Volkswagen (VW): Harvard Case Solution & Analysis

Volkswagen (VW): Case Solution


Volkswagen (VW) is an Automobile manufacturing company, which is globally recognized as a market leader.The company was founded on 4 January 1937 in Germany.

The main focus of the company is on quality. Moreover, the meaning of Volkswagen is people’s car, which explains the company’s motive to make environmentally friendly cars globally and to become the leading manufacturer in world by 2018. This can only be achieved through Effective Operational Management of the company.

Effective Operational Management is necessary for the growth of Volkswagen as the operational strategy would help in achieving the business strategies, which are concerned with individual business units and its divisions. Moreover, it focuses on Products, Markets, Customers, Competition, and Resources.

Problem Statement:

Customers’ CSF are those features of the product due to which the customers purchase the product over the competitors’ products. Moreover,organizations should understand the customers’ CSFs and then excel in those areas to beat the competition.

Recent Scandals:

As we all know brand image is essential for the long term growth of any company, VW although has a loyal customers’ base, however it should focus on maintaining maintain the CSF of the product, because by retaining the quality of the products, then as a result, the customers would stay loyal to the company. Since the launch of Touareg in 2014, the company has been facing criticism and its image has been affected negatively regarding the window regulator issue and ignition coil problem.Moreover,in September, the Environmental Protection Agency found a defected device in many cars which led to the company suffering from enormous loss. Approximately 40% of the value of the company deteriorated within 2 days.Furthermore, these issues affected the brand image of the company negatively and according to the study by MIT, it was found that the excess pollution emitted by VW models led to approximately 60 deaths during the time frame of 10 to 20 years.

The motive of the company is to provide the best quality as its customers are quality focused, however due to this issue,Volkswagen lost confidence of its consumers, resulting in the company’s CEO not taking the responsibility for the issue and resigned.Therefore, a proper committee was to be formed to sort out the issue because if these issues would arise in the future, then it would have an ongoing concern issue of the company.

In Efficiency:

Volkswagen’s employees per vehicle are inefficient as compared to Toyota.Previously,Volkswagen topped Toyota by becoming the leader in the automobile industry, however, nowadays Toyota is considered to be far more productive as compared to Volkswagen. In 2015, Volkswagen employed 600000 people to produce 10 million cars while Toyota employed 3,40,000 employees to produce approximately 9 million cars, which was not a good sign for the company.However,its revenue per employee is higher, which indicates higher productivity and effective use of the company’s resources.

Most of the components are made in house, which has led the company to generate profits otherwise it would have shifted to other suppliers.

The employees per vehicle are important for the company especially in the manufacturing industry where the competitor is performing well, therefore the company should motivate employees to do hard work and increase the efficiency of the production.

Quality issue:

Volkswagen’s main motive is to focus on quality, and since its customers are loyal, therefore its CSF is to maintain or improve the quality. With the industry standards, Volkswagen’s quality is not up to the mark since few customers have complained about the quality.

The reason for this is because the companies are not buying components from best suitable vendors of the world, and for cost saving, they are producing the components in-house which affects the quality......................

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