Reference no: EM133163528

CASE STUDY 

VW Volkswagen Group (VW AG), a German multinational automotive manufacturing corporation, is one of the most well-known firms in the automobile industry, and the largest manufacturing group worldwide. The Group´s brands regarding passenger cars are Audi, Bentley, Bugatti, Seat, Skoda, Lamborghini, Porsche, and considering the commercial vehicles are Scania and Man. The company employs around 600.000 employees around the world, operates in 20 European countries and a further 10 countries in the States, Africa, and Asia, and sells vehicles in 153 nations globally. Their business strategy is to become the market leader within the field by 2025. They plan to promote autonomous driving and launch fully electric cars by using mobility apps, lowering R&D and factory costs, while saving from battery costs. Among their strategic objectives are a solid level of digitalization across all functions, regions, and brands, and the accomplishment of more partnerships. When it comes to HRM strategy, performance is prioritized with a focus on a diverse workforce, opportunities for personal growth, and fair compensation benefits. ´´Empower to transform´´ is the strategic approach that has been followed since 2017 and on. According to ´´ TOGETHER-STRATEGY 2025´´, the female workforce is expected to reach 25% of all employees operating in production plants by 2025. However, the Group´s human capital has been through structural changes since 2015 and after the emission scandal. The Environmental Protection Agency (EPA) revealed the VW´s carbon emissions cheat when after conducting tests on vehicles discovered that 482.000 diesel cars were emitted up to 40 times the permissible Nitrogen oxide fumes in the States. The corporate sustainability scandal was not only translated to a loss of trust and reputation, but to penalties in the International Council on Clean Transportation (ICCT), legal costs, recalls, and compensational adjustments. Senior executives together with the CEO were suspended from their positions. The VW proportion rate was dropped by 24%, $ 25 billion was paid to fines, and 30% of customers were not considered loyal anymore. Also, around 200 employees were dismissed for breaking internal ethical policies, and the Environmental Protection Agency in the USA claimed that the Group put in danger the public due to lung diseases and premature deaths. Currently, VW has been again through a new challenge due to the pandemic, and people management changes have been a reality. In 2020, the Group´s global sales showed a decrease in all brands at an average score of 15% and announced 3.000 layoffs. A further workforce reduction is to be due by 2023.

Questions 

1. Compare and contrast Porter's three types of business unit strategies with Miles and Snow's defender or prospector strategy: Analyse all aspects of the two approaches and highlight the pros and cons of each about the kind of company VW Group is and the products the company produces. Demonstrate which of the two strategies is best suited to the company structure of VW Group and explain why you have chosen one strategy over the other using examples that support your choice.

 2. Provide an alternative conclusion: Assess and recommend another kind of strategy that may best fit VW Group in the future to deal with possible future scandals and be more flexible in dealing with market forces. Justify why you think so