but they mainly do the quality checks. A different factory is the class factory in Dresden. Volkswagen produces Phaeton (unfortunately, the model is not offered in the USA) and some of the Bentley models (dont't forget that Bentley is in fact Volkswagen's brand). Most of the work there is manual. The Transparent Factory is situated in the city center of Dresden, the 800-year-old German city known for its arts and craftsmanship. It stands at the former location of the convention center. The factory's walls are made almost completely of glass. Its floors are covered entirely in Canadian maple. Its visitor-friendly layout was designed to accommodate up to 250 tourists per day. The transparent factory handles final assembly only. To keep birds from flying into the glass, an outdoor speaker system emulates bird language marking the territory as "taken."

Volkswagen ships cars mainly to the same continent using boats, trains and trucks. There are  logistics centers in several areas where cars are shipped to the single dealer. No cars are produced without being ordered by somebody, which means that cars are not stored anywhere. They are produced for the customer. Then how do we see all those cars parked in the dealers' yards? Well, Dealers order and purchase those cars so that you can see and touch your car before you buy it. However, those are not considered stocked by the Volkswagen company but by the franchiser company. 

The Volkswagen brand is recognized worldwide. Beautiful logo almost unchanged for decades. The company has a full list of brand standards that has to be followed in each advert produced or in each product offered- placement of the logo, font style, colours, architecture. The company offers various models- from the tiny Up to the luxurious Phaeton and Touareg, which suggests that the company has different price policy for all of them. The company is aiming at world leadership and to achieve that it introduced new models- Schirocco, CC, Tiguan, Up, new techonoly which makes the cars more efficient and new production technology which makes the cars cheaper without decreasing the quality of the materials and the final product. The company carefully examined which feature is most popular and slightly changed what equipment is offered with each model. For instance the biggest engines are no longer offered with the New Jetta and the smallest ones are no longer offered with the New Passat, which makes the cars cheaper to produce. Volkswagen advertises in all of the medias. It is famous for its nontraditional advertisement. You can see an example on the picture where all of the cars are dreaming they were VW GTI. 

Internal Environment- Service as primary Activity

Volkswagen Services are one of the biggest advantages the company has. You have all seen the dealerships branded in the same way all around the world. The current news is that the brand is changing and the future dealerships will like the one from the second picture. Anyway, not the style of the building makes it so spacial. Volkswagen dealerships have both showrooms and services offered as franchise opportunities.

The company is more willing to let a franchiser have only a service without showroom for new cars, but it will never let anyone sell a car without proving that they can service it. The first advantage is that everywhere in the world there is a service about every 100 miles. The company is trying to make its services accessible and always there when ones need them and at the same time protect the owners by not signing contracts with too many franchisers.

Volkswagen cars are reliable and last long. The brand offers original parts for cars much older than you can imagine. While the other brands mainly focus on the customers driving new and almost new cars, Volkswagen takes care of all of it customers no matter how old car they drive. A prove is that the Warranty does not depend on the millage in most of the countries and that some of the benefits remain even when your car is not in warranty any more- a good example is the road assistance they offer.

In order to provide the best quality for its customers, Volkswagen strictly examines each service at once a year, visits it once every several months, provides know-how, training and assistance and of course sets high level for their franchisers.

Volkswagen | BlueMotion Technologies

Analyzing the External Environment

Volkswagen operates worldwide on various markets and as we can agree, the automobile markets are different and because of that the strategies Volkswagen has should be different. For instance not all of the models are offered everywhere. However, Volkswagen does not change its products as much as the other brands do, instead they just enrich their model range and offer different models in different areas. 

For instance the Volkswagen Polo (on the picture) is the volume maker in Europe but is not even offered in the USA.

In the recent past the automobile market went through a significant change as a result of the Global Economic Crisis backed up with the Environmental problems the world is facing. So, people started to be more and more interested in more ecological and more economical cars. Hybrids, electric cars,  alternative fuel cars, they all flooded the market. Volkswagen had to change, too. But the company is known to be the market leader in innovation, which means that they started changing and the whole marked followed. 

However, what they did is not making cheaper cars with cheaper products, instead they introduced cars with completely new technology. Instead of introducing hybrids, which the media loves so much, they worked on technology called Bluemotion, thanks to which the normal petrol engine is more ecological and efficient and cheaper than the hybrid ones. You can see BlueMotion Simply explained here: http://www.youtube.com/watch?v=OUnCaJKGEn0.

And the company is...

Ok, it is about time to share who I am going to talk about in my blog. The company I chose is Volkswagen. I chose the company first, because I am a fan of the brand, second, because I believe that the management takes interesting and unique decisions for the market. The company is growing and is aiming at the world market leadership in the near future. Here is a link to Volkswgaen's international portal: www.volkswagen.com. I will start with its external environment in my next post. Keep reading, if you want to know more.

Preface

My name is Tsvetelina Pantaleeva. As part of my International Strategic Management class in Augustana College I will develop the following blog. If you follow my blog, you will find information about the strategies and some insight information for a famous international corporation. You will learn how it analyzes the current situation, how it makes decisions and formulates strategies and of course how it makes them reality. If you want to learn which is the company I will focus on, go on reading my posts.