Volkswagen Company Report

free essayThe Volkswagen Company was founded in the 1930s in Germany and has been in operation for many years. The Company automobile company operated only in Europe for several years. It has then expanded from Germany to different parts of the world. Apart from manufacturing and distributing the automotive products, the company also offers banking services and insurance services to its customers globally. The company is a leading logistics company offering fleet management services in a number of countries around the world. The company is listed in several stock exchanges in Europe and outside Europe. In the bid to ensure that it has a relevant and acceptable customer base, the company has over the years embraced innovation by encouraging an innovative and vibrant staff who operate in a number of its branches and subsidiaries. The company has been working closely with its customer base to ensure that it knows what the market needs in terms of its products so that it is able to achieve its goals of reaching out to all the customers and satisfying their needs, which has always been the priority for this company. The company has several subsidiary companies that all work under the Volkswagen AG to ensure that there is a proper delivery of services to clients. While reviewing the company’s innovation management strategy by using the Pentathlon Framework, it becomes evident that the company has put a lot of effort in ensuring its success by conducting a thorough research, as well as considering various aspects of the framework to make sure that its innovation strategy is relevant and beneficial to the company and clients. The company also has worked to improve its innovation strategy relating to different aspects such as technology and other areas that are beneficial to workers and the company’s clients

The Volkswagen Company is one of the leading car producers, distributors, and sellers in the world. The company that was founded in the Nazi Germany in the 1930s has been one of most successful companies globally thanks to a range of innovative services and products. Since its inception, the company has undergone several transformations with the aim of changing its phase, as well as ensuring that products that are distributed by company are relevant in the market. The company has been hailed for innovative products and has worked closely with other companies to improve the services it offers globally. Innovations that are currently being worked on by the company and those that are already ongoing can be attributed to the firm’s good innovation management and ever increasing levels of creativity coupled with hard work and the use of technology to ensure that the company becomes the best in the world.

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1.1 Background of the Volkswagen Company

The Volkswagen Company, also known as Volkswagen AG or V WAG, is one of the largest car and automotive manufacturing companies globally. The company has its headquarters in Wolfsburg Germany. The company was founded in 1937 in Berlin, Germany, to manufacture People’s cars. During the World War II, the Company produced vehicles that were used in the war and was a major target of allied bombing during the war. The war disrupted operations of the company for some time, but later the company picked up and started conducting its operations as usual. The company that is abbreviated as V WAG was among the largest global companies ranked in the Fortune Global 500; in this listing, the company was ranked the 7th among the largest companies in the world. In the post-war period, the company has expanded its operations globally and has become a company with one of the largest customer bases globally.

The Volkswagen Company is responsible for designing, manufacturing, and distributing passenger vehicles, commercial vehicles, engines, motorcycles, as well as turbo machinery. In addition to the manufacture and distribution of automobiles, the company also works to offer a number of services that are related, including financial services, leasing of motor vehicles, and fleet management. The Volkswagen Company has remained the largest automobile company in Europe over the past two decades. In 2015 for instance, the German automotive manufacturer was the second largest global car producer after the Toyota Company. V WAG produced 9.93 million cars that year alone, thereby showing its prowess in the area of car manufacturing globally.

Despite having its major operations in Germany, V WAG has in the recent years expanded its global operations immensely. Currently, the company operates in about 150 countries around the globe; additionally, the company has 100 facilities where its production is done in 27 countries. V WAG produces passenger vehicles, motorcycles, as well as commercial vehicles. Passenger vehicles are sold by the company under several brands, including Volkswagen Marques, Audi, Bugatti, Porsche, Bentley, SEAT, Lamborghini, and Skoda. Commercial vehicles produced by the company are sold under brands like Volkswagen commercial vehicles, Marques MAN, Neoplan, and Scania. Motorcycles that are produced by the company are distributed under the brand of Ducati. Thus, the Volkswagen Company produces several types of vehicles.

The Volkswagen Company has been one of the most innovative companies in the recent years. The company has developed several innovation strategies to reach a wider customer base and be able to make some products that follow the modern technology and do not harm the environment. The company’s innovation strategy is broad and has been helping in improving the company’s standing in the global arena. Some of the most important ways in which the company has made sure that it covers a significant area of business globally concerns modernization of its processes, acquisition of other companies to have huge affiliates all over the world, and implementation of a diverse business strategy.

Through its expansive market strategy, the company has acquired several subsidiaries globally in the last 50 years. Through this process, the company has been able to expand immensely, thereby becoming one of the biggest companies in Europe. The company’s largest market is in Western Europe, North America, and Asia Pacific region with China being the key point of production in the latter region. In total, the company has 12 subsidiary car manufacturers that it works with throughout the entire process of production. Some well-known companies that are closely associated with V WAG as subsidiaries include Audi, Bugatti, Porsche, Bentley, SEAT, Lamborghini, Skoda, MANCE, Neoplan, Scania, and Ducati. Most of these companies are established in different countries, but they are associates of V WAG, thereby enabling expansion of the company as witnessed in the recent times.

The company has also had a wide market strategy aimed at reaching as many types of users as possible. This has been achieved with the help of the company’s ability to produce vehicles that can be used by anyone, including passenger vehicles and commercial vehicles. This form of innovation has enabled the company to expand and stay relevant in business for many years. The company has designated its various subsidiaries to lead the production of various types of vehicles that are needed by its customers. Apart from the production of vehicles, the company has not left behind those who are interested in the use of motorcycles. Through the Ducati Motor holding, V WAG Company manufacturers motorcycles that it distributes globally. V WAG is also involved in the sale of engines to a number of other motor companies, as well as the sale of spare parts for its vehicles globally. One of the largest engine customers produced by the company is Rolls-Royce.

The company has also been innovative in the area of transportation. Volkswagen has been known to be one of the most reliable logistics companies globally. Through its fleet management, the company is known for providing reliable transportation and other logistics services as a way of ensuring that it has an extended global market base. The fleet management of the company involves the use of trucks that can be hired for transportation of bulky goods for long distances and transportation of goods for short distances. The company is therefore not only focused on production and distribution of vehicles, but it also uses its vehicles to provide logistical and other transportation services to a number of its customers in various parts of the world, thereby making it one of the most unique and creative vehicle manufacturers in the world.

A part from providing the logistics services, the company is also known for rendering financial services. This innovative strategy by Volkswagen is aimed at ensuring that it consolidates its customer base by providing affordable financial and insurance services to its customers who operate in various countries globally. The Volkswagen bank, which has branches in a number of countries, including the United Kingdom, provides a number of services to customers such as loans and other crediting services, as well as borrowing services. The company’s market strategy consists in reaching customers across the globe through a number of innovative methods and providing them with assistance so that they would be able to purchase and service their vehicles. It also offers general financial services for the public as a way of consolidating its income.

Volkswagen AG, which is a public company, is considered to be one of the leading companies because it has been listed in several stock exchanges around the world. The listing of the company in these several stock exchange areas globally can be attributed to its ability to generate income in a diverse and innovative manner through the production and sale of various products. The company has primary listing in the stock exchanges in Germany in the Frankfurt Stock Exchange. Additionally, the German automobile giant has several secondary stock exchange listings, which include listings in the New York Stock Exchange, Luxemburg Stock Exchange, SIX Swiss Exchange, as well as London Stock Exchange. The listing of the company in these numerous stock exchanges shows how huge the company is globally.

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2.0. Pentathlon Framework

The Pentathlon Framework refers to a model that can be used by an organization to lay out its path towards development through innovation. This framework does not necessarily mean a chronology in which the business may expand, but rather envisions interaction of various elements. In some instances, the framework has been referred to as the development funnel, meaning that it is a key guide for ensuring that a business prospers. This is a management tool that is used by the business to stay on course in order to achieve its objectives through innovation. The Pentathlon Framework works through the interaction of its five elements, which include innovation strategy, ideas, prioritization, implementation, as well as people and organization. These five elements interact to inform a company’s innovation strategy. In this section, the paper is going to look at the way V WAG has applied its innovation strategy with respect to these key elements. Being one of the largest global manufacturers, Volkswagen has been a leader in the area of innovation thanks to the diversity of its products. To understand further the Volkswagen’s innovation management, the following five elements of the framework should be considered.

2.1. Innovation Strategy

The innovation strategy is one of the key mandates that have to be followed by the top management of a company. The management has to identify the market and various sectors of interest for the company before embarking on the course of action aimed at driving innovation of the company (Frankelius, 2009). The Volkswagen Company’s management has been working tirelessly over the years to identify these new markets so that it would be able to come up with new products that would be the most appealing to their customer base. From its inception in the 1930s, the company has often been customer-centered with the aim of working towards creating new products that are appealing to all categories of customers. The company started as the only German company that could provide affordable cars to the Germans. This was motivated by the fact that at the time in Germany only one individual out of 50 owned a car, which is why the company became the only company that could provide affordable cars to people. Hence, the Volkswagen’s management has been involved in a number of initiatives aimed at developing new and interesting products for its customers.

Success of its innovation strategy has been attributed to the ever changing business environment. Through research, the company’s management has been able to identify gaps in the market and come up with strategies to fill these gaps. Some of the innovations that have been achieved through research include expansion of Volkswagen from just car manufacturing and distribution to other diverse areas, including expansion into the banking industry and logistics with its fleet management. Through research, the company has identified these areas as gaps and thus sought to fill these gaps through innovative methods. The issue of getting into the banking sector could be seen as one of the earliest innovative ideas since most automotive companies do not render such services. Creativity of the company has been passed down from its first generation of managers to the current leadership. This has been achieved over the years by the management through communication of the significance of innovation within the company to workers. The key pillar that Volkswagen has used it its innovation strategy is the use of technology. The company has over the years been involved in using technology to advance its products. For instance, in the past year the Nokia Company confirmed having struck a deal with Volkswagen to deliver some gadgets that would enable automation of cars.

Looking into the future, it is evident that the company’s management has been working with its subsidiaries to come up with better car designs, including electric cars, so that it would be easy for customers to use them. The management has explored several options with the aim of ensuring that cars it produces are friendly to the environment in the future, especially after the emission scandal that rocked the company in 2015 and led to the subsequent resignation of the company’s president.

2.2 Ideas

Since its inception, the Volkswagen Company has been a very open company when it comes to innovation and innovative ideas. The company’s leadership has often allowed its team of engineers to come up with innovative ideas so that it would be easier for the company to manage competition and satisfy needs of its customers. The management of the company has more often than not been at the center stage in its bid for expansion. The company has acquired several subsidiaries and bought several automobile manufacturers in an attempt to reach a larger customer base and appeal to various customer groups across the world.

The firm has over the years been open to innovation coming from the companies that it has acquired such as Audi and others. This has been done to ensure diversity of its products. Ideas that come from all these companies have been embraced by the general management of the Volkswagen Company. This explains why most car manufacturers that are subsidiaries of the Volkswagen Company are still operating under their original names and offer products bearing original names. The pen nature of the Volkswagen Company has enabled it to get innovation ideas from different segments and this has made it one of the most successful firms in the world of automobiles.

The company has branches in various parts of the world, including China and the USA. Most of these branches of the firm operate with some level of autonomy, thus enabling them to come up with new products that are accepted in local markets in respective areas of their functioning. For instance, China is one of the largest markets for Volkswagen cars. The company has over the years been able to produce various models of vehicles that are acceptable to the market where the branch is located. Most of the cars that are designed and manufactured in China are normally sold in the Asia Pacific region, while the headquarters in Germany do not interfere with the work that is being done in other branches of the company. Top managers only listen to good innovative ideas and then allow people implementing them to get to work and produce the best models that they believe to be in demand in the market. The market in this case is normally identified through extensive research so that the company is aware of what people would wish to have.

2.3 Prioritization

The prioritization process is mainly focused on resource allocation with a view to promoting those products that are likely to bring more returns to the company and ensuring that there is customer satisfaction. By allowing most of its subsidiaries to operate independently, the company enables them to work on their own to satisfy needs of customers (Solis, 2011). There are several factors that influence the process of prioritization with respect to innovation. The first and most important factor to consider in the prioritization process is market demand. This is normally driven by the customers’ requirements. The V WAG company’s management has been in the frontline to ensure that most products that are given priority in terms of resource allocation are those that are needed in the market. Demand for products in the market is identified through conducting a proper research by the company in various areas where the company operates. If the market demand meets the threshold that the company has set, then the company can decide to consider launching a product.

The Volkswagen Company has its own tools that it uses to measure how significantly innovation that is supposed to be introduced into the market will impact the market and how much such a product is likely to benefit the company. There are several reasons why innovation has to meet the threshold set by the company in order to be considered for resource allocation. First and foremost, the company as a business has the major objective of making profits and avoiding losses. This means that a new product or service being brought to the market must bring positive returns to the company. By using research, the company can determine how much free room there is in the market for a new product that it is about to launch, who its competitors with respect to this particular product are, how unique this product is as compared to similar products that already exist in the market, and how this uniqueness will help in eliminating competition, thereby attracting more customers to this new product than to products offered by competitors.

2.4 Implementation

Over the years, products of the V WAG company have been subject to improvements in a bid to make sure that all new products partially resemble the old product and this way preserve the originality of Volkswagen so that the brand is recognized as unique. When implementing its innovation strategy, the Volkswagen Company has always ensured that it introduces products that are improved as compared to previous products. This means that new products have better features than the ones that have been previously in the market and that these new features are based on demand displayed by customers and up-to-date technological advancements. Implementation of innovations by Volkswagen has always been dependent on the prevailing market demand and the ability of new products to show improvement in functionality.

During the implementation stage, the company also engages in marketing through advertisements and publicity with the aim of reaching its target customers. For this purpose, the company works with mainstream media , social networking cites, and other internet sources to ensure that the product is seen and that targeted customers get to know how the new innovation functions (Mondy & Mondy, 2014). In the 21st century and with advancement of modern technology, new products of the company have always been marketed through sponsorship deals that have allowed more people to see how products work. One common way of ensuring sponsorship that is likely to show how products work is by sponsoring movies. For instance, in many instances the Volkswagen Company has sponsored Hollywood movies, which are some of the most watched movies globally, with the aim of showing customers how good some of its new products are.

The company has also on several occasions bought airtime from reputable television stations around the globe to run documentaries on its new innovations. This has managed to attract more customers to the company’s new innovation. Apart from TV, commercials, documentaries, and movie sponsorships, the company has also been having car exhibitions to display its new innovations to customers so that those who are targeted are aware that the products are available to them.

2.5 People and Organization

The Volkswagen Company has been one of those companies that are interested in getting innovation ideas from workers. The company’s key goal has always been innovation and this culture has been passed down across generations in order to develop more new products that are constantly improved. V WAG has human resource policies that allow most of its workers to present their creative ideas for consideration in a bid to improve the company’s output with regards to innovation. The company has over the years been involved in ensuring that it attracts the workforce that is competent, innovative, and able to deliver its work within the time required (Paauwe & Boon, 2009).

In terms of motivation of workers, the company offers competitive remunerations that allow workers to work diligently without any complaints in all its subsidiaries across the globe. The company is hailed for ensuring that it is one of the multinationals that pay its workers well both locally and internationality. Volkswagen AG has an array of workers in various sectors that it runs and has proved to be one of the most competitive and well performing companies in the motor industry. Its workers in the banking sector understand needs of customers and have been able to offer good products to them.

The company also offers training to most of its workers in its subsidiaries and the main headquarters. Trainings are meant to sharpen skills that workers have so that they can work innovatively and improve products that the firm is producing every year. Work that most of these workers do is also recognized and rewarded. The company has over the years been able to award some of its best performing workers like engineers who have helped build some of the best models for the company, as well as its marketers and other best performing workers in various departments and branches worldwide. This has in many instances served as a morale booster that has made most employees excel at what they do and give their best at work. Good treatment of workers has been one of the leading reasons for innovation within the company.

3.0 Related Issues

There are several issues that are related to the process of innovation. These issues are factors that make the company different from its competitors. There are unique features within V WAG that have made it easy for the company to achieve its innovation objectives. Some of the issues that related to the process of innovation in the Volkswagen Company are listed below.

3.1 Innovation Drivers

Innovation drivers in the Volkswagen Company are those factors that enable it to come up with new products that are useful for the growth and development of the company. One of the key innovation drivers in the company is desire for expansion. The company has expanded to different parts of the world and with the increasing competition the company has to work for ensuring that it remains relevant by coming up with new products that are appealing to customers (Salge & Vera, 2012). There are several ways through which the company has been able to find out which areas to improve on so as to eliminate or reduce competition. The first and most important thing is customer satisfaction. This is one of the most important areas that the company has been working on. Customer satisfaction is a major driver for innovation as when the customers are satisfied, their loyalty to products is maintained.

3.2 Dimensions of Innovation Present

Presently, there are several dimensions of innovation within the Volkswagen Company that are aimed at ensuring that the company delivers constantly improved products to its ever expanding and diverse customer base. These dimensions of innovation include diversification of services (Siltala, 2010). The Volkswagen Company is not only involved in the designing, manufacture, and distribution of vehicles, but also offers banking and insurance services to customers in several countries around the world. In 2016, the Volkswagen Company has made a major announcement known as the corporate “strategy 2025” according to which the company plans to offer electric cars to its customers. The strategy is aimed at ensuring that by 2020 there will be at least 20 cars that are powered electrically or 20 plug-in car models. It also looks at the possibility of having 30 electric cars by 2025. This innovation strategy that is currently on the pipeline is what most of the Volkswagen Company’s customers are looking forward to.

3.3 Technology

The Volkswagen Company has always embraced technology in its operations. The company started with manufacturing manual cars, but later it started producing automatic cars to make driving easier for its users. The company has also been known to work closely with other companies that offer technological products, for instance, it has recently acquired technology from Nokia that will enable it to make its cars automated and more advanced. The company was also the first company to come up with an automated parking system. All these developments that rely on innovations have been achieved thanks to the company’s technological advancement.

3.4 Individual vs. Team Creativity

The Volkswagen Company has been a leader in creativity and in terms of encouraging individual and group creativity. This has been demonstrated by the way the company has worked to ensure that its several subsidiaries work towards producing good cars that can be sold all over the world. The mother company has never interfered with the work of its subsidiaries in the process of production of quality goods. The company has also allowed an exchange of ideas between its partners and subsidiaries so that its products are innovative, as well as with a view to ensuring that all the products produced under the umbrella of Volkswagen are of good quality and appealing to customers who are the primary concern of the company.

3.5 Managing Knowledge

The company has been on the forefront of ensuring that most of its workers are well-trained, well-equipped, and able to do their jobs well. The company has therefore developed plans to make sure that its workers are able to update their skills through regular training and exchange programs within the subsidiaries so that there is a constant exchange of knowledge and ideas between all employees. This has enabled workers to be more effective in process of performing their duties, as well as enabling learning and improvement in various areas (Heyne, Boettke, & Prychitko, 2010).

4.0 Conclusions and Recommendations

The Volkswagen Company as one of the leading vehicle manufacturers in the world has achieved significant milestones over the years. The work that has been done by the company in terms of innovation and creativity has been immense and the success of the company can only be attributed to the way its management has worked over the years to ensure that there is proper innovation and conducive working environment. The company’s ability to use technology well has been highly appraised and allowed developing numerous products and services that other car dealers do not have access to. V WAG is a classic example of success in the changing world.

Moving into the future, the company should employ better ways of improving its products to taken into consideration a number of issues, including reducing carbon emissions into the atmosphere. The company should adhere to various treaties that have been signed to lower carbon emission levels in order to address the problem of global warming. The corporative strategy 2025 is a step in the right direction for the company since it embraces the use of clean energy. However, the company should do envision even more measures to be implemented in its production plants to reduce harmful emissions into the atmosphere in order to secure a safe future for the generations to come.

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