BALANCED SCORECARD OF VOLKSWAGEN GROUP

Balanced Scorecard of Volkswagen Group

Busa 486A Team #1

Katie Shaffer, Natalie Colcombe, Shana Kurtich,

Andrew Myers, Austin Everett, Malcolm Blake

Grove City College

October 30th, 2017

BALANCED SCORECARD OF VOLKSWAGEN GROUP

Abstract

In this paper, the research group developed a balanced scorecard by collecting and analyzing all

previously executed reports and data collection activities completed throughout this strategic

process. The objective we chose to establish a balanced scorecard for was “Develop and bring to

market one hundred electric vehicle models ready for sale in the global auto industry by 2023.”

For this objective, we established goals within the categories of finance, customers, internal

business processes, and learning and growth. We then moved to establish measures, targets, and

initiatives for each related goal. The purpose of this paper is to expand upon the rationale which

led us to establish the balanced scorecard.

BALANCED SCORECARD OF VOLKSWAGEN GROUP

Over the course of this semester, this group has conducted extensive research into the

Volkswagen Group. The group completed internal and external audits, vision and mission

statement evaluations, SWOT analysis, and strategic objective evaluations. As a result of

exhaustive research and data collection, the research group has combined all findings into a

balanced scorecard. A balanced scorecard is a performance metric used in strategic management

to identify and improve various internal functions of a business and their resulting external

outcomes. As a managerial tool, the balanced scorecard contains five components. The first

overarching component consists of both the vision statement of the company, and the selected

strategic objective to be applied.

The four subsequent parts of the scorecard are financials, customers, internal business

processes, and learning and growth. The financial portion of the balanced scorecard serves to

satisfy shareholders and ultimately derive continued financial support and success from them.

The scorecard includes a customer portion to answer the question, “in order to achieve our

vision, how should we appear to our customers?” Internal business processes focuses on finding

the most effective and efficient processes for the company, and implementing those to the

satisfaction of shareholders and customers. The learning and growth sections is included to

ensure that the positioning of the company is sustainable and that effective changes are

implemented to yield further progress.

When applied to Volkswagen Group, the research team determined that the vision of the

company was: “We are the leading provider of sustainable mobility.” This was concluded

sufficient on the basis of it providing a long term goal for the company and it spurring on

progress in contrast of the company’s current position within the market. Volkswagen’s strategic

objective for this exercise is to develop and bring to market one hundred electric vehicle models
BALANCED SCORECARD OF VOLKSWAGEN GROUP

ready for sale in the global auto industry by 2023. This strategic objective follows the SMART

rule, as it is specific, measureable, achievable, realistic, and time sensitive. The research group

selected this strategy because it was most applicable to SWOT matches that were previously

analyzed. This strategic objective allows for Volkswagen to put more efforts towards green

energy, allowing them to not only capitalize on an expanding market but to also slowly repair the

negative connotations from their 2015 diesel emissions scandal. In addition, countries like India,

Norway, and China are looking to ban traditional combustion engines by 2023-2030, and this

provides a huge advantage for an auto manufacturer looking to expand their electric car

portfolio.

The financial section of the balanced scorecard includes multiple goals to help achieve

the strategic objective of developing one hundred electric vehicle models. One of the specific

goals is to shift financial resources to help build up the electric car division. The research group

wanted to highlight this goal because of how crucial it is to the objective. The electric car

division will usher in all of the new car models and needs to have adequate resources to do so.

By distributing financial resources throughout the company to focus on electric cars, the

Volkswagen Group will take steps towards making its objective take place. The measurement of

how the money is reallocated will be done by comparing current numbers to the previous year’s

amount as a baseline. The goal for this is to increase the electric car division by 5% each year,

with the initial comparison being against the amount from the previous year. We will

accomplish the goal of redistributing the financial resources by shifting those resources away

from diesel division into the electric car division.

Another section of the balanced scorecard focuses on customers. One of the goals within

this section is for the Volkswagen Group to build its image as an economically-friendly
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company. With Volkswagen still feeling the negative effects of the diesel scandal, the group felt

that there should be a heavy focus on this goal. Not only will this help Volkswagen’s sales in

electric cars, but it will also help their public image and public relations. This can be measured

through customer satisfaction in surveys. The Group’s benchmark is to have three successful

marketing campaigns which will emphasize the eco-friendly improvements being made. In order

to reach the goal, the Group will encourage both employees and salesmen to depict the eco-

friendly persona.

The internal business processes section of the balanced scorecard offers goals to help the

organization reach its strategic objective. One of the goals is to improve the research and

development technical innovation and implementation process. Since the objective relies heavily

on research and development, it would only be natural for the group to highlight this goal for

internal business processes. Any enhancements to this process directly affects Volkswagens

ability to succeed in this objective. Improvement would be measured as the rate of innovation

and implementation of said innovation. The target of this goal is for all technical projects to

have deliverable innovation ready to be implemented in less than two years after the birth of the

idea. This will be accomplished by increasing R&D spending, heavy delegation of decisions to

managers, both of which will reduce the slow reaction time of large corporate setting.

The fourth section of the balanced scorecard is the learning and growth portion. Under

this section, the research group decided on establishing one of our goals as to “establish a

research and development training division.” We believe this goal is crucial for the success of

our objective because the health of our research and development division is the chief

wherewithal to execute the production of the electric cars. Our measurement for successful

implementation of this goal will be measured by the benchmark of having 50 employees in this
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new training division. Ideally, this division will be established by the beginning of the second

quarter of 2018, and will be accomplished by shifting three highly-skilled research and

development team members to this division to whom we delegate the power to recruit others

both internally and externally until they reach 50 employees.

Completing the balanced scorecard assessment allows the research group to have a full

understanding of the company in order to understand their strategic position. Volkswagen

should utilize all deductions made in order to align their best possible strategic objective to every

part of the company and its vision. By doing so, Volkswagen Group can expect to effectively

communicate what they are trying to accomplish and align day-to-day work with the bigger

picture strategy. In addition this scorecard will help to prioritize projects, products and services

to please customers and shareholders, as well as measuring and monitoring continued progress

towards achieving Volkswagen’s goal of being the leading provider of sustainable mobility.

Should Volkswagen follow this plan, it can expect to not only repair its current reputation, but

improve and increase market share.

BALANCED SCORECARD OF VOLKSWAGEN GROUP

References

Bomey, N. (2017, September 11). Volkswagen, Mercedes-Benz launch electric cars: ' ...

Retrieved October 15, 2017, from http://www.cnnmoney.com/cr?

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Edelstein, S. (n.d.). VW Group plans 8 plug-in electric cars for China. Retrieved October 25,

2017, from http://www.greencarreports.com/news/1108388_vw-group-plans-8-plug-in-electric-

cars-for-chin