Question 1: Expansion strategies and global competitiveness.

In December 2007, Martin Winterkorn the CEO of Volkswagen launched “Strategy 2018”. The
goal of the “Strategy 2018” is to position the Volkswagen Group as a global economic and
environmental leader among automobile manufacturers. In order to achieve that, Volkswagen
has set four strategic goals: Volkswagen intends to become a world leader by using intelligent
innovations and technologies, to delivering customer satisfaction and quality. In long run,
Volkswagen aims to increase unit sales to more than 10 million vehicles a year. By achieving a
return on sales before tax of over 8.0%, to ensure the Group’s solid financial position and ability
to act are guaranteed even in difficult market periods. Volkswagen aims to become the top
employer across all brands, companies and regions. (Anon 2010)

In earlier 2014, when U.S. and German researchers from the international council on clean
transportation (ICCT) together with a team at the West Virginia University (WVU) run a road
tested Volkswagen vehicles under real driving conditions and the emissions violations were
discovered in Volkswagen diesel vehicles. (Blackwelder et al. 2016). In 2015, the US EPA
(Environmental Protection Agency’s) and the California Air Resource Board were corroborated
these initial results and the scandal became global. Volkswagen engineers had fitted cheat
software that allowed the vehicles to run within the strict boundaries of Californian regulations
for nitrogen oxide emissions during tests, but when run in the real world, the engine emissions
were significantly higher. (Robertson 2017). Nitric Dioxide is released with other small particles
from the engines of diesel and they simultaneously can penetrate lungs and cause lung cancer,
premature deaths and bronchial asthma in children's.(Abdelrasool 2018).This scandal were bring
huge impart for Volkswagen, the public trust to the Volkswagens has been demolished (Joachim
Fiedler 2018), the company lose one third of the company’s market cap. Volkswagen was also
facing lawsuits and criminal charges. (Zhou 2016).

As a strategic business consultant, Volkswagen needs to take more decisive measures and
strategies to win back the trust for the Volkswagen group. Trust is a fragile commodity, it takes a
long time to build, but can be destroyed rapidly. Immediately after acknowledge the scandal, I
will set up a team with public relation specialists, makerting manager, repution managers,
lawyers, etc to discuss the strategy to face this scandal.(Sarah landrum 2017)
Next is, Volkswagen CEO should instantly apologize for transgression to facilitate the consumer
and stakeholder antipathy. Actually, consumers will not restore the trust because apology can
only show the regret for the past behavior and cannot believe the company before actions.
(Bansal & Zahedi 2015; Zhang 2012; Utz et al. 2009).

The CEO Martin must give an explanation to the public, consumer and stockholder about this
scandal. He will be responsible for this dieselgate issues and resign his position as Volkswagen’s
CEO and handle the key to new CEO Matthias. With these strategic moves, consumers and
stakeholders will see you are actively moving and responding. He also must make the apology
through digital age like facebook, newspaper and television for the cheating software lead to this
dieselgate scandal.

At the same time, new CEO Matthias represent Volkswagen promise that this issues will be
solve immediately and will not happen again in future. The promise represent the intention in the
future and increase the confidence of consumers, apology plus promise may help rebuild trust
better.(Zhang 2012) Besides that, Volkswagen will recall all the dieselgate vehicles and
exchange new vehicles to the customer.

Following step is brand recovery, this is important because after the scandal the volkswagen’s
U.S. sales fell nearly 25% and U.K. sales fell 20% in November 2015. (Gallardo 2016)
Advertising as a communication device to regain customers lost trust. Adverting will influence
consumers first purchase decision. (Cleeren et al. 2008) The advertisement design must be
creative and bring positive ideas towards Volkswagen.

Customer loyalty is the key for business success and a loyal customer means increasing
profitability (value making) in low costs. (Monfared 2015)When it comes to brand loyalty,
customer service weighs heavily in customer decisions. Thus, Volkswagen customer service
team must get more customer service review, because in today big data world all customer will
search the review before purchase. “try before you buy” is one of the advance step to bust the
customer trust and loyalty.