Business Plan of Audi Essay Example

sales of Audi vehicles by region. (Audi AG, 2011) C. Business Description Audi is a 99. 55% owned subsidiary of Volkswagen AG, Wolfsburg, Germany. The company operates through production locations in Germany, China, Italy, Hungary and Belgium and owns the six major brands: Audi, Lamborghini, Volkswagen, SEAT, Skoda and Bentley. The company? s cars are produced and sold globally through a network of subsidiaries and collaborations. The table below indicates which car models are produced and sold by Audi and its subsidiaries. Datamonitor, 2010) Company/location| Car Models/activities| Audi Ingolstadt (Germany)| Production of A3, A3 Sportback, A4 car line, A5 Sportback, A5 Coupe, Audi Q5, A3 Cabriolet (body), TT series| Audi Neckarsulm (Germany)| Production of A4 Sedan, A5 Cabriolet, A6 car line, A8 luxury, S5 Cabriolet, S6 Sedan, S6 Avant, S8 and A8 W12. | Quattro - wholly owned subsidiary of Audi (Neckarsulm , Germany)| Production of RS 6 Sedan, RS 6 Avant, Audi Q7 V12 TDI quattro, and Audi R8 mid-engine sports car| Audi Brussels (Belgium)| Production of Audi A3, VW Polo|

Audi Hungaria Motor company | Developing and building engines for Audi, as well as other Volkswagen Group companies and for third-party companies in Gyor (Hungary)| Automobili Lamborghini (Sant’Agata Bolognese, Northern Italy)| Building of Lamborghini Gallardo and Lamborghini Murcielago| sales subsidiaries Volkswagen Group Italia, Audi Volkswagen Korea (Seoul, South Korea) and Audi Volkswagen Middle East FZE (Dubai, United Arab Emirates)| Sales of the Bentley, SEAT, Skoda, VW Passenger Car and VW Commercial Vehicle brands| D. Corporate Strategy Audi? priority strategic corporate goal is a qualitative and profitable growth (Strategy 2020). Audi is trying to achieve this goal through effective and efficient structures and processes, an

ongoing optimization of costs and systematic investment management. The company? s aim is also to cover investment from self-generated cash flow because they favor a high level of self-financing to preserve the Audi Group’s ability to invest and act. In addition, Audi prefers to have an attractive product range and to keep adding new models as part of their long-term model initiative.

Audi believes that a “strong brand is the basis for lasting success” and that an attractive product range helps to improve its image position. As a matter of fact, Audi tries to delight its customers with a “stunning new product portfolio”. In the year of 2010, for instance, the new Audi A8, A1 and A7 Sportback models were launched, as well as the ultra-sporty models S5 Sportback, RS 5 Coupe and Audi TT. The company set itself the goal to reach 42 new models by 2015 to continue growing their model range. Investor Relations, 2011) In FY 2010, Audi sold 1,092,411 vehicles but the company has the goal to increase their sales to 1. 5 million vehicles by 2015. To realize its growth plan, Audi plans on pursuing a more dominant role in the international auto market, e. g. with expanding its production network and increasing the number of dealer and service outlets. Another strategic importance is to improve its image as an attractive employer because well-qualified and dedicated employees are essential assets to become the number one premium brand.

Audi has already been offering attractive working conditions, commensurate pay and high job security. External surveys have confirmed that the Audi Group has a high appeal for employees and regular internal surveys have shown that

Audi? s workforce have a high level of employee satisfaction. (Investor Relations, 2011) E. Company History Audi is one of the oldest manufacturers in Germany. The Audi badge, also called “Four Rings” symbolizes the 1932 merger of the four independent motor-vehicle manufacturers, Audi, Dampf-Kraft Wagen (DKW), Horch and Wanderer.

After the merger, the Auto Union was formed, which joined with the NSU brand to establish the NSU Auto Union in 1969. The latter was renamed as Audi in 1985. The company also moved its headquarters from Neckarsulm to Ingolstadt. In 1998, Audi Hungaria Motor was established and the Automobili Lamborghini Holding was founded after Audi had acquired the share capital of the sports car manufacturer. “The portfolio of companies consolidated under the umbrella of the Audi Group was enlarged in the 2003 to include Audi Synko, Audi Vertriebsbetreuungsgesellschaft and Audi Zentrum in Germany. (Datamonitor, 2010) In 2003, the company also added Audi Japan and FAW-Volkswagen Automotive, as well as Audi Australia to its subsidiaries list. Three years later, Audi won the best of European Business Award for bing one of the nine most competitive companies in Europe and it received 'the Best Car Company of the Year 2006' by the British car magazine Autocar. In 2007, Audi opened a new production plant in Brussels and in 2008, the company “started local assembly of the new Audi A4 at its plant in Aurangabad, India”.

In 2008, Audi also opened its first dealership in Ho Chi Minh City, Vietnam. In the same year, Audi introduced many innovative technologies, such as the A1 Sportback, a concept for a five-door four-seater for the sub-compact class and a weight-saving technology 'ASF (Audi

Space Frame)' to improve the performance and efficiency of Audi model (TT, TT Roadster, R8 and A8). Due to the company? s successful innovations, it received the inaugural Award for Mechatronic Innovation for Audi’s dynamic steering from the Association of German Engineers (VDI) presented. Datamonitor, 2010) In the year of 2009, Audi opened a new assembly hall with its Chinese joint-venture partner FAW in Changchun, China. “In May 2010, Audi introduced a new mobile portal that can be reached by users via any Internet-capable cell phone on http://m. audi. de. ” One month later, the Audi Q5 and Audi A4 models were introduced in the 2010 TOP SAFETY PICK rating by the Insurance Institute for Highway Safety in the US. (Datamonitor, 2010). II. Mission Statement Audi? s mission statement is “We delight customers worldwide” The compay? goal is to become the number one car seller in the premium segment. To delight its customers, Audi offers emotional and technologically advanced products, which have a high reputation for their sophistication and reliability. Furthermore, the Audi brand strives to give its customers the best brand experience available and to let their customers feel and see the brand values “sophisticated,” “progressive” and “sporty” at every point of contact with the brand. Indeed, Audi wants to establish an emotional bond between its customers and the brand (resonance level of the brand value pyramid).

The public’s enthusiasm for the Audi brand and its products was again reflected in numerous national and international awards in the 2010 fiscal year. The product and investment decisions also focus on delivering customer benefit and employees are made responsible for the successful implementation of the decisions. (Investor

Relations, 2011) III. Porters 5 Forces A. Threat of new entrance There is a low level of threat of new entrance within the automobile industry, due to multiple factors. Access to distribution channels, financial factors obtaining a high level of capital to support research and development, innovation, manufacturing etc.

In order to produce a safe, reliable and competitive automobile, mass-production of cars enables the firm to achieve economies of scale. B. Bargaining Power of Suppliers The suppliers does have an amount of power within this industry, due to the shortage of raw materials suppliers can charge what they want for products having an amount of power over the manufacturer. But on the other hand there is still a significant amount of suppliers within this field, and because Audi buys in huge quantity if not happy with suppliers price they still have the opportunity to switch supplier if necessary. C. Bargaining Power of Buyer

The bargaining power of the buyers is moderately high. The buyer play a significant role in generating revenue Audi needs to keep buyer happy to avoid losing them to competitors. Audi has two types of buyer the professional buyers and the individual buyers. Manufactures would have to know what to offer the different types of consumers, for example for lower priced cars consumers have little if no bargaining power. As for those who are wealthy complimentary s can be provide with their purchases. D. Intensity of Rivalry among Competitors The level of rivalry within the automobile industry is high; Audi’s major ompetitors are BMW, Mercedes-Benz, Jaguar etc. Each competitor manufactures cars, trucks and SUV’s but are consistently compared by quality, durability, price, technology, model

appearance etc. These are factors consumers take into account before making a purchase. Advertisement/ marketing also build up a portfolio of the company for the consumers. E. Threat of Subsidiaries Subsidiaries are dependent on geographic location of consumers, in some cities and countries it is not necessary to own an automobile and consumers prefer to walk, take bus or train, ride a bike etc.

However in most places it is common for individuals to have possession of an automobile. IV. Market overview In the past fiscal year the Audi Group displayed its international competitiveness impressively and achieved historic peak figures for production, deliveries and in all key financial performance indicators. Key performance indicators: Factor| Measurement| 2009| 2010| Change in %| Revenue| EUR million| 29,840| 35,441| 18. 8| Operating profit| EUR million| 1,604| 3,340| 108. 2| Operating return on sales| Percent| 5. 4| 9. 4| 4. 0| Profit before tax| EUR million| 1,928| 3,634| 88. 5|

Profit after tax| EUR million| 1,347| 2,630| 95. 2| Employees| Average| 58,011| 59,513| 2. 6| Revenue – The Audi Group increased its revenue in 2010 by 18. 8% to a new record level of EUR 35. 4 billion. The most decisive factor in this was the increase of worldwide demand for the Audi brand’s attractive and efficient cars. Operating profit – The Audi Group more than doubled its operating profit in 2010 to over EUR 3. 3 billion. The Company achieved the highest profit from operating activities in its history and made further convincing advances in its quest for sustainable and profitable growth.

Operating return on sales at 9. 4% represents a new peak for the Audi Group. This once again places the

Ingolstadt-based premium car manufacturer among the world’s most profitable carmakers. Employees – The Audi Group employed an average of 59,513 people worldwide in 2010 – more than ever before. Another 1,200 specialists will be hired in 2011, primarily for the areas of electronic mobility and lightweight design. They will be recruited in order to support the will of increasing the car production according to their worldwide development strategy.

As premium carmaker, the success of Audi is based on the highest quality, down to the smallest detail. Product developments as well as customer service closely follow customer demand, making Audi a trendsetter among automotive companies. The strong market orientation, close cooperation between marketing, sales and research and development, and the densely woven sales and service network lead to high customer satisfaction and loyalty. This has made the brand one of the world’s most successful makers of premium cars today.

Michael Renz, Head of Marketing at Audi, knows that market orientation is crucial to the success of a company: “Only a company that understands its customers can achieve lasting success with its brand and products,” Renz said. Along with the methods of classic market research such as extensive surveys, in-depth interviews and so-called product clinics, Audi relies on complex analyses of behavior and buying too. The brand studies the current demands and needs of relevant groups of customers as well as future trends that will change the lifestyles of target groups worldwide and thus what they expect from their cars.

Deliveries and distribution: The Audi Group achieved the strongest sales figures in its history in 2010 – the worldwide deliveries to customers boosted by 12. 9% to 1,293,453 vehicles. The

core brand Audi grew faster than the worldwide auto market overall – it increased by 15% to take its tally to 1,092,411 cars, comfortably beating the previous deliveries record of just over one million premium vehicles established in 2008. Sales leaders of the Audi Group: Car model| 2010| 2009| Audi A4 Sedan| 180,125| 164,854| Audi A6 Sedan| 159,213| 149,079| Audi A3 Sportback| 154,574| 150,684| Audi A4 Avant| 110,297| 118,642|

Audi A5 Sportback| 51,844| 10,021| Market growth: The basis for continuous growth is the Audi brand’s attractive product range, to which numerous new models were again added in the 2010 year as part of the long-term initiative. The model range of the Audi brand will continue to grow – it is set to reach 42 models by 2015. The company intends to achieve a delivery volume of 1. 5 million vehicles of the Audi brand by 2015. The Audi Group will continue to place focus on quality alongside continuity of growth. In order to realize its growth plans, the Company furthermore stepping up its activities in international auto markets.

The Audi Group is thus steadily expanding its production network and increasing the number of dealer and service outlets in important sales markets. V. Current market position Audi is the 8th in the top 20 best-selling automobile brands in Europe in 2010 according to the ACEA (Fr. Association des Constracteuis Europeen des Automobiles, Eng. European Automobile Manufacturers Association). | Car Brand| Manufacturing Group| Cars Sold in 2010| % Market Share| % Change from 2009| 1| Volkswagen| VW| 1 541 279| 11. 2| - 6. 6| 2| Renault| Renault| 1 147 486| 8. 3| + 3. 4| 3| Ford| Ford| 1 109

588| 8| - 13. | 4| Opel/Vauhall| GM| 1 006 832| 7. 3| - 5. 5| 5| Peugeot| PSA| 1 005 916| 7. 3| - 0. 4| 6| Citroen| PSA| 838 147| 6. 1| - 4. 5| 7| Fiat| Fiat| 825 376| 6| - 18. 8| 8| Audi| VW| 623 536| 4. 5| + 1. 7| 9| BMW| BMW| 609 196| 4. 4| + 6. 5| 10| Mercedes| Daimler| 586 146| 4. 3| - 16. 5| VI. PESTEL The next step in analysing the company is PESTEL analyse that shows all macro-environmetal factors which have an impact on the company. PESTEL analyse consists of six areas: political factors, economic environment, social factors, technologic plan, environmental factors and legal level.

The automotive industry is one of the world's most important economic sectors by revenue. The Detroit branch of Boston Consulting Group predicts that, by 2014, one-third of world demand will be in the four BRIC markets (Brazil, Russia, India and China). Other potentially powerful automotive markets are Iran and Indonesia. It is great opportunity for vehicle manufacturers to enter new attractive markets. Political and legal factors have a great impact on automotive industry. Audi is subject to various federal, state local and foreign laws and regulations.

The company is required to comply with these laws and regulations governing the protection of the environment and occupational health and safety. These include laws regulating: the generation, storage, handling, use and transportation of hazardous materials, the emission and discharge of hazardous materials into soil, air or water and the health and safety of its employees. Audi has to also comply with environmental requirements, like CO2 emission regulations, which say that vehicle manufacturers are committed to delivering further CO2 emission reductions.

The goal

for 2012 is clearly set by the European Commission – new vehicles are to produce not more than 130 g/km by means of vehicle technology improvements and other contributory factors. These refer to other areas like environment and technology. Because of global warming and environment protection policy, vehicle manufacturers must come up with fuel-efficient cars, produce more and more environmental friendly products, launch Corporate Social Responsibility policy. According to technological factor, there are more and more innovations in automotive industry.

Audi is required to be innovative to attain competitive advantage and maintain technological edge over its competitors. Audi must constantly follow trends not to stay behind its competitors. If social factor is considered, there are more and more environment activists that encourage society to protect environment by changing car for other less or non-polluting mean of transport. Nowadays, there is a social trend to be more “green”, what can be one of a threat to vehicle manufacturers. Nevertheless, there is still great demand on cars, especially in Asian market.

VII. SWOT Analyses The next method used to analyse the company is SWOT that helps to identify internal and external factors that are important for achieving the objectives of the company. There are two main categories in SWOT analysis: internal factors (the strengths and weaknesses internal to the company) and external factors (the opportunities and threats presented by the external environment to the company). Three different SWOT analyses are presented below. The first refers to Audi AG and the next two refer to main competitors: BMW AG and Mercedes-Benz.

A. SWOT analysis of Audi AG. Strengths| Weaknesses| * Innovation and technology * Robust production capabilities * Strong identity and

brand image| * Dependence mainly on one geographic region (European market) * Much less revenues than main competitors * Recalls of products due to manufacturing and design problems| Opportunities| Threats| * Recovery of automotive industry * Increasing demand in India and China * Development of eco-friendly vehicles| * Many competitors * Volatile raw material prices|

The main identified strengths of Audi are innovation and technology, robust production capabilities and strong identity and brand image. Audi is one of the most innovative company in the automotive industry. The company invested E2,050 million in R;D in 2009. It creates more and more new products with increased customer value that allows Audi to attain competitive advantage over its peers, maintain technological edge and stay ahead of industry trends. The other strength is robust production capabilities. In 2009 Audi produced 932, 260 vehicles.

The higher production output is the effect of successful product launches such as Audi A5 Sportback, Audi Q5 models and Audi A4. The company produced also 1,384,240 engines, out of which 42,7% were diesel engines. Production capabilities enable Audi to enhance its efficiency, reduce costs and improve its processes. Another strength is brand image. Audi is one of the strongest brand in global premium brands, mainly because it provides innovative products and each launch of a new product or improvement of an existing products has a great publicity. The weakness of Audi is that it is dependent on one market.

Over 73% of revenues are generated from Europe (29,2% from Germany). It generates very less revenues from other region where it operates such as Asia-Pacific (15,6%), North America (9,6%), Africa (0,8%), South America (0,6%). The other weakness of the

company is the level of revenues in comparison with its main competitors. Because of lack of scale, it’s hard for Audi to compete effectively with large players like Daimler, Ford, BMW. In 2009 Audi recorded revenues of E29,840 million while Daimler recorded E78,924 millions. Product recalls is another weakness of the company.

It happened that Audi announced recalls in America and South Korea, because of defects in transmission and dashboard operations, what had a negative impact on brand image. The opportunities for Audi are: recovery of automotive industry after economical crisis and rising demand in Asian market. In2008-2009 automotive industry met problems like low profitability, production overcapacity. Now the industry is recovering because of improvement in credit availability, increase in consumer confidence and increasing demand in Brazil, Russia, China and India.

Chinese and Indian markets are expected to be the world’s key automotive markets in the future. It is a great opportunity for Audi to expend its revenues and profits on these markets, where the demand on cars is growing. The opportunity is also development of eco-friendly vehicles. Rising energy costs and increased emission regulations are likely to increase demand for hybrid electric vehicles. By 2015, the largest markets for HEVs will be America and China. There are also some threats in company’s environment such as the amount of competitors and volatile raw materials prices.

The automotive industry is highly competitive and there are many larger vehicle manufacturers than Audi. The main competitors of Audi are: BMW, Daimler, Fiat, Ford Motor, General Motors, Nissan Motor, Toyota Motor, Renault and so on. The actions of competitors like adding enhancements to the vehicles, providing subsidized financing, leasing programs can have

a negative impact on Audi’s market share, pricing and results. The second important threat is volatile prices of raw materials such as steel, the main material used in vehicles’ production.

The prices are higher and higher, what has an negative impact on Audi’s financial condition and profitability. B. SWOT analysis of Mercedes-Benz Strengths | Weaknesses | * Holds is known as one of the world’s most prestigious luxury brands. * Increased revenue by 33% to 3,674 million in the first half of 2010. 100,500 was the total units sold worldwide in the same year. * Retain good resale price, holding as much as 65% of unit value after 3 years. * Works with government | * Time to produce vehicle * Increase in cost of raw materials due to shortages * Price | Opportunities | Threats | Development of eco friendly vehicles Fuel Cell vehicles * Professional sports sponsorship * Maybach design | * Strong competitors i. e. BMW, Audi, Jaguar * New entries * Economic crisis * Legislations, government, Tax * Exchange rate inflation * Product substitution| Mercedes-Benz holds is known as one of the world’s most prestigious luxury brands. Ownership of its vehicles does not just imply wealth but also good taste reflected by the brands understated glamour. The organisations brand image has helped the company to generate great level of ales, increasing revenue by 33% to 3,674 million in the first half of 2010. 100,500 was the total units sold worldwide in the same year. Mercedes retain good resale price, depending on vehicle models, the company holds as much as 65% of unit value after 3 years. The organisation works with the government to

negotiate means that will enable the company and country to benefit from their products. For example Mercedes are keen on fuel cell technology, developing fuel cell B-Class a vehicle with 249 mile range, fuel cell vehicles are a viable option as a clean vehicle.

Mercedes work alongside governments on a global scale, stating that in order for fuel cell to work they would have to first invest in building an infrastructure of filling stations to support the vehicles. For Mercedes the time to produce products is a little long, the cost of raw materials has increased due to its shortages. For example tire material has increased by 5%, and steel by much more. Mercedes car prices may be too costly for consumers and there for they will look for cheaper alternatives.

Mercedes invest a lot into the development of new models and improving existing ones (innovation). Mercedes engages in the fast moving economy and tries to jump on the band wagon of sustainability. As consumers, organisations and governments have become aware of the issues and want to contribute in carbon footprint reduction. They are producing environmentally friendly cars like hybrid and fuel cell. Mercedes have also designed maybach line which is there to maintain and endure aesthetic appeal, reinforcing extravagance within the luxury market.

Mercedes also have professional sports sponsorship i. e. golf Mercedes has many strong competitors within the luxury market i. e. BMW, Audi, Jaguar etc. There are also new entries into the luxury market as well as developing models from competitors. For example Jaguar XJ and BMW EV. The economic crisis has affect sale, due to the recession consumers and more wiry about how they

spend their money. It’s an economic slowdown, eternal changes like legislations, taxes i. e. -the move from 15% to a 17. 5% VAT rate will put ? 250 on the price of a new car with a ? 10,000 pre-tax price etc.

Exchange rate fluctuation, product substitutions etc. Lack of professional and experienced minds to keep innovation due to population depreciation in Germany. C. SWOT analysis of BMW AG Strengths| Weaknesses | * The financial year 2010 marked an upswing for the BMW Group after the global financial crisis * Revenues in 2010 amounted to euro 60,477 million, 19. 3% higher than in the previous year * 1,461,166 BMW, MINI and Rolls-Royce cars worldwide during the year under report (+13. 6%), and thus achieved one of the best sales volume performances in the history of the Group. Highly successful financial year 2010 for the BMW Group * Access to a well educated, skilled and flexible workforce * One of the leading brands of machinery manufacturing industry * Strong positive effect on customers through the mass media| * Raw material prices continued to rise over the course of 2011 * Extremely high competition for customers and resources * Strong competition with other car manufacturers * Consumers' association with a very high price for the product| Opportunities| Threats| After-sales service as important success factor * The year 2010 saw a large number of model start-ups within worldwide production network * Demand for premium vehicles grew strongly, particularly in Asia * Reconciling environmental standards crafted for the European Union and those of its other markets * Convincing Americans to buy diesels| * Exports affected by the global economic slow

recovery * Economic growth in Europe as a whole will remain lower than in the USA * The ageing and shrinking population in Germany will have a lasting impact on the conditions prevailing in the labour, product, services and financial markets * risks arising from business interruptions and loss of production are also insured up to economically reasonable levels with insurance companies of good credit standing * The future price of fuel – influenced both by market factors and governmental fiscal policies| VIII. Assumptions All future assumptions can be divided into several groups - manufacturing, economic concerns and social responsibility.

Of course, Audi also has affected the global economic crisis, so here are some assumptions in relation to it and other assumptions that are based on economic considerations: * The world is changing at a rapid pace – including its politics, the structures of the international economy, and social value system. * Audi needs to invest even more heavily in new products and innovative technologies in the future. * Audi need continue to work in a focused way on Audi sustainable profitability * The Indian and Chinese new cars market witnessed strong growth rates and the trend is likely to continue in the future. Growing automotive markets in China and India will provide an opportunity for the company to increase its revenues and profitability.

As in any major part of today's businesses are very important to be socially responsible company, so the Audi trying to create his image as a socially responsible company: * Audi is facing up to the responsibility, it is a matter of answers to global climate change, of alternatives to the fossil raw

material petroleum and of modern mobility concepts for the fast growing megacities of this world. * Rising energy costs and increased emissions regulations are likely to increase demand for hybrid electric vehicles. * Global problems that include the environmental challenges of global warming and the need to conserve resources and energy are the key drivers for the company's to develop hybrid electric vehicles.

However, to maintain the company's growth and ensure a profit, needs new products to attract customers, thus a constant development of new products that could attract many consumers, and in addition, at the same time trying to be “green”. * Electric cars in the future „e-tron”. Electric cars are expected to no longer be a niche product, but rather a natural part of the product range in not more than ten to 15 years. * On one side there is the further optimization of combustion engines, and on other side, the technological advancement of hybrid and electrics cars. * Design, driving dynamics, efficiency and lightweight constructions will continue to be decisive factors in the future. As a premium manufacturer, Audi must continue to further develop its core competences in the interest of electric mobility. IX. Objectives With its vision of “Audi: the number one premium brand,” the Audi Group combined its objectives with the aim to be the lead role in the premium segment worldwide. With the goals of Strategy 2020 the company analyzes follow categories: * Economical objectives * Social goals * Environmental objectives 1. Economical objectives One element to improve the economy is to increase the financial strength. Increasing financial strength The financial growth is the key focus of Strategy 2020

and a priority strategic corporate goal.

In the value-oriented corporate management the long-term superior financial strength can be achieved above all through effective and efficient structures and processes, the ongoing optimization of costs and systematic investment management. A high level of self-financing furthermore helps to preserve the Audi Group’s ability to invest and act. The main aim therefore is to cover investment from self-generated cash flow. Continuous growth The Audi brand’s attractive product range is the basis for continuous growth. The new Audi A8 as well as the Audi A1 and A7 Sportback models are delighting customers with their emotional design, sportiness, efficiency and everyday suitability. The market launch of the ultra-sporty models S5 Sportback, RS 5 Coupe and R8 Spyder as well as improved versions of the Audi A3 and Audi TT car lines were also part of the stunning new product portfolio.

The model range of the Audi brand will continue to grow – 42 new models until 2015. The Company wants to produce a delivery volume of 1. 5 million vehicles of the Audi brand by 2015. The Audi Group will continue to place the focus on quality alongside continuity of growth. In order to realize its growth plans, the Company want to remove its activities in international auto markets. The Audi Group is thus steadily expanding its production network and increasing the number of dealer and service outlets in important sales markets. With the continuous growth we used the growth strategy, which we explain, later. Image leader In the view of Audi the strong brand is the basis for success.

Therefore the Audi Group improves its image position above all through the Audi brand’s

attractive product range, and establish an emotional bond between its customers and the brand. The public’s enthusiasm for the Audi brand and its products was again reflected in numerous national and international awards in the 2010 fiscal year. 2. Social goals Most attractive employer Human resources are essential for group performances like the Audi Group. To improve it, Audi wants to develop staff commitment by offering multiple training and putting the employees at the heart of corporate culture through a policy of incentives. Therefore Audi created a own academy to qualify the own trainees, employees and manager.

Contribute to group performance Audi's development requires a modern recruitment policy in effect Audi wishes accompany the youth assets. Staff at Audi wants to increase trade with VW Group employees to develop cohesion within the group. In fact, more than 1000 employees are concerned by this exchange to develop the intercultural dimension of the group. Promoting social strategy The transmission of information is a primary objective for Audi. Indeed, more than 100000 copies of the internally newspaper “Audimobil” will be distributed in many countries. This internal communication has many functions for Audi: * Increase the motivation of employees Explain the results of the group * Provide new information In conclusion the internal communication strategy gathers all members of Audi, from employees to their leaders and add the feeling of community. Moreover, Audi really wants to be a social company and his goal is also to participate in the road prevention. This is why Audi makes more and more training for drivers. 3. Environmental objectives The environmental protection of Audi follows the aim to give the customer driving pleasure in

combination with sustainable mobility. CO2 reduction as a social responsibility The products of Audi are produced on the basis of a modular efficiency system.

This holistic approach takes account of all CO2-related factors, including engine and drive concepts, aerodynamics, body technology and electronic assistance systems. The commitment „Vorsprung durch Technik- Advance through technique“ confirms the topic of CO2. Consequently, Audi pursues an all-embracing climate strategy that takes account of all the corporate divisions. It is the expression of the company’s enduring commitment to society and environmental protection and is, for this reason, an integral part of the corporate social responsibility. "Encounter" – Audi’s environmental magazine The Audi Group published since 2009 its own environmental magazine. “Encounter” presents environmental protection at Audi in all its diversity.

These corporate activities of AUDI AG are shaped by the desire to preserve resources and take a responsible approach to the environment. Emphasis is placed on efficient vehicles and their sustainable development and manufacture – yet Audi’s strategy for environmental protection reaches far beyond this. XI- Strategy To better understand the position of Audi on the premium car market, we are going to describe and explain the corporate strategy of Audi. 2010: a record year for Audi! The strategy established by Audi is a real success. In 2010, the group registered a record year with a growth of 15 percent more than last year which permits reaching 1,092,411 cars sold all over the world.

It is all the more a success that Rupert Stadler, Chairman of the Board of Management of AUDI, declared that it was a success that Audi grows in all the region of the world not only in China. In

Western Europe, Audi registered an increase of 4 percent. 2011: to confirm and reinforce the results of the previous year Audi clearly fixed its new objectives for 2011: to reach more than 1. 2 million deliveries to customers all over the world. At that moment, Audi announced that the first quarter results are good and they expect to continue growing along the year. 1. Its current strategy As we said before, Audi is leader in the premium segment in Western Europe.

The competition on this market is very strong with several important brands like Mercedes and BMW. Its vision is to be the constructor number one on premium segment and to reinforce its position all over the world. This strategy completely matches with the mission statement of the brand which is “to delight customers worldwide”. To achieve this mission, the German brand can use the assets which characterize the quality of Audi like the innovative approach and the ability to give emotional experience to its customers. They consider their customers as being members of the Audi community. Being present on each segment Audi is present on each premium segment and innovate each year to reinforce its leadership.

For instance, concerning the sportsback models, Audi has launched several models in 2010 like the A8, A1 and A7. It launched the S5 Sportback and the R8 Spyder on the ultra-sporty market as well. Improving the leadership via the brand image Then, Audi aims to continue improving its image of leader. Its image is recognized as being very present. It is one of the characteristics that each competitors share on the market of premium cars. Indeed, their brand recognition level

is very high. Customers are often loyal to a specific brand and they often buy the same brand one purchase to another one. At this level, Audi has been awarded in 2009 with a growth of 4. 9% of repeating customers in US.

As a consequence, improving its brand image is relevant on this segment because it is easier to make customers loyal than to recruit new ones. Finally, Audi is recognized as being one of the most attractive employers which permitted to recruit the most qualified engineers and workers as possible. The good working conditions offered to its employees permit to challenge them. It is important to include this advantage in the corporate strategy of Audi because the product quality depends on the qualifications of the personnel. And also being a pioneer in the electric technology Audi wants to be close to the evolution of the society issues in terms of consumptions of alternative energy.

Thus, another part of the Audi Strategy is to become a major actor which will develop the electric technology. That’s why Audi, is enhancing two electric models: the A1 e-tron and the R8 e-tron. The third model of Audi is the Q5 hybrid which is the main innovation of Audi. Most of the brands want to become the first constructor which could create an effective electric motor. In this race, Audi has arguments in favor of innovation and is trying to launch an electric car matching the needs whose our society faced. To success in this challenge, Audi is gambling on its e-tron models which gather the A1 for the most accessible model and R8 for the premium model. These models

are cars which completely work by electric energy.

Audi expects to launch new e-tron prototypes to improve its innovations in order to do a new step to the electric energy. 2. 4P Analysis The product Audi presents a large range of cars able to fill the needs of its most loyal customers and to recruit new one as well. All of its models belong to the premium cars market. Through each model, the image and values of Audi are very present which permit to sign the identity of the brand. Each Audi model aims to provide emotional experience. Three arguments are used to achieve this objective. First, the Audi’s identity is based on a sophisticated design. Each form reminds the Audi touch which is both sporty and elegant.

Second, one of the touches brought by the German brand is the new technologic approach that makes each model more innovative and attractive to satisfy and attract customers. This added value is all the more important that it permits to Audi reaching new customers especially those who are sensitive to innovation. This especially concerns the ecological approach in terms of electric motors (e-tron models) and the way of reducing CO? emission. Finally, as Audi is present on a premium market, it is necessary to purpose cars which fill customer’s needs in terms of performance. German cars are usually said to be powerful in this area and Audi does not break with the tradition. Customers look for these kinds of model and Audi performs to succeed in this challenge.

We can say there is a real expectation from customers who want to get a car which could reflect a strong personality.

If we refer to the needs hierarchy of Maslow, Audi’ shoppers are often people who want to satisfy a self-actualization need and self-esteem needs as well. The price The pricing strategy of Audi matches with the type of customers that the brand targets. Indeed, these are people who have a quite good economical situation. Owning an Audi car means that the owner can afford for it. Even if, Audi uses a high pricing strategy which is the same strategy for all the brands present on the premium cars market, Audi applies different level at its pricing strategy. Indeed, we distinguish two different strategies.

On the one hand, to promote its sportiest models such as the R8 Spyder for example, Audi applies a price-skimming strategy. This strategy permits to select its customers who will feel as being a privileged-person. That matches with the willingness of being present on the up-market in which customers have a very good living conditions and whose revenues are usually high. Be careful what is expensive for us is not necessarily expensive for the others and Audi well-understood that statement and continue to sell more and more top premium models. Finally, this strategy permits to promote the Audi range as a whole because these smart models compose the showcase of the brand.

On the other hand, Audi provides cars which are both elegant but more “basic”. Indeed, this category of cars permits to sell more volumes because more people can afford for these models. For example, in 2011, Audi is gambling on its new A1 whose prices started at around €16. 000. This combination in the pricing Strategy permits to Audi being very effective

in terms of value via its skimming strategy and in volume at the same time. Besides, one of the objectives for Audi is to become leader of the premium market in value but in volume too. The promotion The competition on this market is so strong that Audi tries to be active in terms of promotion.

In this sense, marketers and agencies working for the brand, broadcast creative message appeals which permit to attract the attention and capture the interest of the most people as possible. Mass media: Television and billboards Audi uses mass media with TV, billboards and posters. Most of the Audi advertisements reflect the identity of the brand. At the same time, to attract the interests of the viewers, Audi does not hesitate to broadcast creative messages which break through the clutter. For example broadcast in some countries, a TV campaign has been even called “the Audi friendly competition”. This TV spot is a comparative ad in which we can see Audi with its main rival: BMW. ttp://www. youtube. com/watch? v=CsRNgpKNjFI Another comparative ad for Audi shows the 4 famous rings done by gathering the keys of four competitors: Volvo, Mercedes, Alfa Romeo and BMW,. http://www. dailymotion. com/video/x54s99_pub-audi-les-cles_fun All of the Audi models are represented in their advertisements even the most prestigious models like the R8. For the A7 model, the emotional appeal that Audi wanted to give was the jealousy. The campaign for the Audi Quattro was very innovative and creative. Each viewer can create its own feeling toward this ad. What’s yours? The slogan was: “Sticks like quattro” An attractive website: www. audi. com

Audi provides a huge quantity of information through

its website (www. audi. com). The viewer can find there, features about all the Audi models. Each model is described in details and the website offers the possibility to watch the car in 3D. It also provides a large quantity of photograph which aims to attract viewer’s interest. It is also possible to consult the latest news of the brand such as the performance realized by the group over the year. Finally, Audi also created Audi TV, a website in which people can watch promotional videos. Sponsoring events Audi is highly involved in sponsorship especially in sport and culture. SPORTS EVENTS: Audi is involved in 5 sports events: Different Football championships: The brand sponsors top teams such as FC Bayern Munich, Real Madrid and FC Barcelona. It is involved in the development of other german teams like Hoffenheim or Hertha Berlin. * Three sailing races * Five Golf tournaments for men and ladies * The Olympia 2010 which is the event the most watched all over the world * The winter games The presence of Audi is all the more benefic that its name is also given to different sport events like the “Audi MedCup” for the sailing and “the Audi Quattro Cup” for the Golf. The choice of selecting such or such sport, is not a hazard, it is a real opportunity to reach the right target at the right moment.

Audi is also present in the most important car racings such as “24h du Mans” in France. CULTURAL EVENTS: Audi also sponsors various cultural events like festivals, concerts, orchestras, art and design foundations. Again, the targeting is effective because it permits to reach the

right category of person. Be present in video games Most of young people have their first driving experience by playing on video games. That’s why, Audi is present in numerous video games which permit to show and virtually drive most of the Audi models. World car shows Like all the others constructors, Audi usually participates to numerous car shows in which it is possible to show the latest models and others concept cars.

It is an effective way to promote and to improve the brand image because these shows welcome million of visitors each year and each of them are a potential purchaser. World car show 2010 (Quattro concept) World car show 2011 of Detroit 79th World car show 2011 of Geneve The Place Audi sells its cars via 2 main distribution networks. First, there are the Audi dealers who work for the Audi group and can exclusively sell Audi cars. It is also possible to find other dealers who can sell others brands. Those dealers do not depend on a unique constructor. Then, there is the professional network in which Audi purposes different packages to companies. In France, 40% of the number of vehicles is provided by Audi Group. Audi accounts 154 distributors including 85 exclusives dealers. . Growth Strategy The basis for continuous growth of the Audi brand is its attractive product range. Indeed the model range of Audi is one of the most important parts of their growth strategy. Many new models were added in 2010 as part of the long-term model initiative. The new Audi A8, the Audi A1 and the A7 Sportback are delighting customers thanks to their emotional design, their

sportiness, their efficiency and their everyday suitability. The market launch of the ultra-sporty models S5 Sportback, RS 5 Coupe and R8 Spyder as well as improved versions of the Audi A3 and Audi TT car lines were also part of the stunning new product portfolio.

The model range of Audi brand still continues to grow: it is set to reach 42 models by 2015. The second point of the growth strategy of Audi is in terms of sales. Indeed the company intends to achieve a delivery volume of 1. 5 million vehicles of the Audi brand by 2015. In order to realize this goal, Audi is stepping up its activities in international car markets. The company is also expanding its production network and increasing the number of dealers and service outlets in important sales markets. Finally the Audi Group precised that they will continue to focus on quality alongside the continuity of growth. 4. Competitive positioning One of the main issues for the Audi brand is the image leader.

Indeed the company believes that a strong brand is the basis for lasting success. Audi positions itself at the mid to high-end of the automobile market. The Audi Group is eager to keep improving its image position above all through different ways: * To focus on Audi brand’s attractive product range. * To establish an emotional bond between its customers and the brand. The public’s enthusiasm for the brand and its products is reflected in numerous national and international awards in 2010 (The Audi R8 V10 was elected the “2010 World Performance Car”; The Aus A1 E-Tron concept wins the “2010 E-Car Award”: the electric car). 5. Competition

with environment As a car manufacturer, we can never claim to have a truly positive impact on the environment – and nor should anyone else in the automotive industry. But what we can be certain about is that the billions of pounds we’re investing in responsible technologies over the next decade will place Audi at the forefront of efficient motoring and manufacture. ”(http://www. audi. co. uk/about-audi/environment. html. html). By improving their technologies Audi placed itself in a strong position. The brand developed: the lightweight space frames, the efficient TDI engines and waste-reducing manufacturing processes. All of these serve to cut the CO2 emissions.

Audi improved its cars’ efficiency by over a third during the last 20 years and by 2012 they plan to reduce the emissions of the vehicles by around 20%. The company created new processes in order to be more respectful of the environment: They save the water: they feed 96. 3% of their total water use into a closed-loop system. This means that the demand for water (and also the amount of wasted water used in the production of each car) has been reduced from 4. 9 cubic metres/car in 1998 to 1. 5 cubic metres/ car in 2007 which represents 69% of reduction. They recycle the waste material and they reduced their transport needs by using a software system which calculates every last square centimetre of loading space in the lorries which allows to maximise the available space.

Packaging is already optimised in the planning stages; our packing team and their computer find the most efficient way of loading, further reducing the number of lorry journeys. They reduce the carbon footprint by improving

the engines in order to reduce the CO2 emissions. They improve the paint process: they took the decision not to use materials containing CFCs or adhesives containing solvents back in 1990, for the entire factory. This helps to reduce the overall solvent emissions, and thanks to water-based paint technology, the paints they use contain very little organic solvents. X. Sources http://www. audi. com/com/brand/en/company/investor_relations/audi_at_a_glance/corporate_strategy. html http://www. audi. co. uk/about-audi/environment. html. html ttp://www. chinapost. com. tw/business/global-markets/2011/03/16/294780/Japans-sales. htm http://www. independentonlinesolutions. com/advertisingGuide/audi. html http://www. audi. com/com/brand/en/company/investor_relations/audi_at_a_glance/corporate_strategy. html http://www. automotive. com/future-cars/01/audi/index. html http://www. audi. co. in/sea/brand/in. html http://www. autospies. com/news/Audi-s-goal-to-become-leading-premium-manufacturer-by-2015-fact-or-fiction-20469/ http://www. suite101. com/content/top-20-best-selling-car-manufacturers-and-brands-in-europe-2010-a334475#ixzz1KvQrN0Vthttp://www. audi. com/com/brand/en/company/news. html