American automobile industry and Volkswagen Ag Performance Improvement
Document Type:Research Paper
The company is also involved in the maritime industry where it is involved in the production and distribution of machinery and engines. Following a series of challenges including the 2015 emission scandal that badly ruined the company’s reputation and caused fears all over the automobile market and thus caused the company to experience massive losses. Despite increasing its revenue from about 200 billion according to its 2014 annualized performance review, to over 210 billion in 2015, the company suffered its first loss in years in 2015 (Volkswagen,2015). in this period, the company’s profits declined by about 10 billion Euros compared to the previous year, culminating in a loss of about 1. 5 billion Euros. ABout $ 800 billion has exported regarding vehicle units and parts. This particular industry is also instrumental to the growth of the American economy considering that it consumes American products including semiconductors, iron, rubber, glass and American steel.
Players in the automobile industry have also invested heavily in R&D. The most important players in the American automobile industry include General Motors, Ford, and FCA US. These three companies run three out of five vehicle assembly plants and create two out of three jobs in the American automobile industry. There has been a shift toward global model platforms affecting the entire industry. Ass a result, an industry-wide initiative to centralize manufacturing in high performance markets such as the United States. Furthermore, the American Car and Automobile Manufacturing between the years 2012 and 2017 went through a volatile phase in which companies involved in this line of business were expected to generate fewer revenues. Nonetheless, the economy, during this period, appeared to experience a rebound which has played a significant role in increasing financing options and improving consumer confidence.
The impact of the slight increases in the overall national economic performance has been evident in the increase in the volume of new vehicle purchases in the early to middle stages of the 5-year period. Some of the newer trends in the US automobile industry includes the trend toward large franchise auto repair businesses, which have smaller business units joining them. Also, the aftermarket business is increasingly being carried out via online platforms- vehicle parts and vehicle servicing are now accessible online. Also, the average length of time for keeping both old and new vehicles has increased by about 55% over the last decade. Older vehicles are lasting longer, and thus the average of the total number of vehicles on American roads has increased by about 18% over the last decade.
Nature of the automobile industry (External and internal factors affecting) The essential economic indicators for investing in the automobile industry include interest rates, consumer confidence, the unemployment rates and auto sales. In such settings, more people are predisposed to making major purchases such as vehicle purchases. Players involved in the automobile industry tend to get involved in substantial financial debts. Also, the competition between rival companies is extremely fierce and small setbacks in the context of products or quality can be devastating for business in the extremely competitive industry that is the automobile industry. It is not seldom for a automobile giants to go bankrupt as General Motors did ten years ago. Nonetheless, such an event is highly unlikely in an environment where economic indicators are supportive of business.
Also, the company encountered a harsh market in China and in the process made serious losses. Aside from the company’s troubles with implausible CO2 ratings, the internal structure of their products was also considered to be full of errors. Volkswagen’s staff numbers include more than 550,000 employees spread among more than 90 factories across the globe (Team,2015). Toyota, the company’s main competitor, only has about half Volkswagen’s employee number but manages to achieve more than double its operating margins. This fact demonstrates the fact that Volkswagen is in dire need of changes in the context of strategic management. Stocks declined again two days later by about 18 % when the company announced that it would spend up to 7. 5 billion dollars to cover the expenses of the emissions scandal.
Then CEO Martin Winterkorn stepped down and was a year later charged with fraud and conspiracy in the United States. In the aftermath of the scandal, the company needs an aggressive plan to rebuild its image and market power, which is the mainstay of this article. SWOT ANALYSIS Strengths • The company has strong relationships with regional automakers in the Asian region especially in the Chinese market. Moreover, a decreasing euro exchange which have the capacity to better the company’s revenues and profits internationally. • The firm has the opportunity to gain access and use the necessary skill-set and knowledge through assimilation with rival firms, or firms involved in the automobile production. • Volkswagen can turn around its ruined reputation by coming up with strategies that are oriented toward sustainable growth for the company.
• The firm can run a PR campaign that emphasizes regaining consumer confidence in the company’s products by establishing policies that are geared toward guaranteeing the safety of the customers and the welfare of the environment. Threats • The threats posed against the company include strong competitors including the Chrysler Group LLC, , Honda Motor Company, Ford, GM Motors and especially Toyota • Due to the costs incurred in recalling and buying back vehicles the company has incurred extensive losses. part of the reason for this phenomenon is because consumers prefer older automakers that have been present in the market for longer under the assumption that newer models are low-budget, of inadequate quality and unsafe. Also, government regulations involved in the issuance of licenses are a massive obstacle for starters in this industry.
Moreover, starters or new entrants in the industry have to enter into dealership pacts in order to achieve viability, a factor that may put them at a disadvantage regarding competing with major automobile firms. Power of suppliers : Suppliers involved in the automobile industry have diminished power. In the American industry, supply companies are only allowed to deal with two automotive companies at one go. In addition, rather than being defensive the company should instead be honest about their failures and focus on recovery (Painter & Martins, 2017). Volkswagen AG should also utilize what they learned from the emissions scandal debate so as to produce the largest supply of electricity powered automobile vehicle, which at the moment is the future f the automobile industry(Painter, & Martins, 2017).
Moreover, driver less technology, which most of Volkswagen competitors have adopted should be the way forward for the company. The company also needs to focus on adopting technologies that will reduce emissions (Schindler & Volkswagen, 2004). Ultimately, if they stuck to these steps, the company would enhance its business significantly. It can thus be concluded that the Volkswagen company needs to make serious strategic management moves to cement its position as the world’s leading automaker. Moreover, it is important that the company restores public trust and puts in place policy to ensure that it does not involve itself in criminal dealings for it to prosper in the American automobile industry. References Barth, F. , Eckert, C. , Gatzert, N. Springer, Cham. Jeruvicus, Ovidijus. SWOT analysis of Volkswagen.
From $10 to earn access
Only on Studyloop