Case #2: Globalizing Volkswagen; Creating Excellence on all fronts
Global Business Management
Sai Teja Boddupalli
November 28th, 2015
The Volkswagen Group is a Germany-based automobile manufacturer with its headquarters in Wolfsburg, Germany. It is one of the world’s leading automobile manufacturer and carmaker in Europe.
In 1930, Ferdinand Porsche, an Austrian born design engineer set up his own vehicle development center and that was foundation of Porsche AG, a leading sports car marker. In 1938, the government laid the foundation of the factory in Wolfsburg. However, before the plant started car production, it was a ...view middle of the document...
He prepared for the introduction of the cars Golf, Passat, Polo and Scirocco. However, due to oil crisis the German company was in loss and Leiding resigned. In 1970, VW had difficult time due to global recession. In 1978, the company offered first diesel engine because of major oil crisis. Toni Schmucker ran the company between 1975 and 1982. Later, in 1983, Dr. Carl Hahn steered the company into Chinese market for further international expansion. Hahn’s mission was to motorize it’s country and large parts of Europe to provide employment to ten thousands of people. In 1991, the company provided 20% of the employment in Lower Saxony and 50% in exports.
In 1960s, VW was partly privatized with 60% of the company being sold to public.
With Hahn’s retirement, Dr. Ferdinand Piech took over as CEO of the Volkswagen Group in early 1993, time when the company was not performing conscientious.
Piech was mastermind of the industry and known as a technology leader. Despite heavy investment in technology, the company started earning high profits. Piech was known for his “closeness” to products and customers. He was described as intense, unpredictable and quirky and he often got first hand information from the dealers.
However, by 2001 the situation was completely different because VW was market leader in Europe, China and South America. Since 1993 to 2001 the sales increased sevenfold. The company in 2001 was barely recognizable from the company Piech had taken over eight years earlier. He transformed the almost bankrupt manufacturer into a powerful global player. Under his leadership, the company added prestigious brands such as Bentley, Bugatti, Lamborghini, and minor stake in Scania trucks and also turning over former loser brands such as Skoda and Seat into respected players. In 2001, it was the first company, which sold over 5 million cars across the globe, and its world market share was increased from 9% in 1994 to 12.4 % in 2001. VW engaged itself in ventures like “Autostadt,” a theme park followed by revolutionary car plant and event center in heart of Dresden.
Organizational Assets and Skills
The Volkswagen Group grew from a single public automobile company in 1930s to incorporate the Audi, Bentley, Bugatti, Ducati, Lamborghini, Porsche, SEAT, Skoda, and Volkswagen’s commercial vehicle brands selling commercial vehicles. Each brand is known for its own characters and features with its own identity in the market.
The company offers a wide range of financial services including dealership, financing, leasing, banking, insurance activities as well as fleet management. As sales of Beetle was increasing, the increasing buying power of customers led Nordhoff to add to the range a station wagon and sedan based on Beetle. In 1964 he even purchased the unprofitable Audi from Daimler-Benz. This acquisition of Audi increased the production capacity of VW group.
Kurt Lotz, Nordoff’s successor, with no automotive background had vision to expand...