Volkswagen a g Situation Analysis Final 2
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Transcript of Volkswagen a g Situation Analysis Final 2
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Volkswagen AG
Situation AnalysisEBA 605, Dr. J. ColemanSaturday, March 11, 2006Team Maxxim presents
Volkswagen AG
Project Goals & ObjectivesHighlight trends in the automobile industry
Analyze and critique Volkswagen recent decisions
Discuss where and why VW went wrong
Offer potential solutions as an objective outsider
Volkswagen AG
Volkswagen AG
Presentation OverviewCompany Overview Brand PortfolioCurrent SituationThe VW Customer Competitive AnalysisFinancialsSWOT AnalysisQuestions
Volkswagen AG
Volkswagen AG
Corporate OverviewHQ: Wolfsburg, GermanyUS Operations: Auburn Hills, MIEuropes #1 automobile manufacturerTraditional Brands: Jetta, Passat, Touareg, Phaeton, Fox and AudiInternational Brands: SEAT and SKODAAnnual production: 5M vehiclesAnnual sales: $121,345/ 10.9 YOY growthEmployees: 342,502 worldwide
Volkswagen AG
Key Milestones
Volkswagen AG
Volkswagen Group Brand Portfolioemotionfunctionalitysophistication
Volkswagen AG
Current Situation Project BasisPorsche increase stake in VWRecently hired Wolfgang Bernhard to head VW groupLaunched Moonraker projectLoosing share in China marketPulled out US luxury marketVW to cut 20,000 jobsFerdinand Piech steps down as Chairman***Triple threat: high costs inflated sticker pricequestionable quality
HIGHSLOWS*** Some may say this is a high given that he engaged VW inHigh risk, high reward strategies
Volkswagen AG
The VW CustomerPositioning Statement: For the cost conscience buyer, Volkswagen offers reliability and value.
Value Proposition:Target Market: Cost conscience buyer (parents, females, young adults)Benefits offered: German technologyRelative price: Affordable, reliable
Volkswagen AG
The VW Customer
YoungFemaleAge 19-32College-EducatedParentsAspirational valueGlobal ReachUSA, FranceSpain, UK GermanyItaly, China
Value conscience
Volkswagen AG
Volkswagen Global Marketing Mix234 Brand portfolio Volkswagen Audi Seat koda Bugatti Bentley Lamborghini Commercial vehicles1 Unique brand identity for each nameplate Complete product range Mostly standardized products with minor adaptations
Setting prices with regard to competitors Price discrimination across regions No price competition in emerging markets Strict cost controlling Glocalized communication Emphasis on the European market Brand advertising Emotionalization Development of distribution partners Separated distribution channels for each brand International standardization of dealersGlobal Marketing Mix
Volkswagen AG
VW Competitive AnalysisVolkswagen AGGolfJettaNew BeetlePassatPhaetonTouareg*Numbers based on 2004 Marke tshare
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Operating MarginNet Profits
Volkswagen AG
5 Year Sales Trend (in billions)Sales increased by 4.9% in 2004Shareholders net profitsSubstantial decrease 00 to 01
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Return on Equity Return on Assets5-year periodReduction in ROE & ROA
Volkswagen AG
SWOT ANALYSIS
STRENGTHSMarket LeadersHigh Brand EquityFocus on InnovationOPPORTUNITIESNew market to explore (India)Auto sales up 30%2010 India will have 36x more carsIncrease disposable incomeLaunch new modelsWEAKNESSSlow revenue growthLow presence in SUV marketRising admin expensesTHREATSFierce competitionIncreasing steel pricesDecline car sales in U.S.Low consumer spending in Germany
Volkswagen AG
Challenges and Risks* Costs Revenue and PerformancefuturecurrentIncreasing product costsHigh investmentsFurther price pressuresChinese operationsUS operations-luxury market$/ Exchange ratesPrice pressureWeak economy
DepreciationLegislationInvestments in future marketsRaw material pricesLabor costs
*Volkswagen AG 2005 Strategy Meeting
Volkswagen AG
Thank you!
Volkswagen AG
ReferencesCulp, Eric, VW in Fresh Trouble as it Withdraws US Model, Knight Ridder Tribune Business News, 11/05, pg 1Flint, Jerry, The Fast and the Furious, www.forbesauto.com, 01/06Fondon, Daren, A Pitch to the Rich, Times Online, 11/03Hoovers Company Information, Hoovers, Inc., 2006Landler, Mark, Volkswagen Chairman Step Down, New York Times, 01/06Landler, Mark, Porsche to Build a 20% Stake in VW, Detroit News Auto Insider/New York Times News Service, 09/05Power, Stephen, Once Hot Volkswagen Attempts to Reverse U.S. Sales Decline, Wallstreet Journal (Eastern Edition), New York, 09/05, pg A3Rancanelli, Vito J., Turn Around Ahead at Volkswagen, Barrons, 05/05, Vol. 85, Issue 20, pg 26Thomas, Chad & Archey, Sheenagh, Porsche Buys 20% in the VWs Share to Prevent Takeover, Bloomberg News, http://quote.bloomberg.com/apps/news, 09/205
Volkswagen AG
Volkswagen AG
ReferencesBrodrick, Sean. Set Your Sights On Asias Sleeping Elephant. http://www.escapeartist.com/efam/70/Invest_In_India.htmlwww.datamonitor.com
We need to have the competitive information for this chart.Volkswagen is a global manufacturer of passenger automobiles and commercialvehicles. The company is the number one car manufacturer in Europe. The group haspresence in 11 European countries and seven countries in the Americas, Asia andAfrica. The company has a 12.1% share of the worldwide new passenger car market.The company holds a leading market position through all its brands.Volkswagen is a powerful multi-brand group. It has earned the reputation of being anestablished automobile manufacturer, with several well-known brands. Thecompanys brands enjoy high brand equity globally. Some of the companys popularbrands include Passat/Santana, Golf, Beetle, Parati, Skoda, Octavia, Bentley, Rolls-Royce, Bugatti, Audi and Lamborghini. All of these hold the top positions in theirrespective market segments.Volkswagen has a strategy of extending its product range and broadening its marketcoverage through innovation. In view of the rising rate of innovation in the automotivesector, Volkswagen has been able to innovate effectively to ward off competition. Thecompanys innovations include the Caddy delivery van, the Golf GTI, Golf Plus, Golf4MOTION, Jetta, Passat B6, Polo FUN and the Fox. The company innovates boththrough new models and technology. The sporty flair of the Golf, the Audi A3 and theAudi TT is enhanced by the combination of the new dual clutch DSG (direct shiftgearbox) with the powerful 3.2 l VR6 engine. The Volkswagen Group aims to expandits product spectrum with innovations aimed at penetrating niche markets andunexploited market segments.