Market System of Volkswagen Automobile †MyAssignmenthelp.com

Question: Discuss about the Market System of Volkswagen Automobile. Answer: Volkswagen is a German automobile company founded in May 28, 1937. Its headquarters are located in Wolfsburg, Germany. It is the flagship brand of the Volkswagen group which was the leading automobile seller in the year 2016. In German, the term Volkswagen means peoples car. It was founded by German Labor Front to serve the needs of the global market. Herbert Diess is the chairman of the Volkswagen passenger Cars brand. They had an annual output 6.073 million in the previous year which earned them revenue of 105.651 billion euro. In the year 2016 the group had made a profit of 1.869 billion euro. The company has 626, 715 employees working to satisfy the aims and objectives. The largest automaker in the world has 61 factories in the 15 European countries of Europe (Akaka, Vargo and Lusch 2013). It is a luxurious car company where most of the products are affordable from the higher middle class population. Recently, the company sold its 150 millionth car in the market. The categories o f cars manufactured by this company vary from sedan and SUV to hatchback and crossover. The products of this company are provided with high quality material and accompanied with premium features. The innovative technology provided with the beast offers a great driving experience and extremely passenger- friendly. The market system of a company involves its group of buyers, seller and other stakeholders who come across for the selling of products. The participants in a market system include the direct market players such as the producers, consumers and purchasers who are responsible for regulating the economic activities in the market. If marketing is considered as a type of market then there are two categories such as consumer market and industrial market. In consumer market the business is conducted between the individual and the company (Bellin et al. 2014). In industrial markets the trade takes place between two or more businesses and do not involve the customers directly. Considering the above mentioned marketing system, it can be said that the Volkswagen Company do not sell their products directly to the customers, but the customers visit the individual showrooms to make a purchase. Therefore the automobile company Volkswagen operates in the industrial market. Apart from these two, there are five other market systems such as perfect competition, monopoly, oligopoly, monopolistic competition and monopsony. In the case of Volkswagen, it follows perfect competition in the market system where there exist many different buyers and sellers. With several market players, there is no scope of changing the pricing policy in the market by any individual. Even if someone wants to change the pricing policy, the others will be left with a number of options (Berkey 2014). Volkswagen, one of the largest and the most profitable car companies in the word has successfully opened up competition in the global market. Although they had to struggle in the US market but they have found ways to come out of that crisis. They had to come across economic crisis but smoothly got through by depending on the Chinese and European pillars. But the company is facing a loss in its sales because of the scandal that was spread against it. The accusation of cheating resulted in the loss of market share in Europe for a consecutive six months. The crisis of VW has enabled its competitors to increase the sales. The competitors of Volkswagen include Fiat Chrysler, Jaguar Land Rover, Mazda, Ford Motors, Honda, Nissan, Toyota, Jeep Renagade and others. With a SWOT analysis of the company, the power of VW can be established in the competitive market (Beukes and van Wyk 2016). Strength Largest brand portfolio New and diversified strategies Joint ventures with Chinese automakers Weakness Negative publicity Highest recall rate in US market Low market share in the US market No compete in battery vehicles Opportunities Increase in fuel price (Zhang et al. 2016) Acquire skills and competence Demand for autonomous vehicles Weak euro exchange rate Focus on improving sustainability Threat Tough competition Payment of fine and compensation for damages Growing government policies (Blackwelder et al. 2016) VW is present in a number of countries including Hungary Italy, Netherlands, Spain, Sweden, India, Malaysia, Brazil and many more. With the internationalization and outsourcing on a global range, Germany has faced loss in job and employment. This has affected the German economy and the surplus foreign currency has led to inflation in the country. Internalization has led to lower long term costs for the company and creating product differentiation. Examples include appealing to the US market. The instance of Brazil with the modular consortium model is significant of the lower costs of materials. Trans-nationalization has also resulted in making the company consumer oriented which was beneficial to spread outside the national boundaries. Industrial competition from the Japanese automobile companies had resulted VW to make more innovations in its products for withstanding the competition (Brooks 2016). The constant increase in sales and expansion of networks in other countries influence d VW to walk in the path of internationalization. One important factor which can be raised here is the weak automobile market in Germany which let the company to spread its business outside. Internationalization has been effective in building the companys profile overseas by enabling diversification in products and providing consortium model for cost advantages. The company has followed a simple global strategy to be a successful and dominating brand in the market. They had remained firm on their objective of becoming the market leader and thus invested a billion dollar in their US market for expanding globally. With internationalization, it has become the biggest brand in China and the second biggest brand in Brazil after Fiat. But the point that should be taken into consideration when it comes to competition is that the company should start operating both in industrial market and consumer market. This will open the door for more competition thus increasing sales. With the increase in sales and gaining revenue, VW will able to keep itself in the position of a global market leader (Couch et al. 2017). Brand development provides the company with a set of strategic and creative guidelines so that the company can attain a competitive advantage and become a successful marketing driven company. Competitive advantage is the prime factor because of which a product will be preferred over another. Volkswagen has been able to cope up with the changes because of its constant vision to be a strong market leader by providing sustainability. The business of Volkswagen has been using various strategies to develop its brand on a global scale. In this discussion the first and foremost factor is the excitement of customers. This particular target dimension looks into the diversified needs of the customers and keeps a check on the solutions. The company always puts effort to keep up to the expectations of the customers by providing with most of the benefits. Such benefits do not only include best products, service or the most effective solutions but also premium quality and a remarkable image for th e company. The main aim of the company is to impress their existing customers and attract the new ones for long term retention (Epstein and Buhovac 2014). This is because only the trustworthy and the devoted customers of the company will recommend the products to others. The strategic key performance indicators or KPIs include the rate of loyalty along with the rate of take-over and breakdowns. Volkswagen also takes into consideration the employment and retention of skilled and dedicated employees which contributes to success of the company. They intend to promote the satisfaction and motivation of the employees by providing equal opportunities, a well- equipped and modern working environment and forward work organization. This helps in developing the brand because employees are considered as the most important asset for the company (Whittall et al. 2015). This has become possible due to the outstanding leadership and well- maintained corporate culture which has helped in retaining the prime workforce to draw new talent. The employees at the VW company keep up to their responsibility with regard to the safety of society and the environment. This particular sense of responsibility guides their thoughts and actions in their decision making process. With regard to their brand development and competitive profitability the investors take care of the payments of debts and interes ts. The investments are made with the intention to attain profitable growth so that competitiveness can be strengthened (Gillespie and Hennessey 2010). The set goals and the strategic KPIs help in serving the purpose of internal management. The VW group supports projects which help in the promotion of art, culture, science, education, health and sport. They believe that as a multi- national company it becomes their duty and responsibility to work for the betterment of the society which goes beyond applying charity. The projects that are chosen by the company showcase philosophy and basic confidence on the two prime elements. These elements include application of continuity instead of following the latest trend and working hard to build up sustainable structural developments as opportunities for the stakeholders. Most of the CSR projects of Volkswagen begin at an international level to satisfy a number of important guidelines. The projects are taken in such a way that they are in accordance with the principle of the company to address the regional and local issues (Gong 2015). The diversity in the company and the social environment is expressed with the projects that are undertaken. The projects of the CSR actually origi nate from the conversation of the stakeholders with the local community because the projects take place locally so it becomes the responsibility of those units which are active at the location. According to the previous years sustainability report of the company, it can be observed that the Volkswagen group is dedicated to apparent and dependable corporate governance. It is a challenge for them to implement such responsibility at every level and step of the value chain (Grant 2016). The company considers sustainability as a method for striving and struggling to achieve the economic, social and environmental goals in such a way that equal priority can be attained. The aim of the VW group is to establish an enduring value which will arrange for a good working condition and also take care of the resources and environment. The company has created a transparent management structure for the coordination of sustainability and CSR. The group allotted for this responsibility regularly informs the company about sustainability issues and corporate responsibility. When the company had identified the prime issues in sustainability three criteria had come forward. These are the expectati ons of the stakeholders, its significance for the company and the extent to which the issues can have an impact on the company. The outcome has given the group the main action areas which will help in the achievement of the sustainability goals. The CSR projects undertaken by the company centers on the groups principle and also take care of the local issues. The projects look into the diversity in the company and in the social environment where it takes place (Holmqvist 2017). Volkswagen considers CSR as a business management culture and theory which makes it a business case instead of a social case. The company has tools and techniques with which it can make the social investments unique to make it stand out in the competition. It is responsible for making the ways which will satisfy the needs for communicating with the stakeholders and at the same time moving their projects based on society into the main activities of the company involving the elements that generate value (Schilke, Reimann and Thomas 2013). The realization that CSR enhances the strategy that is required for increasing the competition is the basis on which sustainability oriented management is built up. The content of CSR is an active process which is operated by market forces as well as social stakeholder groups. This, in turn, is affected by the tradition, culture and history and the significance of the locales are spread world- wide. The manufacture of the eco- friendly, high quality a nd safe products have led to the satisfaction of the stakeholders which will enable a good bond between the company and those (Kompalla et al. 2017). The company always undertakes such programs which increases the quality of life and offer special opportunities which can connect the diverse groups and help in the long term sustainability partnership for creating a better community where the employees can live and work happily. The company can also implement the particular CSR projects which will be beneficial for getting the scope directly through the CSR department. The CSR committee is also responsible for assessing the planned progress in comparison with the actual progress. Even the actual expenditure is compared in contrast with the proposed budget to keep a track. The reporting of the activities done by CSR is done in accordance with the prescribed format of the government and ministry. The surplus evolving out of the CSR projects are not part of the business profit of the com pany. These activities carried out by the VW group has proved to be effective in establishing and maintaining good relationship with the stakeholders, as per an opinion survey conducted among 350000 employees in 2012. The company is also advancing in their Brazil outlets which have made the stakeholders happy (Mokhtar et al. 2016). Most of the brands owned by the shareholders have seen an increase in sales. Such improvements have not only made the customers happy but also the shareholders, management and employees. To meet the demands of the American customers, the company had reshaped their diesel cars with a better fuel mileage which helped in making record sales in diesel cars (Ruan 2016). Therefore it can be concluded from this assignment that all other companies such as VW should look into the needs, values and expectations of the group to increase the interests of the stakeholders. Those interests must be identified, resolved and discussed for securing the stakeholders. The VW group has been able to provide high quality product and competent services to the customers along with fair price and an easy- to- use information system. The investors of the company have also been benefitted as they can easily access the accurate financial information. They are also able to get honest answers to questions from those accessible resources. The suppliers got prompt payment with fair contract terms. With a safe working environment and opportunities for personal development the employees are also satisfied. They are impressed with the culture formed which appreciates their contribution. If authentic information about the organization is available then it can affect the community with the payment of fair taxes. There is rational access to media also along with sufficient notice of unfavorable events. The quality and durability that is provided with the VW products makes it the leading automaker with more than 100,000 miles. References Akaka, M.A., Vargo, S.L. and Lusch, R.F., 2013. The complexity of context: A service ecosystems approach for international marketing.Journal of Marketing Research,21(4), pp.1-20. Bellin, J., Weiss, N., Breuel, M., Kurrat, M. and Stamprath, C., 2014. Predictive Optimization of the Operating Strategy in Future Volkswagen Vehicles. 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