So-Jung Kim Milena Baur Valeriya Zhuvertseva Madini Liebscher

Industry Development Porters 5 Forces Value Chain Internationalization VW Strategy Analysis

VW Group China Skoda

Future Trends

1886, Daimler 1886, Benz

 By 1901 Weimar Republic (1918-1933)

Motorization (Motorisierung) Great Depression (Early 1930s) During 1930s

Today

Porter's Five Forces Analysis of the Automobile Industry

Threat of New Entrants

Bargaining Power of Suppliers

Rivalry among Existing Competitors

Bargaining Power of Buyers

Threat of Substitute Products or Services

Value Chain
1970
Manufacturing Car Dealers

OEM

Development

Assembly

Marketing

Distribution

Customer

Suppliers 2011+

Parts/Components

OEM Suppliers

General Development

Manufacturing

Final Assembly

Marketing

Distribution

Car Dealers

Customer

-components and systems development -parts and components manufacturing -parts and systems assembly

Internationalization

Why Internationalize?

For To geographical expand acquire gain synergies market resources reason

Environmental scanning

Strategy Formulation

Strategy Implementation

Evaluation & Control

Entry Modes
Home Country Host Country

Level of Risk & Control

Exporting Licensing & Franchising Joint Venture Wholly-owned subsidiary

Involvement (Geographical center of Operation)

Produce automobiles, commercial vehicles, engines 61 production plants in 21 countries Production output: 7,4 mln units for sale in 153 countries (2010) 3rd biggest motor vehicle manufacturer & Largest carmaker in Europe

made up of nine brands

Strength brand portfolio diversification focus on R&D

Weaknesses Relatively low employee productivity Sluggish performance in few market sectors Threats Loss of market share Severe competition Cannibalization

Opportunities Global growth potential

1978: Negotiations with Chinese government

1984: joint venture agreement for Shanghai Volkswagen Automotive Co., Ltd. (SVW)
1990: Signing of the joint venture agreement for FAWVolkswagen Automotive Co., Ltd. (FAW-VW) 1996: Shanghai Volkswagen sets up R&D center

1999: Foundation of the Volkswagen (China) Investment Company Ltd. 2004: Foundation of VOLKSWAGEN Group China 2007: Launch Powertrain Strategy 2008: Successful sponsorship of Beijing Olympics. Today: VW Group China is represented by 16 companies

Chinese government does not approve wholly owned subsidiaries Typical step for initial international expansion to unfamiliar foreign market Strengthening market position to block competition

VWLate took a proactive by entering China Market Further boom 1990s of market the approach automotive became more market, competitive; especially VW during the early shares 1990s, dropped brought fromsignificant over 50% (1999) profitstofor 16% Volkswagen (2010) Group
Automobile Production (mln. units)
20
15 10 5 0

1999

2003

1992

2000

2001

2002

2004

2005

2006

2007

2008

2009

Competitive environment 1985 2010

2010

2008 - 503 2009 468 2010 - 550

+9.2%

2008 2,989 2009 2,918 2010 2,903

-2.9%

2008 - 560 2009 385 2010 - 429

-23.4%

2008 1,024 2009 1,401 2010 1,925 2008 803 2009 826 2010 908

+87.9%

+13.0%

2008 19 2009 19 2010 54

+185.5%

Strategy 2018

New emerging markets Multi-brand stragety target different market segments

biggest car producer in eastern Europe faster & better access into east European market geographic proximity greater size expand market increase market share efficiency gains through synergies supplier

Performance: Production and Quality Improvement re-branding mass market car brand

Global success under VW

VW Group
Production output Operating Income
7,357,505 units

Skoda
762,600 units

% of VW Group
10,36%

7.141 billion

1.31 billion

18,34%

Future Market Trends

-HIGH-TECH -SHORTER PLC

-GLOBAL FOCUS
BRIC USA

- COMPETITION - PLATFORM AND MODULE CONCEPT

2020: 1 000 000 e-cars 000 jobs on30 german streets

300 000 Euro

THE
BMW i8

Lamborghini Aventador
CARBON

E-CAR
BMW i3

Sources
Handelsblatt, editions no. 84, 88, 92, 94, 95, 97, 98 http://www.economywatch.com/world-industries/automobile/germany-autoindustry.html http://www.vda.de/en/zahlen/jahreszahlen/ http://www.vda.de/en/meldungen/news/20110318-1.html

http://www.vda.de/en/meldungen/news/20110316-1.html
http://www.bem-ev.de/strukturwandel-der-deutschen-automobilindustrie/ http://www.scribd.com/doc/18337/Globale-Wertschopfungskette-derAutomobilindustrie http://www.german-businessportal.info/GBP/Redaktion/en/PDF/automotive-industry-in-germany-investin-germany,property=pdf,bereich=gbp,sprache=en,rwb=true.pdf

Souces:
http://www.spiegel.de/international/business/bild-682530-67534.html www.skoda-auto.com www.VW.de http://tutor2u.net/business/marketing/casestudy_skoda.asp http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/03/Volkswagen_AG _Geschaeftsbericht_2010.-bin.acq/qual-BinaryStorageItem.Single.File/GB_2010_e.pdf http://www.google.de/imgres?imgurl=http://3.bp.blogspot.com/_bDeJOEIwcBE/Sh0wp6AoryI/AAAA AAAAArU/wUve10PKdS4/s320/skoda%2Blogo.jpg&imgrefurl=http://www.new-britishcars.com/2009/05/skoda.html&usg=__5hPjM6Q0WleuT5LVInCI5dNfPM=&h=320&w=320&sz=20&hl=de&start=0&zoom=1&tbnid=2SCNJLxgVpC_9M:&tbnh=140&tbnw =141&ei=X8HcTef_Hsrwsgb2r5DqDg&prev=/search%3Fq%3DVW%2Bgroup%2Blogo%26um%3D1%26hl %3Dde%26sa%3DN%26biw%3D1280%26bih%3D709%26tbm%3Disch&um=1&itbs=1&iact=rc&dur=473&s qi=2&page=1&ndsp=27&ved=1t:429,r:7,s:0&tx=73&ty=82 http://www.quickmba.com/strategy/global/marketentry/ http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/03/Volkswagen_AG _Geschaeftsbericht_2010.-bin.acq/qual-BinaryStorageItem.Single.File/GB_2010_e.pdf http://www.autonews.com/files/06_china/pdf/anc_dieter_seemann_nov_16_english.pdf http://www.ecch.com/casesearch/product_details.cfm?id=69862&rellnk=1 http://www.secinfo.com/d13Wqv.v1r4.d.htm