1、 Volkswagen-peoples carTeam 6:Stone,Thomas,Cheryl,Peter ,Ben,Libby.Agendau Introduction -Stoneu Field market research report -Thomasu SWOT Analysis -Cherylu Strategies -Peteru Value chain optimization -Benu Risks&Contingency plan -LibbyHistoryHistory：Introduction1937：Known as“Gesellschaft zur Vorber
2、eitung des Volkswagens”1938：Renamed“Volkswagenwerk GmbH”1939-1945：Switched to armaments1945-1948：British Military Government in management1948：Returned Volkswagens to Germany.1952：Internationalization1981:Change name“Volkswagen Caminhoes“1985:Shanghai VW was established2005:Established two joint ven
3、ture companies in ChinaIts HQ located in Wolfsburg.The largest automobile maker in Europe.The third largest automobile maker in the World.Ownership StructureThe share ownership of Volkswagen AG is distributed as follows:50.76%20.10%3.58%25.56%Porsche AutomobilState of Lower SaxonyUBS AG,Zurich.Other
4、sVision of VolkswagenVision:Future powertrains and fuels for sustainable mobility.Mission of VolkswagenBiologicalClimate protectionSpeciesprotectionPartnershipBlue Motion Technologies:a pledge to protect the environmentEnvironmental protection has many helping handsEnvironmental protection the smart
5、 way thanks to Blue MotionTechnologiesIts a promise:true driving pleasure plus environmental protectionVolkswagen publishes mission statement on biodiversity.Brand portfolioAnnual growthin 000 millionThe Groups sales revenue in 2009 will be lower than in the previous year because of the decline in v
6、olume sales.8000085000900009500010000010500011000011500012000020042005200620072008Sales revenue in five recent yearsField Market ResearchField Market ResearchVolkswagen Car Dealer HongQiaoProduct line:Santana*PassatPoloTouran medium-sized cars 34 VW stores in total in SH area*(23%market share in SH)
7、u Measurement of Success Sales by volume(revenue)-sales in total-sales by m2-customer feedback via surveys from JD PoweruTarget customer-Santana:small businesses-Polo:age range:25-35,white collar-Passat:age range:35-50,successful peopleField Market Research Classical model of low costs and high prof
8、it margin?Few different cars availableField Market Research Road to Success Maintain customer base Keep sales constant(difficult competition in SH)Financial Crisis has so far had little impact Sales are stable Oil is cheaper Cost of raw material has decreased(steel,glass)Field Market Research Challe
9、nges in the Current Environment High demand for low-end cars Difficult market situation in provinces with lower income Manufacturing cost reductions may affect quality of the end product Volume of maintenance not very high Low sales volume in the North and in the South of China(e.g.less than 4%of al
10、l VW vehicles are being sold in the Southern region,such as Guangdong province)Field Market Research Competitors Toyota:better after-sales service GM:special offers(in general ten to twenty-thousand RMB cheaper);concern about market share Dealers long-term strategy More market share in China desired
11、 Maintain sales at high level and keep loyal customers Better after-sales serviceField Market Research CTQ Analysisu Safetyu Brand reputationu Priceu Stylingu Oil-consumptionu After-sale serviceAfter-sale service,2.3%Styling,6.7%Price,14.7%Brand,17.6%Safety,52.2%safetybrandpricestylingOilserviceOil-
12、consumption,5.3%PESTAL AnalysisPoliticalEconomicSocialEnvironmentalTechnologicalLegalEconomic：uIncrease in material and energy price in the long run.u Financial crisis Economy grew by 9%in the third quarter of 2008 -the lowest level since mid-2003.In 2008,Growth in the auto sector slowed to 6.7%-the
13、 lowest level in a decade.Jan.2009,overall car sales were down 14%compared with the same period a year ago(U.S.sales fell 37%).Forecast:shrink for the first time in 20 years.Political：Stimulus Package for Car Sector mass production of electric cars in big and medium-sized cities targeted subsidies f
14、or rural buyers Tax Policy.Social-Cultural：In western countries,its a century old industry;In China its not even decades old Chinas auto market is far from saturated-especially for private vehicles.Demand continues to grow with the increase of personal wealth More recognition of quality,environment
15、and brand Changing consumer priorities Technological：Foreign companies bring advanced technologies into China but local technology still lag behind.a 10-billion-yuan subsidy over the next three years for auto makers that upgrade their technology and develop alternative-energy vehicles.-Environmental
16、：In 2007,new motor vehicle emission standards,a move that should cut automobile pollutants by 30 percent（equivalent to the Euro III standard）In 2008,Sales tax increase in large engine cars.In 2009,sales tax reduction from 10%to 5%(engine 1.6 liters)In 2010，a more stringent standard,equivalent to Eur
17、o IV,will take effect PESTAL AnalysisLegal：Tax system Regulations of gas emissionInternal analysis-StrengthuBrand imageuBroad Product portfolio uLeading market share in China market uHigh technology&quality -safetyuNorthern areaDays of Inventory on Hand52,2132,5131,62VWToyotaGMInternal analysis-Weak
18、nessu Southern areau Weak turnover ratiou Bad management and low productivityu Serviceu Low capacity utilizationMuch Higher priceLower competitivenessBad managementWhat do you think are the VWs weakness in China?Survey of 11268 peopleProduct positioningConflict:FAW&SVWinvestmentOthersItemsPercentage
19、numberSWOT Analysis 20 SWOT Brand image&Product portfolio Leading market share High technology&quality First foreign Auto companyBad management and low productivity-Weak turnover ratio-Low capacity utilization focus on fuel-efficient cars Potential growth rate-increase of purchasing power-More recog
20、nition of quality-Changing consumer priorities-Stringent emission regulations-Rising materials energy price-Downturn of economy-Fierce competitionStrengthWeaknessOpportunitiesThreatsStrategy formulation-SO 21 Brand image&Product portfolio Leading market share High technology&quality First foreign Au
21、to companyfocus on fuel-efficient cars Potential growth rate-increase of purchasing power-More recognition of qualityStrengthOpportunities Try to commercialize fuel-efficient vehicles.-Expand in second ties regions-Optimize the portfolio of the product lines.-Expand the distribution channelsSO strat
22、egyStrategy formulation-ST 22 Brand image&Product portfolio Leading market share High technology&quality First foreign Auto company-Changing consumer priorities-Stringent emission regulations-Rising materials&labor cost-Downturn of economy-Fierce competitionStrengthThreats-Improve the firms market p
23、osition-Focus on customer demand and-reduce the competitive threat by developing new flexible product lineST strategyStrategy formulation-WO 23 focus on fuel-efficient cars Potential growth rate-increase of purchasing power-More recognition of quality no cooperation between SH VW&FAW VW-Weak turnove
24、r ratio-Low capacity utilization OpportunitiesWeakness Production Line optimization platform combine different product line shareWO strategyStrategy formulation-WT 24-Changing consumer priorities-Stringent emission regulations-Rising materials&labor cost-Downturn of economy-Fierce competition no coo
25、peration between SH VW&FAW VW-Weak turnover ratio-Low capacity utilization ThreatsWeakness-Focus on more oil efficency model&boost maturation-Value chain optimizationWT strategyStrategy choose reason Raw material&labor cost goes upStrategy choose reason Fierce competition More than 80 brands in chin
26、a meanwhile only 40 in US Sales stores earn profits by rebates and service Margins in the car dealers space continue to compress 34 4S stores in shanghai which hire almost 5000 person Capacity utilizaiton rate no so high200220032004200520062007200820092010Car demandCar demand（millionmillion）1.122.32
27、.83.84.755.36.1Car supplyCar supply（millionmillion）1.933.94.95.66.77.88.99.8Utilization RateUtilization Rate59%67%60%57%68%70%64%59%63%ProfitProfit7.20%7.20%7%3.70%4.80%5.20%Strategy (2009-2019)Growth of VWStage 1.（2009-2011）sales units:1250,000China localizationPlatform integrationNew products Stag
28、e 2.(2012-2016)sales units：1780,000Fuel efficient technologynetwork expansiontriple brand consolidationStage 3.（2016-2019）sales units：2400,000new energy technologyInternal acquisitionLeading brand position2008200920102011201320142017201920202018Value chain optimizationR&DProductionPurchaseR&D center
29、 sharing-VW&Porsche-Shang VW and FAWNew creation of Cars by focusing on passenger carssuch as LavidaSupport R&D Localization in chinaPurchase localizationBargaining powerPurchase integration Between FAW and SHWReduce the inventoryLean productionSystem Production localizationSharing platform strategy
30、MarketingLaunch market Campaign Product portfolioMarket strategyService training Service survey and Evaluationstandardization Cost ReductionMarket CampaignServiceValue chain optimizationR&DProductionPurchaseR&D center sharing-VW&Porsche-Shang VW and FAWNew creation of Cars by focusing on passenger c
31、arssuch as LavidaSupport R&D Localization in chinaPurchase localizationBargaining powerPurchase integration Between FAW and SHWReduce the inventoryLean productionSystem Production localizationSharing platform strategyMarketingServiceLaunch market Campaign Product portfolioMarket strategyService trai
32、ning Service survey and Evaluationstandardization Cost ReductionMarket CampaignDifficulty and complexity of ImplementationPossibility urgencyProduct portfolio1098765432smalllargeLarge investment on large trucksReduce the output of extremely high endEnter mini-car marketCan do with enough resourcesWa
33、it to moveBenefits Revenue increaseReturn of investmentMust do now!Passenger carsMaintain high market share of Audi brand1Must do ASAPBentleyStarGolJettaGolfPassatAudiPOLOLavidaSantana9%*10%MarketGrowthrateMarket share?ScaniaProduct portfolioMixSUVMPVPassenger100,000200,000300,000400,0000TiguanGolf
34、VITypePricing rangeSatigarPlanning vehicles New BoraTouran HybridTouran PassatOthersProduct StrategyAudiMarketing Strategy2009201020112013201420172019202020082018Target units:1.25 millionNew 5types VehiclesExpand distributors by 100 of Shanghai VW asWell as 100 of FAWStandardization of 4SStores by p
35、rofessional Training and redecoration Maintain the 3new Products per year to China(VW,Audi,Skoda)Expand distributors by200of Shanghai VW As well as 150 of FAWLower cost by 10%of itsPassenger carsLower the fuel consumptionBy 18%Leading brands of(VW,Audi,Skoda)in eachTarget marketExpand distributors b
36、y300of Shanghai VW As well as 250 of FAWLower the fuel consumptionBy 27%Target units:1.78 millionTarget units:2.4 millionTarget units for sale Brand valueMajor risks of auto industry in China The industrial policys risks-The major policy of auto industry from 2007-2009 in ChinaEnd of Year of 2007The
37、 central government encouraged the governments purchase:energy-saving&carbon emission-reducing cars.Also protected the domestic brand cars to expand.Volkswagen should develop the car model of oil efficient in China market and keep the cars sales at high level.2008.7Required all the car makers to add
38、 the uniform fuel consumption identification code.A great challenge for car companies technology and capital.2008.7Required all the car makers to add the uniform fuel consumption identification code Implementation of the carbon emission criteria Europe in ChinaThe new cars entry standard raised.2008
39、.9The central government adjusted the car consumption tax to minimize the burden of emissionVolkswagen must adjust the product structure 2009.1Oil tax started and it will boost the new energy cars salesVolkswagen should use its brand and technology advantages to explore new modelsMajor risks of auto
40、 industry in ChinaThe economic risk The risk of global economic downturn:leads to the sales growth rate and yield rate both declined in China market below the expectationMajor risks of auto industry in ChinaThe industrial integrated risks -Current big car makers have no ability to deal well with the
41、 giant business in China.-The conflict of different local governments protectionism will impact on the strategy.The joint-venture risks -“3 auto giants”in US will sell its bad assets globally,and it will affect the performances of other joint-ventures.-The bad assets will bring negative effect on th
42、e profit ability and the cash flow in short run.Contingency PlanIn the period of auto industrial transition,Volkswagen should change its competitive structure and the organizational portfolio,and seek the industrial integration.It is a good time for Volkswagen to be a leading enterprise in auto industry in China market,and eventually defeat other competitors.(like Toyota was in the same situation in 1970th)Innovation in developing new energy cars to dominate the blue ocean market.Further implement localization strategy by acquisition of domestic brands to reduce cost.Q&A
