Volkswagen Group is based in Wolfsburg, Germany, ranks among the world’s leading automobile manufacturer and is the largest carmaker in Europe. Therefore the Group posses 11.3 percent share of the world passenger car market and holds 20.9 percent of the European automobile market. The Volkswagen Group with its nine brands (Audi, SEAT, Škoda, Volkswagen, Volkswagen Commercial Vehicles, Bentley, Bugatti, Lamborghini and Scania) offers a broad product range from low-consumption small cars to luxury class vehicles. For simplicity reasons the Volkswagen Aktiengesellschaft (as parent company of the Volkswagen group) is referred to as Volkswagen or VW where as the whole Volkswagen Group is either referred to as Volkswagen (VW) Group or Group within this paper. Despite the Group’s international alignment it is currently only slightly represented in India. As it has entered the Indian passenger car market ten years ago, significantly later than its Japanese and American competitors, its current market share amounts only to two percent. Because potential customers are increasing, the automotive industry is getting more dynamical and international and government’s politics are focusing on economic growth, India could become the future key market to the automotive industry. Due to the eminently strong growth of the Indian main street and the proceeding social change, as the younger generation wants to go for a distinguished career, especially the Indian minicar market’s (IMM) potential is higher than ever before. As Volkswagen Group is alive to the importance of this market but lacking in appropriate knowledge how to produce cheapest cars in large-scale production, it considers strengthening the cooperation with Suzuki Motor Corporation and Volkswagen by building a Joint Venture (JV). Thus, the already existing cross share- holding as shown in Appendix A could evolve into a new common entity. This paper analyses, appraises and evaluates in what way this strategy is promising for Volkswagen and how far Suzuki is an appropriate partner. Therefore, this assignment contributes to the assessment of the strategy’s prospect of success. Therefore, Appendix B was used partly as framework in this paper. Firstly, Volkswagen Group’s vision and history is epitomised and its objectives are outlined. Secondly, chosen resources of Volkswagen are revealed (2) and it is analysed how far they are transferable to the mentioned market and to which extent the JV with Suzuki Motor ...
Table of Contents
1. Introduction
2. Volkswagen Group’s history, objectives and vision
3. Analysis and evaluation of chosen resources of Volkswagen and their transferability to the IMM whilst taking the JV into account
3.1 Tangible Assets
3.1.1 Physical resources: Location of plants and supplier network
3.2 Intangible Assets
3.2.1 Research and development capabilities
3.2.2 Perceptions of product quality, durability, and reliability among customers
3. Indian’s market for minicars
4. India´s business environment
5. Conclusion
Research Goals and Thematic Areas
The primary goal of this paper is to analyze and evaluate the resources of the Volkswagen Group in Germany to determine their transferability to the Indian minicar market (IMM), particularly regarding a potential joint venture with Suzuki Motor Corporation. The research aims to assess how Volkswagen can leverage its existing competencies to successfully establish itself in a market where it currently holds a very limited share.
- Analysis of Volkswagen Group's historical development, strategic objectives, and vision.
- Evaluation of tangible assets, specifically plant locations and the efficiency of the supplier network.
- Assessment of intangible assets, focusing on research and development capabilities and corporate reputation.
- Examination of the Indian minicar market (IMM) characteristics and business environment.
- Strategic assessment of a potential joint venture with Suzuki as a means to overcome market entry barriers.
Excerpt from the Book
3.1 Tangible Assets
Over the years Volkswagen built up nine plants in Germany. Whereas three of them are located close to the Czech border in Saxony (East Germany), other plants are situated in the northwest of Germany. Today’s headquarter was already established in 1938 in Wolfsburg due to its proximity to the Midland Canal and steel works in Peine and Salzgitter and its connections to the railway Berlin – Ruhr area as well as to the federal autobahn 2. In the following years other plants were build up in the vicinity. In general VW can profit at its western plants from the central European location, diversified know how of employees, the logistical hub and the Jade-Weser Port in Wilhelmshaven which is currently under construction (Jirikowski-Winter, 2010).
In Saxony Volkswagen may benefit from lower wages (mainly in the plant in Dresden as it has features of a manufactory), the state’s strong economic growth, its splendidly constructed transport infrastructure (2 international airports, motorway access), the proximity to East European countries and the dense R&D infrastructure (Invest in Saxony, n.d.). Indeed, the global market presence of Volkswagen is one of its main strengths, but it also presents special challenges. Therefore, VW already established successfully stable supplier relations, an efficient network of production and procurement and effective risk management. The Group and its suppliers benefit from an online platform (VWGroupSupply.com) where nearly the complete procurement volume of more than € 75,4 billion is managed. The following Table 1 helps to assess competitive implications of the firm’s plant locations and its supplier network.
Summary of Chapters
1. Introduction: This chapter introduces the global positioning of the Volkswagen Group and highlights its current competitive situation in India, while establishing the purpose of examining a potential joint venture with Suzuki.
2. Volkswagen Group’s history, objectives and vision: This section outlines the company's growth objectives in India, its strategy to develop localized products, and its commitment to technology leadership and sustainable development.
3. Analysis and evaluation of chosen resources of Volkswagen and their transferability to the IMM whilst taking the JV into account: This main body chapter utilizes the VRIO framework to analyze Volkswagen’s tangible and intangible resources and evaluates their applicability to the Indian market.
3.1 Tangible Assets: This part focuses on the strategic significance of German plant locations and the extensive supplier network as a source of competitive advantage.
3.2 Intangible Assets: This section investigates the firm’s R&D prowess and brand reputation, and their role in creating customer trust and product differentiation.
3. Indian’s market for minicars: This chapter provides an overview of the competitive landscape, market size, and growth drivers specifically within the Indian minicar segment.
4. India´s business environment: This chapter analyzes the institutional and social factors affecting business operations in India, emphasizing the need for understanding local frameworks.
5. Conclusion: This final chapter synthesizes the findings and provides a strategic outlook on the viability of the joint venture with Suzuki.
Keywords
Volkswagen, Indian minicar market, Joint Venture, Suzuki, VRIO framework, tangible assets, intangible assets, R&D capabilities, supplier network, corporate reputation, automotive industry, market entry strategy, competitive advantage.
Frequently Asked Questions
What is the core focus of this research?
The work examines the strategic resources of the Volkswagen Group in Germany and evaluates whether these can be transferred to the Indian minicar market to facilitate a successful expansion, potentially through a joint venture with Suzuki.
What are the primary thematic areas covered?
The research covers Volkswagen's corporate history and strategy, a detailed VRIO analysis of its resources (tangible and intangible), the specific characteristics of the Indian minicar market, and the broader Indian business environment.
What is the central research question?
The paper asks to what extent Volkswagen’s existing resources contribute to its competitive advantage and how they can be effectively transferred to the Indian minicar market, considering the potential synergy with Suzuki Motor Corporation.
Which scientific methodology is applied?
The study primarily uses the VRIO framework (Value, Rarity, Imitability, Organization) to evaluate resources and incorporates Porter’s Five Forces model to assess the competitiveness of the Indian minicar market.
What does the main body of the work address?
The main body focuses on analyzing Volkswagen's physical assets (plants and supplier network) and intangible assets (R&D capabilities and brand reputation) and evaluates how these interact with the specific requirements of the Indian market.
Which keywords best describe this study?
Key concepts include Volkswagen, Indian minicar market, Joint Venture, Suzuki, VRIO framework, and competitive advantage.
How does the author view Volkswagen’s current position in India?
The author notes that Volkswagen is currently only slightly represented in India and faces significant challenges regarding cost-efficient production of small cars, which is why a joint venture is considered an appropriate strategy.
What role does Suzuki play in the proposed strategy?
Suzuki is identified as a vital partner because it possesses deep local market knowledge, experience in large-scale production of minicars, and an established distribution network that Volkswagen currently lacks in India.
- Citation du texte
- Jan Kubik (Auteur), 2010, Analysis and evaluation of chosen resources of Volkswagen in Germany and in respect of the Indian minicar market and the role of Suzuki as a Joint Venture prospect, Munich, GRIN Verlag, https://www.grin.com/document/167909
