This essay analyses internationalisation strategies by using the example of the German automotive manufacturer Volkswagen (VW). First, there will be a theoretical approach to internationalisation by defining the term and explaining the different opportunities and risks of internationalisation.
Following this, essential internationalisation strategies for entering foreign countries and markets will be considered. The main part of the essay will deal with the Volkswagen Aktiengesellschaft (AG) and its internationalisation strategy. Following that, there will be a short description of the historical development of the VW AG before the three main phases of Volkswagen’s internationalisation process and the internationalisation strategy for the Chinese market will be worked out. Finally, the conclusions will summarise the results of this essay.
Table of Contents
1. Introduction
2. Theoretical Approach of Internationalisation Strategies
2.1 Definition
2.2 Essential Internationalisation Strategies
2.3 Motives and risks of Internationalisation
3. Volkswagen AG and its Internationalisation Strategy
3.1 Short company profile and historical development
3.2 Phases of Volkswagen’s Internationalisation Strategy
3.3 The Internationalisation Strategy of VW illustrated through the example of the People’s Republic of China
4. Conclusions
Objectives and Topics
This study aims to examine the internationalisation strategies of the Volkswagen AG, focusing on the company's historical transformation from a multinational to a globally operating transnational corporation and its specific market entry and expansion tactics within China.
- Fundamentals of internationalisation strategies and corporate motives.
- Analysis of the historical development phases of Volkswagen AG.
- Evaluation of market entry modes such as Joint Ventures.
- Strategic examination of Volkswagen's success in the Chinese automotive market.
Excerpt from the Book
3.3 The Internationalisation Strategy of VW illustrated through the example of the People’s Republic of China
Volkswagen directly builds production plants before any sales subsidiaries were established. A possible reason for this unusual strategy could be the country policy in China: up until 1984 China had a planned economy and the market was vigorously controlled by the government. The imported goods were very strongly controlled. Foreign investors were given the opportunity to explore the Chinese market because of Chinas reform and opening-up policy in 1978. The joint venture form of investment for the automobile industry was encouraged by the Chinese government. VW is the first company in the automobile industry that became a JV partner in China (Fu and Ogasavara, n.d.; p. 6).
Volkswagen was one of the first international companies that very early on recognised the long-term market opportunities presented by the unexplored Chinese market. This leads to high investments in the early stages of VW’s foreign activities in China. In 1982 the basic agreement for trial installation was signed by Volkswagen and the Shanghai Tractor & Automotive Corporation, which was the starting point for VWs engagement in China. Just one year later, the industrial serial production of the Santana model started. Volkswagens involvement in China achieved its next milestone in 1985 through the signing of a JV agreement with the Shanghai Automotive Industry Co. (SAIC) with an investment share of € 500 million which resulted in the Shanghai Volkswagen Automotive Co. Ltd. (SVW). This new JV temporarily achieved a market share of more than 50 percent in the Chinese automobile market. Despite significantly decreasing sales in the last couple of years because of new competitors, SVW is still a relevant factor in the Chinese automobile market. The market entrance and the opportunity gradually expanded product capacities were the two main reasons for the establishment of the JV with SAIC. VW was in possession of modern and innovative know how in technologic and management, whereas SAIC had already gained experience in the Chinese market and had built an excellent network with important business contacts to politics and the economy.
Summary of Chapters
1. Introduction: This chapter provides an overview of the essay's scope, outlining the analysis of internationalisation strategies with Volkswagen AG as the primary case study.
2. Theoretical Approach of Internationalisation Strategies: This section defines the core concept of internationalisation and details various strategic entry modes and associated business risks.
3. Volkswagen AG and its Internationalisation Strategy: This chapter covers the company's historical background, the evolution of its internationalisation phases, and a deep dive into its strategic engagement in China.
4. Conclusions: The final chapter synthesizes the main findings, highlighting the shift towards a transnational profile and the significance of the Chinese market for Volkswagen's long-term success.
Keywords
Internationalisation, Volkswagen AG, Joint Venture, China, Automotive Industry, Transnational Corporation, Market Entry, SAIC, FAW-VW, Foreign Direct Investment, Strategic Alliance, Globalization, Corporate Strategy, Export, Production Facilities.
Frequently Asked Questions
What is the primary focus of this academic work?
The work provides a comprehensive analysis of internationalisation strategies, specifically utilizing Volkswagen AG as a real-world case study to illustrate these concepts in practice.
What are the central thematic areas covered?
The study covers the theoretical foundations of internationalisation, the classification of entry strategies (such as exports, licensing, and joint ventures), and the practical application of these strategies within the automotive sector.
What is the primary research goal?
The goal is to evaluate how Volkswagen transformed its corporate structure and international strategy to become a globally operating transnational corporation, with a specific focus on its operations in China.
Which scientific methods were employed?
The paper utilizes a qualitative case study approach, synthesizing existing literature, corporate reports, and industry data to analyze the internationalisation process of Volkswagen AG.
What is the main subject of the central chapters?
The main chapters detail the historical development of Volkswagen, categorize the phases of its internationalisation process, and examine its strategic partnerships in China, particularly with SAIC and FAW-VW.
Which keywords best describe this research?
Key terms include Internationalisation, Volkswagen AG, Joint Venture, China market, Automotive industry, and Transnational corporation.
How did China's policy reform influence Volkswagen's entry strategy?
China's "reform and opening-up" policy of 1978 and the government's encouragement of Joint Ventures for the automotive industry allowed Volkswagen to establish production plants early on, overcoming barriers typical of a planned economy.
Why is the partnership with SAIC considered crucial for Volkswagen?
The partnership provided Volkswagen with essential local market knowledge and political/economic networks through SAIC, while Volkswagen contributed modern technological know-how, allowing them to secure a dominant market share.
- Arbeit zitieren
- M. Sc. Jannis Happeck (Autor:in), 2016, An Analysis of Internationalisation Strategies Using the Example of Volkswagen (VW AG), München, GRIN Verlag, https://www.grin.com/document/366656
