1. Which of the four basic strategy types were used by VW? Explain your rationale.
2. Based on the case, what is VW's vision? Do you think it is realistic? Explain.
3. State two SMART goals for VW based on the case. Are these goals attainable? Discuss.
4. Using Figure 5.5, describe the extent to which VW is using the planning/control cycle.
5. What did you learn about planning based on this case? Explain.
When Volkswagen CEO Martin Winterkorn said two years ago that he was determined to zoom past Toyota to become the world's biggest automaker, the notion seemed laughable. At the time,
German automaker sold 3 million fewer vehicles than Toyota, was losing ground in the United States, and had a reputation for iffy quality.... Winterkorn sees a historic opportunity. And with the backing of his formidable boss and mentor, VW Chairman Ferdinand Piech, he's seizing it. By 2018, Winterkorn vows, VW will pass Toyota.... All over the globe, Winterkorn, 62, is punching the accelerator. VW has agreed to buy a 20% stake in Suzuki Motors to gear up for an assault on the rapidly growing markets of Southeast Asia and India. Winterkorn is going after BMW and Mercedes, committing $11 billion over the next three years to Audi, VW's luxury brand....
Winterkorn's most ambitious plans are in the United States, where he aims to double sales by 2012. It was only five years ago that VW tried and failed to move upmarket in the United States. Remember the Phaeton, the VW with a sticker price of $85,000? Now Winterkorn is reversing course. He's betting that Volkswagen can steal customers from Toyota, Honda, Ford, and others by selling Americans on German engineering and style at affordable prices.... Beating Toyota won't be easy. For starters, VW sells fewer vehicles in the United States than Subaru or Kia and still has a reputation for making unreliable, overpriced cars. In Southeast Asia-a Toyota stronghold-the VW brand is practically unknown. Ditto for India.... Still, VW is a formidable competitor; it earned $975 million in the first three quarters of 2009, despite the global collapse of car sales, and it has $33.3 billion in cash. "We want to make VW the economic, ecological, and technological leader by 2018, "Winterkorn wrote in an e-mail. "Our goal is not just about size-we are aiming for quality-driven growth." ...
In the summer of 2007, Winterkorn and the board met to brainstorm ways to become the world's biggest automaker, say VW's U.S. chief, Stefan Jacoby. High on the agenda was fixing VW's America problem. That year, VW expected to sell200,000 cars in the United States, a 40% drop from 2000 and a third of what VW sold in 1970 when the Bug and Bus were hippie icons. Jacoby says executives at the meeting saw three choices: They could continue to lose buckets of money selling cars that were too small and too expensive; they could wave the white flag; or they could go on the offensive. They chose Door No. 3. Jacoby says he persuaded the board to build VW's first U.S. plant. He recalls arguing that doing so would help VW overcome resistance in the American heartland to imported vehicles. If VW built the plant, Jacoby recalls saying, he would sell 1 50,000 cars from that factory alone each year. The board approved the plan and allocated $1 billion for the facility, which is scheduled to open [in 2011] in Chattanooga, Tennessee. VW's decision to build cars in the United States has not gone unnoticed by its main rival. ... According to a source briefed on VW's plans for the United States, the company plans to expand its lineup from 10 cars today to 14 in five years. VW will have new compact and midsized sedans priced for the American market, plus a small SUV. ...
VW will have to convince Americans its cars are worth buying. In J.D. Powers & Associates Initial Quality Study, which ranks cars in the first three months of ownership, VW came in 1 5th out of 37 [in 2009]. The company's ranking improved from 24th in 2008....
Winterkorn and Piech have put in place the pieces of their global strategy. Now that VW's two main rivals, Toyota and GM, are retrenching, they're speeding up their plans. The big question is whether size for size's sake generates real benefits for a car company. Automakers like to get big so they can spread the huge costs of developing new models over mass volume. Of course, car companies have a tendency to get so big that they become unmanageable.