Volkswagen Case Study

Kevin Timothy Hall

University of the People

BUS5112 Marketing Management

 Volkswagen Case Study

This case study forces on the Volkswagen Group’s Strategy 2018 and how due to failures within

the company created a public scandal in 2015. This paper will go on to examine the new Strategy

2025 which replaces the previous one and how it aims to repair the damage done in 2015.  

Volkswagen’s Strategy 2018

In 2008, Volkswagen Group announced its Strategy 2018 in which they aimed at positioning

themselves as a global economic and environmental leader of car manufacturers. The strategy as

defined in the Volkswagen Group’s (2011) annual report outlined four main objectives, which

were: 1) the implementation of innovative technologies to achieve world leader status for quality

and consumer satisfaction. 2) Increase automobile sales to 10 million per year and obtain higher

than average market share of developing markets. 3) A focus on the financial position stronger

by increasing its returns on sales (before tax) to at least 8%. 4) To develop into the top employer

in all departments and regions to create a top team.

By 2014, as reported by Holloway (2015) the Volkswagen Group had appeared to have achieved

its sales goal as it recorded global sales of 10.217 million vehicles and a rise in profits.  The

group also had increased its number of employees to 592,586 as stated in their annual report

(2014). However, the emissions scandal of 2015 would have a huge impact on the Volkswagen

group. As summarised by Magadia et al. (2019), the Environmental Protection Agency (EPA)

discovered a software that could detect when the vehicle was going through an emissions check

and would change the results of the test to one that favoured the vehicle. Once the news broke,

this had a huge impact on the reputation of Volkswagen Group and public opinion was at an all
time low. Furthermore, between recalls and settlements, the finances of Volkswagen were hard

hit.  Reuters (2020) reported that the scandal has cost the Volkswagen Group 31.3 billion euros.

On top of the scandal, Magadia et al. (2019) noted that the recall rate for the Volkswagen Group

was the second highest in 2016 which did not include the recalls for the emissions scandal.

Strategy 2018 Key Elements & Failures

The strategy’s key elements were focused on increasing sales revenue and market share, building

a reputation for quality and reliability through innovation, while also increasing their profits.

However, the emissions scandal only highlighted a deep problem at the company. In an article by

Rothfeder (2016), the management at the company had, at times, created an unethical and

negative culture. Also, there were claims that employees became afraid to speak out on technical

issues in case they would lose their job. These two main issues had caused the Strategy 2018 to

fail. Following this, in 2015 the Volkswagen Group outlined their new strategy.

Strategy 2025

Following the emission scandal, the Volkswagen Group would shift its focus to more

environmentally friendly projects, such as electric cars. In addition, they created a Sustainability

Board which would improve dialogue with its stakeholders on sustainability and corporate social

responsibility (CSR). Fernando (2021) stated that CSR can assist in creating a better public

image of the company and show that their brand is more ethical. Magadia et al. (2019) article

gave four recommendations: 1) change the culture of the company, 2) improve brand recognition

and regain consumer trust. 3) improve the quality and productivity 3) establish joint ventures to

improve battery technology. All four recommendations have their merits, as Kumar (2016)

pointed out that company culture is essential in increasing the business performance and the
employee performance. Furthermore, Lin & Chuang’s (2018) research concluded that a positive

brand image had a direct link on consumer behaviour. However, there are risks with some of the

recommendations as Channon & Sammut-Bonnici (2014) pointed out that there is a relatively

high rate of failures with joint ventures. The approach suggested by Magadia et al. (2019) does

target the areas that, if improved, would set the Volkswagen group back on track.  

Strategy 2025’s Clarity and Achievability

Magadia et al. (2019) noted that the Volkswagen Group has identified nine functional areas for

improvement which included production, R&D, procurement, sales, finance, quality assurance,

HR, IT, and integrity and legal affairs. They also outlined the change initiatives which were

grouped into four areas: transform core business, strengthen innovative power, build mobility

solutions business and secure funding.  The Volkswagen Groups aimed at making key changes

and provided a detailed vision and road map of how to achieve it. This laid the foundations for a

new looks Volkswagen group that would be achievable.

Conclusion

The Volkswagen group has recovered from the emissions scandal and looks well on its way to

recapture its position as a leader in car manufacturing. They appear to be on track in delivering

on some of the key goals as they are reported to be on track to switch to electric in line with

Europe’s net zero climate target (Transport & Environment, 2021). Furthermore, Diess (2020) -

the Chairman of the Board of Management of the Volkswagen Group – stated that the group sold

over 11 million vehicles annually and had grown to 670,000 employees. The Volkswagen group

had recovered from their setback to become one of the world’s largest car manufacturers.
 References

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