Strategic Financial Analysis Volkswagen
For example, Volkswagen company scandal which revealed that the company had installed software in car engines which would detect when carbon dioxide emission tests were being done changing the performance to produce better results (Hotten, 2015). This paper will discuss the implication of Volkswagen scandal on past and future performance on strategy, governance, and ethics of the company. Strategy Before the scandal was revealed, Volkswagen had received a huge back up especially in industrialized nations such as the United States, Britain, Italy, France, and South Korea who encourage the use of their cars within their nations (Hotten, 2015). The demand for Volkswagen diesel cars had increased since the carbon dioxide tests showed that the cars had the least emissions making them environmentally friendly.
The five forces model business strategy suggests that companies should keep an eye not only on the operations of their competitors but on features and factors which can significantly influence the entire business industry. In addition to other legal costs, the company has parted with approximately 30 billion Euros making it record the first quarterly loss this year (Hotten, 2015). Despite the loss of public trust and a reliable United States market, the Germany carmaker can still attain its strategic plan and regain its position and confidence in the market. The CEO, Matthias Mueller announced that the company will be deserting partially from making diesel engines and strive to reduce gas and diesel internal combustion. Similarly, the company’s decision to manufacture electric cars like the one launched in Detroit which is fully driverless called Sedric which will probably be on the road in a years’ time sounds like a restructuring strategy ("Volkswagen Seeks to Rebrand”).
If the company will be able to actualize this, it will have increased its ability to implement its business and competition strategy in the future. An efficient board should comprise of at most 12 members and should be interchanged occasionally. The structure of the board in Volkswagen is not diverse in that it does not grip age, ethnic, gender, and skills multiplicity. To improve the quality of corporate governance, a diverse board which encompasses professionals should be appointed to facilitate autonomous thinking and oppositions. The ownership construction of the company whereby the largest three investors hold 88 percent of the shares has affected the internal operations of the company. They have been imposing pressure to the management to come up with measures to comply with the strict emissions standards in the US to increase the market base and eventually generate higher shareholder’s returns (Blackwelder et al.
The second steps involve establishing the ethical issues at stake. In this case, the manager wants me to practice unethical behavior by failing to disclose important information to shareholders which can influence their decision to invest. The next step includes highlighting the norms by weighing the decision’s social, ethical, and professional behavior. The professional and ethical code of ethics requires an analysis to be undertaken with utmost faith and honesty and the information and facts established be fully communicated. However, the social implications of the initial sentence would be immense since it may result in the collapse of the company making people lose jobs and the CSR to the society. However, it should not indulge in scandalous practices in the road to getting a competitive advantage, as it would be a costly affair when detected by the authority.
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