University of the People
Master in Business Administration
Marketing Management
Case analysis: Volkswagen's Strategy 2018 and Strategy 2025
Randy Cabato Ambog
The "people's car" that is Volkswagen. There are many anecdotes about this car and
company. There is this claim that the original designers are not the historically and officially
recognized Ferdinand Porsche but a man named Josef Ganz (Volkswagen, 2018). Another
anecdote is that after World War 2, the British offered Volkswagen to the American automaker
Henry Ford (Bruce,2018. para.1). The Volkswagen Beetle "symbolized many things over a
history of 8 decades since 1938" (Mchugh, 2019. para. 1). The Volkswagen Beetle had been part
of Germany's history from the pre-war to post-war economic renaissance and to be an example
of globalization because of its expansion all over the world (Mchugh). Volkswagen had been
through a lot of controversies over its history. The latest is in 2015 in what is dubbed as
'dieselgate scandal' by the media.
The 'dieselgate' tag appears to have been coined first by a news website dedicated to the
car industry, such as Hybridcars.com (Siciliano, 2015). The scandal started when the United
States Environmental Protection Agency discovered an installed software in Volkswagen's diesel
vehicles. The software is said to be a "defeat device" during emission testing. It is prohibited
under the Clean Air Act (EPA).
As a result of the scandal, CEO Mr. Winterkorn resigned. Some executives were arrested,
and VW was made to pay billions of dollars for reparations, fines, and damage control efforts.
"The full extent of the financial implications is unclear, although they are estimated to be in the
range of $25 to $40 billion" (Singh,2015., para. 3). What are the contributing factors to this
scandal and how Volkswagen reacted?
STRATEGY 2018 and 'DIESELGATE'
According to Volkswagen ANNUAL REPORT 2009, Strategy 2018 is VW's "aim to be
the most successful and fascinating automaker in the world" (Volkswagen, 2009). CEO Martin
Winterkorn may have been overzealous in achieving that goal. VW needs growth in the US.
Volkswagen has a strong presence in Europe, Latin America, and China but lagging in the US.
(Armstrong, 2019). One problem relies on more rigid emission testing in the US. Approved by
the CEO or not, someone from VW designed software to "defeat" the US emission test standard.
The act may have been influenced by the hunger for growth by VW's management (Armstrong)
and resolve to realize the Strategy 2018.
VOLKSWAGEN'S RESPONSE TO THE SCANDAL: STRATEGY 2025.
Strategy 2018 aims to be the most successful and fascinating automobile manufacturer
(Volkswagen) that is carried over to the Strategy 2025. The new strategy hopes to rectify their
image after the 'dieselgate scandal' (Team, 2016). VW's goal in Strategy TOGETHER 2025+ is
"to make mobility sustainable for us and the future generations" (Volkswagen). The company
exerted a considerable amount and effort to clean its image. They focus on e-car production.
They promised a completely new driving experience, clean, quiet, intelligent, and safe
automobile. They also claim it is their part in climate and environmental protection
(Volkswagen).
Volkswagen's ambitious Strategy 2018 may have been a factor to the dieselgate scandal,
but something good came out of it. They had the chance to change their culture. It had become
the "catalyst for its major shift to electric cars" (Legget, 2016. para. 15). The scandal shows that
corporate values and culture matters (Armstrong).
Had Volkswagen put more emphasis on proactive management, they could not have
spent billions of dollars to execute their reactive effort to salvage their integrity. They could have
realized their goal in their Strategy 2018 earlier. The VW management's ability to bounce back is
commendable, but it is more satisfying to be number one by doing it right. As an end note,
Volkswagen should have realized earlier that "companies need a purpose that transcends making
money; they need sustainability strategies that recognize that you can make money by doing
good things" (Tata, R., Hart, S. L., Sharma, A. & Sarkar, C. 2013).
References
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