Components Of The Strategic Management Process Persuasive Essay Example

purchase other car manufacturers such as Skoda, Lamborghini, and Porsche. The company also owns well-known brands including SEAT,AUDI,Porsche,Bugatti,and the Volkswagen Marques that have a global presence.

The objective of the company is to forge strategic partnerships with customers, aiming to reduce their operational costs while maintaining superior service. Additionally, the company remains dedicated to implementing innovative techniques in order to enhance its manufacturing processes and sustain international competitiveness. One persistent challenge for Volkswagen is adhering to various regulations designed to decrease emissions as a response to climate change.

Explanation for selecting this particular organization

The decision to focus on Volkswagen for this paper is justified by multiple factors. Firstly, the organization operates in a challenging industry that necessitates strategic operations for sustained growth. Due to its global prominence, there are abundant resources such as journals, books, and annual reports available for research purposes. Moreover, Volkswagen's consistent innovation over the years makes it an ideal case study to comprehend how organizations can maintain a competitive position in the global market.

Summary of the situation

With the increasing global focus on conservation and environmental sustainability, the motor industry has encountered more stringent controls (Lee, Veloso, Hounshell, ; Rubin 2010). Numerous studies have linked nitrogen oxide emissions to health problems like asthma, bronchitis, and premature death. Consequently, governments have implemented measures to tighten emissions regulations. This has posed a significant obstacle for car manufacturers worldwide, particularly when it comes to developing diesel-efficient vehicles for the United States market.

Volkswagen made the decision to continue selling diesel vehicles in the American market, even though its competitors chose not to. However, in 2015, the Environmental Protection Agency (EPA) discovered that Volkswagen was involved in a deceptive

practice called "diesel dupe." This practice involved manipulating emission tests for their diesel engines using software or devices within the engine to improve performance and produce better test results. Instead of accurately reporting emissions from real-world road tests, Volkswagen conducted laboratory tests that showed artificially low levels. By making small adjustments to the engine, nitrogen oxide emissions during these tests were reduced by about 35 times compared to actual vehicle emissions. As a result, this scandal has presented a significant challenge for Volkswagen and continues to affect its operations today.

The following is a summary of the strategic issues involved.

The emission scandal for Volkswagen created several strategic challenges due to its scope and the factors involved. One major strategic challenge Volkswagen faces is implementing a reliable environmental management process. As a manufacturing-focused company, it is crucial for Volkswagen to develop products that do not harm the environment. This strategy goes beyond addressing the central issue of emissions in the scandal and emphasizes engaging in processes that protect the environment and ensure public health. To regain its competitive advantage, Volkswagen must prioritize environmental management.

The emissions scandal had a significant impact on Volkswagen's sales, becoming one of the key issues that need to be addressed. It negatively affected customer loyalty, causing many clients to switch to competitors and resulting in a decline in sales. According to Volkswagen reports, the drop in sales in 2015 following the diesel scandal was the largest since 2002 (Volkswagen, 2015). Additionally, the decrease in sales led to a loss of Volkswagen shares, particularly after it was revealed that unethical practices were involved in the scandal. Reports indicate that once the investigation became

public, approximately a third of their value was wiped off from Volkswagen's market capitalization, erasing billions from their worth.

Reviewing Tools, Concepts, and Frameworks for Strategic Analysis

From a strategic management perspective, Volkswagen has several options to address the challenges arising from the diesel emissions scandal. These tools, concepts, and frameworks enable the company to identify its strengths, evaluate current strategies, and conduct strategic analysis. By utilizing these tools, Volkswagen can effectively overcome the problems stemming from the scandal (Kraus, Kuranen ; Reschke 2010). The following section outlines the strategic tools that Volkswagen can employ to resolve the issues:

i. SWOT Analysis

The organizational concept allows for the identification of strengths, weaknesses, opportunities, and threats within the operational environment of an organization (Sempels ; Hoffman 2013). The table below presents a SWOT analysis specifically for Volkswagen.

Table 1: Volkswagen SWOT Analysis

ii. PEST Analysis

The idea of PEST refers to the political, economical, socio-cultural, and technological aspects that comprise the external environment of a company. The concept of PEST analysis furnishes valuable information that aids in facilitating the strategic management procedures within an organization. The subsequent table presents a PEST Analysis for Volkswagen:

Table 2: Volkswagen PEST Analysis

iii. Porters Five Forces Analysis

The framework is important for the organization to assess their positioning and competitiveness. The analysis concentrates on supplier power, customer power, threat

of new entrants, threat of substitutes, and competitive rivalry (Mainardes, Ferreira ; Raposo 2014). The table below presents a summary of this analysis applied to Volkswagen within the automobile industry:

IV. Value Chain Analysis

The framework offers a dependable analysis of how organizational activities bring value to customers (Johnson, Whittington, Scholes, Angwin, & Regner 2013). Volkswagen, for example, manufactures most of the units needed to produce its cars, which helps lower operating expenses and reduce car costs. The company has multiple locations and efficient dealer orders for faster global transportation. Volkswagen has also implemented robotic technology in its assembly line to minimize manufacturing waste (Lee et al. 2010). Additionally, the company delivers cars on demand to reduce storage costs. Its brand has gained worldwide recognition and has remained unchanged for many years. The company's logo has also remained the same over the decades, attracting more attention. Volkswagen provides after-sales training and handles customer complaints effectively.

v. Resource-Based View

The resource-based view highlights the internal strengths and industry-specific factors that shape an organization's strategies and competitive position (Voss 2010). Volkswagen, as an organization, possesses tangible assets like buildings that can strategically position it in competition within the automotive industry. Additionally, intangible assets like trademarks, intellectual properties, and brand reputation play a vital role in developing competitive strategies (Johnson et al. 2013). Utilizing heterogeneous resources, such as designing unique products compared to the market offerings, is another approach that Volkswagen can adopt.

Porter's Generic Strategies include three different approaches that a company can take to gain a competitive advantage in its industry.

The framework outlines various strategies that an organization

can implement to gain a competitive edge. These strategies include reducing manufacturing costs, diversifying product offerings, and focusing on the industry. Volkswagen has applied these strategies by acquiring additional companies to cater to different segments of the automobile market (Alagoz, Ekici, & Islek 2011). To reduce manufacturing costs, the company has implemented the MQB platform, which allows its subsidiaries to use pre-developed components in their products. By sharing engine parts and interior components among its brands, Volkswagen follows a common practice in the automobile industry, similar to BMW and Rolls-Royce (Marcotte, Grabot, & Affonso 2009).

seventh. Ansoff Matrix

The Ansoff matrix is a tool that helps organizations determine their growth strategy, whether they are entering new or existing markets and launching new or existing products. It provides strategies to drive strategic growth. Here is the Ansoff matrix for Volkswagen.

Table: Ansoff Matrix for Volkswagen