Volkswagon’s comback: aligning strategy and structure
This is just a discussion question.
Discuss the importance of recognizing and implementing different entry strategies and organizational arrangements which result in shared control and oversight through collaborative relationships, as illustrated in the Chapter 9 opening-discussion case, “Volkswagen’s Comeback: Aligning Strategy and Structure.” Please post your Discussion based on the following questions:
1) Which organizational structure described in the chapter does Volkswagen’s “customer oriented” structure most closely resemble?
2) How might such a structure help or hinder entry into new markets?
3) Does a matrix or customer-oriented structure lend itself better to forming joint ventures and alliances?
Here is the reading from the textbook:
Volkswagen’s Comeback: Aligning Strategy and Structure
In the fiercely competitive global automotive industry, Volkswagen has pursued an ongoing global strategy that emphasizes both centralization and regional adaptation and leverages the range of capabilities from its various brands and their production. The Volkswagen Group makes
245 models of passenger cars, trucks, and buses under 10 brands. In 2012, it sold 9.3 million vehicles in 153 countries on five continents, adding more than 1 million passenger cars over 2011 and catapulting it ahead of both General Motors and Toyota to become the largest automaker in the world.1 Despite the tough global environment for automotive sales, especially in Europe, VW’s home base, the Volkswa- gen Group outperformed the market in 2012, growing in almost all key regions. Deliveries of all vehicles climbed 12.2 percent, increasing the Group’s global share of the passenger car market to 12.8 percent from 12.3 percent in the prior year. Volkswagen’s revenue increased by 20.9 per- cent in fiscal year 2012 to €‚192.7 billion from the previous year’s €‚159.3 billion. Like many leading automotive compa- nies, including Ford, GM, and Toyota, VW operates a joint venture in China that generated a €‚3.7 billion (€‚2.6 billion) share of the 2012 operating profit.2 In 2013, VW extended its lead over its rivals in market share for passenger vehi- cles and trucks through its many brands, including the Volkswagen Passenger Cars brand; the Audi brand; ŠKODA, a car and truck manufacturer; SEAT, an entry level vehicle brand; Bentley, the luxury car maker; sports car manufac- turer Porsche; the Commercial Vehicles group; Scania, a truck maker; and a financial services group.3
Despite these successes, as recently as 2007, VW was facing severe challenges with slow sales, meager mar- gins, and no clear global strategy. What factors led to the impressive comeback?