Global Operations and Logistics
Volkswagen group is one of the renowned brands which is specializing in producing cars that are widely known as the people’s car. Interestingly, the Volkswagen group was established with the intent of providing low prices cars and now become one of the renowned brand with almost every class of cars presented in their line of assembly which ranges from low priced cars as well as high prices and luxurious cars and its headquarter is also located in Germany. The Volkswagen group was founded in Germany in the year 1937 with the intention to produce low price cars for the people of Germany and with the span of time the Volkswagen group has now started its production and delivery in almost every regions of the world due to the wider acceptability of cars all around the world(Larry Li, 2018). Moreover, due to the World War 2 the Volkswagen Company was completely destroyed due to its involvement in producing and providing military vehicles and equipment to the military of Germany but later on after the World War 2 was over the company was again established and organized in the year 1949 and started to produce low cost cars.
In 1950, the Volkswagen Company has rapidly increased its operation in disparate parts of the world and started exporting care in different regions of the world. Interestingly, the production of Volkswagen cars were widely accepted and admired around the world and the company also introduced van apart from cars in order to fulfill the needs and requirements of the peoples. Furthermore, the reason of introducing a van was due to the fact that the small sized cars provided by the Volkswagen Group unable the company to increase their sales and therefore the company provided the sluggish sale which was enhanced by the introduction of van by the Volkswagen Company(Julia Koplin, 2007). Hence, with the number of years the company has established its reputation by introducing several brands which are widely accepted and are well known all around the world which includes Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche etc. Moreover, under this research study the analysis of the company will be conducted in detail with a focus on the supply chain management activities which are carried out by the company in order to manage their operational activities efficiently and effectively.
SWOT Analysis of the Volkswagen Group
The SWOT analysis of the company enable to determine the strengths, weaknesses, opportunities and threats of the company which is the core information of the company through which suggestions, solutions and problem solving activities is performed by the company to remain competitive and build its brand reputation within the industry in which the company is prevailing. Hence, the SWOT analysis of the company is analyzed in detail below.
Along with number of strengths possessed by the Volkswagen Company, one of the main strength of Volkswagen Group is the numerous brands which are possessed by the company which includes Bugatti, Porsche, Lamborghini and Bentley (Julia Koplin, 2007). The portfolio of brands possessed by the company has overtaken the huge market share due to the features and other specification provided by the company under the portfolio of the brand names. Hence, the possession of the brand name by the company enable the company to enjoy the upper hand and success among the several automotive companies prevailing within the industry. Interestingly, one the major strengths of the company is the strategy of stay together 2025 which is focused on shaping the mobility for the coming generations by focusing on electric cars and cars with more environmental protection measures(Stowell, 2013). Interestingly, the aim of this strategy adopted by the company is to focus on environmental protection and producing advanced technology cars for the future generation to enhance and improve the experience of the customers by offering specification according to their desires.
Contrastingly, in comparison with other automobile industry, the Volkswagen Company has adopted a strategy of adopting several diversified brands which are disparate form each other in terms of specification and features provided by the cars under each of the brands possessed by the Volkswagen Company(Prerna Gautam, 2019). This diversification strategy enable the company to become prominent within the industry and capture the larger share of the automobile industry through its unparalleled diversification strategy. Furthermore, the company has also mark its footprints internationally and provided tough ground to other companies in the automotive industry by obtaining partnerships and joint ventures with the Chinese automakers which enable the company to further compete with the other automotive companies by offering lower pricing on the vehicles provided by the company.
One of the weakness of the company is the scandal of the diesel engine cars of the Volkswagen which were not designed in accordance with the environmental protection and affecting the environmental condition which was determined by the environmental protection researchers. The negative publicity of the company regarding the environmental protection was one of the major concern for the company because the scandal resulted in hampering the brand reputation of the company which the company build by investing number of years in providing superior services to its customers(Jiangtao Hong, 2018). Moreover, the other weakness of the company is the highest recall rates in the United States of America i.e. the delivered vehicles consists of faults such as less environmental friendly engines led the company to recall the vehicles which were sold to the customers in order to fix the problems possessed by the vehicles so that the vehicles can be returned to the customers after fixing the problem. Hence, the recall rate which hampered the reputation of the company is one of the major weakness which reduced the customer’s reliability of the Volkswagen brand.
The other Volkswagen Company weakness is the low market share of the company in the US market which is hampering the potential of sales of the company in one of the largest market of vehicles i.e. the market of United States of America. The low market share in the US is due to the highest call rate in the US and the adoption of less environmental friendly production of vehicles was the major reason which is affecting the company in obtaining and acquiring the larger market share in the United States of America(Larry Li, 2018). Hence, the major weakness of the company is the little expertise and competence in the production of battery driven vehicles which can hamper the future sales of the company because now other automotive industry are focusing on adopting and most companies have adopted the expertise and competence in manufacturing battery driven or electric cars. Hence, the drawback of the company in adopting expertise and competence in the batter driven vehicle is one of the major weakness.
The opportunities which are presented in front of the company is establishing its ability in the manufacturing of battery driven and electric care because the price of the fuels are expected to rise in the near future(Julia Koplin, 2007). Moreover, if the company initiated to develop its expertise and competence in the manufacturing battery driven and electric care then the company can avail the opportunity of increase its sales or revenues of the company through capturing the market of battery driven and electric cars.
The demand of autonomous vehicles is also one of the major opportunity in front of the company which the company can avail through the manufacturing of autonomous vehicles which are in high demands by the customers. The autonomous vehicles provides the ease, comfort and luxurious experience to the buyer of the vehicle which increased he demand for the autonomous vehicles(Stowell, 2013). Moreover, the company brand reputation has deteriorated due to the scandals regarding the environmental friendly vehicles produced by the company which can be rebuilt by the company if the company initiated its focus on production of autonomous cars. Hence, the brand reputation of the company can be maintained and developed by focusing on battery driven, electric and autonomous car.
The threats which are presented to the Volkswagen Company is the fierce competition which is faced by the company from the number of competitors prevailing in the automotive industry. The threats or the competitors of the Volkswagen are Toyota, General Motors, Ford, Renault, BMW, Chevrolet etc.These competitors can provide the competition to the Volkswagen Company in terms of adopting technological advancement which can provide competition to the company in the sale of battery driven and electric vehicles(Julia Koplin, 2007). Moreover, the increasing governmental regulation regarding the automotive industry is also one of the concern or threat for the company which will restrict the company in the production of vehicle without adopting the technological advancement. Furthermore, the government regulations regarding the production of environmental friendly vehicles is also one of the threat for the Volkswagen group because the company was struggling in the production of environmental friendly vehicles.
The Global Supply Chain Network of Volkswagen
The Global supply chain network of the Volkswagen groups consists of suppliers all around the world due to its disparate production site located in numerous parts of the world. The suppliers play an important role in providing the required material which is managed efficiently by the company in order to manage the operational and production activities smoothly and efficiently. There are different suppliers for each part of the car which is used by the Volkswagen Group in the manufacturing of vehicles(Prerna Gautam, 2019). One of the suppliers of paint used on the car by the Volkswagen is the BASF coatings which provides plants as well as the materials painting the cars to Volkswagen group and assist the company in managing their operations efficiently and effectively. Furthermore, the DHL supply chain plays a crucial role in managing the Volkswagen plant’s logistics activities which is pivotal for managing the production and operational activities smoothly and efficiently. The logistics work performed by the DHL supply chain includes management of inbound receiving, storing, picking and sequencing activities that enable the production lines of the Volkswagen group to operate and assemble the parts without any disruption(Massimo Merlino, 2017). Hence, the parts which are managed by the DHL supply chain includes windscreens, gearboxes and engines for the Porsche, Audi etc.
The technology which is required by the Volkswagen Group for the production of vehicles required the services of IBM which enhance the ability of the company significantly in producing the vehicles efficiently and transmitting a valuable technology in the vehicles which enhances the experience of the customers. Hence, the company is focusing on shifting the implementation of the technology in its major plant which is located at Germany. Interestingly, the company is also focusing on the implementation of the modular platforms which will enable the company to install disparate modules on the receiving and purchasing goods sites which will further enhance the production activities through vertical integration (Burki, 2015). Moreover, the company possesses the higher vertical integration in comparison with its peers companies which can be further enhanced in the modular platforms are applied by the company.
To enhance and boost the production efficiency and rely less on materials and goods which are supplied by the suppliers, the Volkswagen group has initiated to produce the goods of the vehicles through in-house production system which enables the company to produce its own interior and exterior goods according to their own customization and desire required for the completion of the vehicles. This is one of the significant steps taken by the company in order to boost its vertical integration and enhancing the operational activities in in-house operations of the company. Hence, the global network of supply chain adopted by the company through the implementation of in-house operations, vertical integrations, logistic and procurement activities, and implementation of technology like modular platforms distinguish the Volkswagen Group from its other competitors(Jiangtao Hong, 2018). Moreover, all the process of obtaining the materials and different parts for the production of vehicles and finally delivering it on the selling point is the focal part of the company which determines that how the supply chain activities adopted by the company is assisting the company in managing its operational and production activities smoothly and efficiently.
Rationale for Facility Location
Facility location is one of the important factor in the development of the efficient supply chain management because locations assist the company in managing the procurement and logistic works on time and efficiently which enable the company to compete its competitors through advancement in supply chain activities. Furthermore, the rationale behind the facility location is manage the supply chain management activities which includes sustainability of operations performed by the company, maintaining the value of procurement and logistic operations, protection of brands of portfolio through maintaining the receiving and purchasing activities regarding materials and other accessories and optimizing the cost of operational activities with respect to logistics and procurement(Larry Li, 2018).
One of the rationale behind the facility location is the protection of disparate brands which are maintained by the company and assist the company in maintaining the brand reputation by providing ease and comfort to the customers through disparate specification and features applied on the brands by the company(Jiangtao Hong, 2018). Moreover, the portfolio of brands which are managed by the company are located at different facility locations due to the fact that the parts and accessories for disparate brands are obtained from suppliers which are located in different regions of the world. Therefore, facility location plays an important role in managing and protecting the brand.
Maintaining the value of brands and the vehicles produced by the company is also one of the factors which are considered by the company in terms of facility location. Evidently, value is an important factor of the Volkswagen Group in building the brand reputation which is maintained by selecting a top quality suppliers or building a vertical integration through production of accessories and other materials required for the production of vehicles(Stowell, 2013). Hence, it can be identified through the maintenance and production of quality brands that facility location is an important factor for maintaining the value of the brands.
Optimizing the cost and managing the sustainable location is also one of the important factor which is considered by the company in term of facility provided to the company through locations selected from plant and equipment for production purposes. Company focuses to minimize the cost by locating the plant at those locations where labor cost and other costs are lower so that high profit margins for the company can be achieved. Furthermore, quality work is also considered while selecting the location in order to provide sustainable management of work.
Competitiveness Achieved by the Volkswagen
Volkswagen faced tough competition from its competitors in the automotive industry. Interestingly, Volkswagen has managed to compete with its competitors which includes BMW, Mercedes, Toyota, Hyundai etc. Moreover, the German Auto Giant, Volkswagen has adopted number of disparate and significant strategies in order to cope up with the fierce completion provided by the competitors. One of the strategy adopted and implemented by the Volkswagen Group under the supervision of CEO Matthias Muller is that the Volkswagen Group initiated a strategy to target the market of China by specifically designing the vehicles for Chinese driver(Massimo Merlino, 2017). Furthermore, China is one of the largest market for vehicle automakers and fierce competition is presented in the market of China. Interestingly, the strategy of targeting the fiercely competitive market by the Volkswagen group is to learn the competitive strategies through building partnerships with Chinese automakers. Moreover, entering the fiercely competitive market is also one of the strategy to indicate other competitors that Volkswagen Group is ready to compete with the auto giants in competitive market even after the company reputation has deteriorated after scandals of environmental friendly cars.
One of the main factor in entering the largest market of automotive vehicles i.e. China is the fact that Volkswagen thrive to achieve the supply chain management efficiency and optimizing cost efficiency by building partnerships with the Chinese automakers who can provide the production services and facilities to the Volkswagen Group at low price in comparison with the other automakers prevailing all around the world(Larry Li, 2018). Furthermore, the efficiency in supply chain management activities and modular platforms which are placed in different production locations along with the partnerships of the company with disparate automakers is one of the crucial steps undertaken by the company in order to maintain the achieved competitiveness earned by the company since its inception.
Recommendations for the Volkswagen Group
The brands owned by the Volkswagen Group are renowned and widely accepted around the world. Furthermore, company has also adopted number of significant strategies to remain competitive in the automobile industry. Fundamentally, it is recommended to the Volkswagen Group that the strategy, expertise and competence regarding the production of battery driven vehicles and electric car vehicles can enable the company to compete with the other automotive manufacturers who possess expertise and competence in the manufacturing activity of battery driven and electric cars(Julia Koplin, 2007). Apart from obtaining the competency in the production of battery driven and electric vehicles, the main focus which the company should adopt in order to remain competitive is to enhance and boost the supply chain management activities including logistics and procurement which will assist the company to remain competitive within the industry.
The implementation of modular platforms must be implemented by the Volkswagen Group in almost all the production and storage facilities which are located all around the world. Moreover, the competitiveness which is obtained by the Volkswagen Group through the implementation of efficient supply chain management activities which will enable the company to supply and manage the manufacturing and production line of vehicle assembly in order to boost the production and supply the vehicles to the point of sales which are the showrooms and other authorized dealers of the Volkswagen Group(Stowell, 2013). Moreover, the adoption of technological advancement in all the facility location of the Volkswagen Group which will enable the company to maintain its competition with the competitors.
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