A CRITICAL STUDY ON OPERATIONS MANAGEMENT OF VOLKSWAGEN

A CRITICAL STUDY
ON
OPERATIONS MANAGEMENT
OF VOLKSWAGEN
PROJECT REPORT SUBMITTED TO
CARDIFF METROPOLITAN UNIVERSITY, UK
UNIVERSAL BUSINESS SCHOOL, KARJAT, MUMBAI
SUBMITTED BY:
ADITYA BETALA
CARDIFF ID: st20112387
MODULE: OPERATIONS MANAGEMENT (MBA7061)
MODULE LEADER: PROF. NIRMAL IYENGAR

ACKNOWLEDGEMENT
It gives me immense pleasure to acknowledge the people who helped
me in formulating this project report, my hearty congratulations to all
of them. I am deeply indebted to the Module Leader of Operations
Management- PROF NIRMAL IYENGAR who has always extended
his hand to help me whenever required in all means with his
extraordinary mentorship.

bstract-This project is on “A Critical study on Operations
Management of Volkswagen”. In this study the areas which have
covered based extensive Literature Review. The project covers a
detail study on Volkswagen Group which covers tables, diagrams,
pictorials, literature analysis based on the literature review available
the study focuses on various key areas those are mentioned in the key word.
Key words- operation strategy, operations planning, portfolio of capacity
Management, Modern Management practices, success factors & innovation in
supply chain management at Volkswagen.
A

TABLE OF CONTENTS
ACKNOWLEDGEMENT
ABSTRACT
1.INTRODUCTION 1
1.1OVERVIEW OF HISTORY OF THE AUTOMOBILE INDUSTRY 1
1.2HISTORY OF VOLKSWAGEN. 1
1.3 12 FLAGSHIP BRANDS OF THE VOLKSWAGEN GROUP 2
1.4 RATING OF VOLKSWAGEN ON DIFFERENT PARAMETERS BY GOLDMAN SACHS GLOBAL
INVESTMENT RESEARCH. 2
1.5 SWOT ANALYSIS 3
2.OPERATIONS STRATEGY OF VOLKSWAGEN. 4
2.1VOLKSWAGEN ADOPTS NEW GROUP STRATEGY-2025 IN ORDER TO BECOME A WORLD’S
LEADING SUSTAINABILITY MOBILITY PROVIDER. 4
2.2VOLKSWAGEN GLOBAL OPERATION STRATEGY 2020 WHICH INCLUDES 5
2.32018 GROUP STRATEGY 5
2.4 BASIC CONCEPTS OF GLOBAL OPERATION STRATEGY. 6
2.5 STARTEGY 2018 TOYOTA AS A STANDARD 7
2.6 GLOBAL OPERATION STRATEGY FRAMEWORK 7
2.7 AUTOMATION STRATEGY 7
2.8 VOLKSWAGEN DIFFERENT LEVEL STRATEGIES 8
3.ANALYSING THE PLANNING OF OPERATIONS IN VOLKSWAGEN 9
3.1OPERATION PLANNING 9
3.2OPERATION PLANNING AT VOLKSWAGEN GROUP. 10
3.3PRODUCTION PROCESS OF VOLKSWAGEN CARS BY TAKING AN EXAMPLE OF XL1 10
3.4 DIFFERENT INNOVATIVE PLANS OF VOLKSWAGEN FOR PRODUCTION 11
3.5 RISKS TAKEN IN CONSIDERATION WHILE FORMULATING OPERATION PLANNING BY
VOLKSWAGEN 12
3.6 GREEN PRODUCTION PLANNING OF VOLKSWAGEN & OTHER INDUSTRY PLAYERS. 12
3.7 CHALLENGES INVOLVED IN PLATFORM CONSOLIDATION & SHARING PLANNING. 13
3.8 DIGITAL PLANNING INCREASED EFFICIENCY OF OPERATION PLANNING. 13
4. ANALYSIS OF PORTFOLIO OF CAPACITY MANAGEMENT AND
CRITICAL ANALYSIS OF CORRESPONDING CONSTRAINTS IN AS
APPLICABLE TO VOLKSWAGEN. 13
4.1 CLASSIFYING CAPABILITIES 15
4.2 CAPABILITY AS ROUTINE 16
4.3 MAKING CAPABILITY & RESOURCES ANALYSIS TO WORK 16

5.EVALUATING THE MODERN MANAGEMENT PRACTICES AND
TECHNOLOGY DEPLOYED BY VOLKSWAGEN 18
5.1 Information & technology solution for the stake holders 18
5.2 Benefits of piloted driving 19
5.3 98% dealer satisfaction from centralized service desk deployed by Volkswagen
with help of Tata consultancy services 19
5.4 Disaster recovery system 19
5.5 Toyota production system 20
5.6 Lean production 21
5.7 Digital Volkswagen factory at Slovakia 22
6.ANALYSIS OF KEY CRITICAL SUCCESS FACTORS OF THE INDUSTRY
AND CRITICAL EVALUATION OF THE STRATEGIES ADOPTED BY THE
VOLKSWAGEN TO GAIN COMPETITIVE ADVANTAGE THROUGH
INNOVATIONS IN SUPPLY CHAIN MANAGEMENT. 22
6.1Supply chain Management 22
6.2Sustainable value enhancements 22
6.3Key indicators to performance for producing alternative drive system, customer,
fuels& connectivity attributes. 23
6.4Volkswagen showcases latest logistic innovation 24
6.5Environmental efficient production 25
6.6Different brands different sustainable environment strategy 25
6.7Green Logistics 26
6.8Reconfiguration of supply chain at Volkswagen group to develop globally 27
6.9Establishing compeititive advantage 28
6.9.1Sustaining compeititve advantage 28
7. CONCLUSION 29
BIBLOGRAPHY

A CRITICAL STUDY ON OPERATION MANAGEMENT OF VOLKSWAGEN
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Introduction
1.1 OVERVIEW OF HISTORY OF THE AUTOMOBILE INDUSTRY:
This is a short history of automobile industry. By manufacturing activities company’s agenda
to earn return on deployed investment. To minimize the cost of production the companies in
this sector looks for continuous development & innovations.
The ancestor aggregate manufacturing was known as “scientific Management”. F.W. Taylor
formulated a theory which diversified managerial & labour activities. Due to high-cost sales
were very low & profit generation was very hectic task. Only some anarchistic ideas would
lead to profit gaining.
Ford was the pioneer to acquaint aggregate manufacturing by arranging assembly line in
manufacturing. This led to minimizing the expenditure on employees.
In the year 1970 the ford model started having problems as the ford customer needs & wants
were varying from region to region then as a result Toyota came up with Toyota Production
System. By this T.P.S each employees had a sense of responsibility which made Toyota
world’s leading car manufacturer. Then evolved Lean management which told setup time &
run time should very less.
Due to globalization an contemporary concept came up called as “world car” in this the
constituents were manufactured across the globe. European producers acknowledged this &
came up with Modular Manufacturing & modular organization.
(Csizmazia, December 2014)
1.2 History of Volkswagen.
Volkswagen had taken birth on 28th
may 1937, Gesellschaft Zur Vorebereitung des
deutschen Volkswagens mbh a society which manufactures car for German community by
the Nazi Deutsche Arbeitsfront. The main objective of the organization was to produce the
Volkswagen car which was earlier known as Porsche type sixty, then Volkswagen type one,
which was known as Volkswagen beetle. A consulting firm known as Ferdinand Porsches
designed the vehicle which was advocated by the abutment of Adolf Hitler. The company
started producing cars for military at the time of second world war. After completion of the
battle in Europe in 1945 British army royal electrical & mechanical engineers had taken of
the authority of the plant & begin over the manufacturing process.
As per the Orders as many industries were asked to annihilate, so even Volkswagen had to do
it, after that the company continued to live on only by manufacturing cars for the army of
British. The army of British gave back the control to Germany which was been controlled
earlier by Opel chief Heinrich Nordhoff. Slowly the old model manufacturing started &
company geared up in 1950-1960 also came up with many new variants.
In 1960 as government of Germany had a stake in the company, then the name became
volkswagenwerk.
1st
of January 1965 Volkswagen acquired auto union GMBH from its parent organization
Dailmer Benz. This subsidiary started manufacturing under the brand name of Audi
(Bule, et al., n.d.)

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1.3 Fig-1. 12 Flagship brands of the Volkswagen Group.
(Aktiengesellschaft, 2015).
1.4 Rating of Volkswagen on different parameters by Goldman sachs Global investment
Research.
Fig-2.Volkswagen score card spider
(Burgstaller, et al., November 27, 2009)

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Fig-3. Comparative analysis of major companies
1.5 Swot Analysis
Strengths of Volkswagen
 Extensive portfolio of brands as compared to other rivals.
 To become Global Automobile leader company has adopted “Together-2025
strategy”.
 Assortment strategy.
 In order to reduce cost Volkswagen is in joint venture with Chinese producers.
 Combined efforts of brand which create brand retention in the mind of consumer.
Weakness.
 Abrogating publicity raising question mark on Volkswagen brand.
 Recalling of cars in U.S. was very high.
 Market grab is very low in U.S.A.
 Brief ability & No adequacy in manufacturing cars which run on battery.
Opportunities
 Access skills & competency by acquisition.
 Hike in fuel rates soon.
 High appeal for autonomous vehicles.
 Company is concentrating on brand building because of the damage caused.
 Day by day euro exchange amount is going down.
Threats
 Heavy competition.
 Many Government Norms.
 Government penalties. (Jurevicius, December 10, 2016)

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2. Operations strategy of Volkswagen.
2.1 Volkswagen adopts new group strategy-2025 in order to become a world’s leading
Sustainability Mobility provider.
 “Together Strategy 2025” it is the biggest change process in company’s history which
will focus transforming the core business and grabbing the potential new segments.
 Crucial electrification initiative is planned- It will help increasing the annual unit sales
from two to three million as more than 30 new e-vehicles variants by 2025 will be
launched.
 The new group competencies will be digitalization, autonomous driving & technology
of battery.
 Business components will be realigned.
 Business will be quickly expanded by new mobility solution.
 Through Group wide improvements in efficiency & optimization of portfolio the
projected investment will reach a mark of double digit billion range.
 There will be quick expansion of new mobility solution business.
 The return on capital deployed will be 15 percent by 2025 in automotive division &
operating return on sales is estimated 7 to 8 percent.
 The key achieving group tasks are efficiency of brand Volkswagen & enlarging
profitability.
 CEO Matthias Muller “The Volkswagen group will be more focused, efficient,
innovative, customer driven & sustainable- and systematically geared to generating
profitable growth”.
(http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2016/06/2025.ht
ml, n.d.)

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2.2 Volkswagen global operation strategy 2020 which includes-
 Product planning.
 Positioning of product.
 Development of product.
 Platform for powertrains, lightweight & vehicular communication.
(DUBLIN, 2013)
2.3 2018 Group strategy
1. Volkswagen wants to be world leader through using technologies & intelligent
innovation & at same time quality & customer satisfaction is considered.
2. In the coming future company wants to hike its sales to more than ten million units a
year.It wants to capture above average market chunk.
3. In order to build a first class team Volkswagen aims at becoming top employer at all
levels.
4. Company is targeting a return on sales of at least 8 percent before tax in the distant
future in regards to maintain its brick wall financial position & take action during
uncertain period. (Gong, 01-Jul-2013)
As the company has imposed an aspiring deadline of 2018 in its Annual general
report-2014.Companys core strategy is to come up with environmental friendly
variants. While administering the expenditure & cost company will address people on
quality front rather than holding a regular stick of pricing. The organization will work
on process standardization in both means direct & indirect sector of the team &
lowering throughput times. The Team will be accountable on the seven key
performance Indicators which are as follows-
I. Customer timely deliveries.
II. Sales revenue.
III. Operating profit.
IV. Capex revenue.
V. Operating return on sales.
VI. Return on Investment.
VII. Net cash inflow. (Pratt, n.d.)
Company is discerning in broadening range in vehicles on order to create an active position
to their individual brands & consistently rising the competitive advantage. Products are
adopted on the basis of localization. (Aktinengesellschaft, 2015)

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2.4 BASIC CONCEPTS OF GLOBAL OPERATION STRATEGY.
1. Vertical Integration
It is concerned to alliance of a partner venture to handle of process of manufacturing
for a selected product, it refers to a level to which an organization can control the
upstream & downstream suppliers. It helps in achieving economies of scale.
2. Manufacturing Process
An organization needs to make decisions between high volume of homogeneous &
low volumes of differentiation product. Haynes & Wheelwright comes up with a
matrix which helps in market-manufacturing congruence problem & helps in decision
relating to production. The matrix consists of two indicators namely process choice &
Process structure. It has been extended by product life cycle.
Fig-4.Process & product structure
(Gong, 01-Jul-2013)
3. Facility & Design Planning
Facility Design & Planning involves a set of critical decisions which undertakes
irreversible & sustainable investment.It acknowledges raw material,
Market,Transportation & local work workforce,it can be solved by using quantitative
method. (Gong, 01-Jul-2013)
Volkswagen adopts modular platform in order to enhance peoduction flexibility & efficiency.
Modular platforms means it’s a platform for automobile which shares a set of manufacturing
activities & common designin order to minimize the cost of manufacturing & create a new
model on the same lines,selecting a platform is a very crucial decision to be made by the
group.
For example-There was a dilemma between porsche & Audithat which car brand would pave
a stage for the volkswagen forthcoming sport cars platform which includes Audi Bentley &
Lamborghini.Quality Management & control becomes a vital infrastructure operating
decisions.Company wants to create a benchmark in both product & service quality which
would be appreciable by the consimer & give them lifetime value.
Fig-5.Examples of V.W. PL/PQ platforms
(Gong, 01-Jul-2013)

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2.5 Startegy 2018 Toyota as a standard
The main feature of this strategy are-
 Company is on attacking strategy of not rankind 2nd
or 3rd
but be on top.
 To give a clear challenge to the japanese giant & the global leader.
 To be more than them in quality & sustainability
 To be customer choice brand. (stifung, 2008)
2.6 Fig-6.Global operation strategy Framework
(Gong, 01-Jul-2013)
2.7 Automation strategy-
Plant location plays a very crucial role in the degree of automation in an industry ,it also takes
in consideration skills of employees, labour availability in a particular region. It is found in
the study that low automation leads to lesser output which ultimately tends to give lesser
revenue. In the present scenario automobile industry believes in mass manufacturing & mass
consumption. So the need of the hour is progressive automation which was demanded in the
earlier automation days. High automation system leads future hindrance into plant & product
flexibility. This includes certain parameters-
 Level of Automation.
 Manufacturing cost.

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Fig-7. Level of Automation
(Gong, 01-Jul-2013)
Graph of cost versus level of automation.
 Quality Indices.
 Productivity Indices.
Fig-8.Optimum level Strategy.
Optimum level strategy is a creating balancing eco system in the given
parameters & getting the maximum out of it.
(I.A. Gorlach, 2007)
2.8 Volkswagen different level strategies-
A. Current business level strategy
Integrated Cost leadership & differentiation strategy is followed by Volkswagen it
uses common platforms, it focuses process standardization, satisfying products which
the customer is willing to pay even when charged at premium.
B. Corporate Level Strategy
Lower level of diversification in the business carried by Volkswagen, the maximum
revenue comes from the automobile sector, because they share common platforms &
technology which are supportive to each other. It follows horizontal integration just
inverse to vertical integration.
C. International Strategy
Volkswagen follows “GLOCAL” approach it is global in terms quality & local in
providing product because to suit the requirement of the user in order to meet varied
needs. It follows transnational technique as it caters to different class of the society
across the globe. At present Volkswagen has 120 operational plant local situated at
different part of the world.
D. Cooperative strategy
V.W. always has an extended hand the reason is that to minimize competition, satisfy
the end user, increase quality, to share & use core competencies, that’s why today
Volkswagen has 16 automobile strategic alliances with some of the remarkable brands
across the globe. The organization currently has 61 dedicated manufacturing plants &
6 countries in Africa, America & Asia Pacific. (Zhang, et al., March 18, 2015)

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3.Analysing the Planning of Operations in Volkswagen
OPERATION PLANNING
Operation planning means it is a process which minimizes inventory,
reduces customer lead time, keeps manufacturing rates constant & provides top management
an edge to handle on the business in order to give customer life time value of the product
consumed by him. Operation planning is integrated approach from different departments of
the organization in order to maintain the operational plan on the same track with business
plan. It involves a series of meetings at the top level which determines the budget &
production activity for the near future.
(Chase, et al., 2011)
3.1 OPERATION PLANNING AT VOLKSWAGEN GROUP
Volkswagen has the beginning coordinate as the medium term planning which is scheduled
once in a year which takes in consideration of coming Five years & forms a crucial interior
part of operations planning of the company.
At Volkswagen the company specifies systematically & looks for necessity of accomplishing
strategic projects designed in order to reach the set bar both at economic & technical fronts in
order to acquire liquidity effects. It is also used to correlate all business areas inline to
strategic creation. The sectors kept in mind while formulating this are product, process &
markets.
When it comes of deciding company’s operational Planning in the future individual planning
components are buckled down on the basis of time scale involved.
 The unit sales plan for a long term which catches market & segment growth, then
acquires the company’s volume delivery from them.
 Planning will be done for individual locations both capacity & utilization.
 The corporate policy decides the long term factor of product programme.
(Akitengesellschaft, 2015)

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3.2 Production process of Volkswagen Cars by taking an example of XL1
stage-1
• Body shell Frame
stage-2
• Door Assemebly
stage-3
• Body Assembly
stage-4
• Paintaing
stage-5
• Front Car Section
stage-6
• Rear Section & Interior
stage-7
• Wind Screen Door & Wheel
stage-8
• Final Assembly of Doors
stage-9
• Startup

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1. Body shell frame
Production process of XL1 starts with raw material delivery here the raw material
is carbon fibre reinforced polymer which is ridded on assembly support plate, it is
where the body is built without lids & windows or doors, this stage is known as
Body Shell Frame all the parts are moved to their designated positions which is
required tough production withstand.
2. Door Assembly
In this stage the doors are assembled Volkswagen has created its own instrument
for having precision because the sheet metal parts can be easily restructured but
not the carbon fibre, so they do this stage with due diligence.
3. Body Assembly
In this stage the body shell frame is brought on a new fixture & all the small
parts are fixed here they always keep in mind while assembling that proper gap
has been provided in order to fix other surfaces.
4. Painting
As the assembly stage is complete then it is forwarded to painting process where
the paint to the whole car is done as XL1 is made of carbon fibre so a special
paint is done which has reduced weight up to fifty percent. It has three layers in it
base paint, primer & coloured layer.
5. Front car section
In this section the car body is assembled with front part which is previously
made.
6. Rear Section & Interior
In this section integration of driving unit with car is done at same time the interior
is taken care of.
7. Winds Screen, Doors & Wheels
In this stage the laminated glass are installed in the window, doors are again
reinstalled as they were earlier positioned & wheels are installed.
8. Final Assembly of doors
Final Assembly of doors is done here as the windows are attached to the exterior
door skin this is bifurcated.
9. Start-up
After all process are over its time to test the vehicle, all the tests are done by the
computer & if any defects found it is indicated. Now the car is ready to zoom on
roads.
(staff, 2014)

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Fig-9.General Procedure of introducing a new vehicle at volkswagen.
(I.A. Gorlach, July 2 - 4, 2007)
3.3 Different Innovative plans of Volkswagen for production-
Volkswagen according to planning uses modular tool kits to develop production system
flexible, it helps in developing different brands at a single platform another planning is of
turntable which help in mass production flexibility, group production system & efficient
environmental production. (Akitengesellschaft, 2015)
3.4 Risks taken in consideration while formulating operation planning by Volkswagen
i. Risk from changes in demand.
ii. Risk of quality.
iii. Risk of Personnel.
iv. Risk of Information & technology.
v. Risk of production variability.
vi. Risk of procurement.
vii. Risk of research & development.
viii. Risk restricted to sectors.
ix. Risk of macro economy (Bule, et al., n.d.)
3.5 Green production planning of Volkswagen & other industry
players:
A thirst to create environmental friendly products should be always included in the
operation planning. It should be systemic rather than systematic way for forming
operation strategy.
E.O.M- Environment Operation Management it refers to creating operation planning
considering environmental issues. The world’s largest 3 Players in automotive
industry General Motors, Toyota & Volkswagen have planned well before &
executed it that is production through technology driven output. The paint section of
the production process was transformed to make use of waterborne paint sprayers &
solvent based of water.
Use of renewable energy, minimizing the use of energy, efficient waste management
system & recycling of the products to gain greater level in greener production.
(Nunes & Bennet, 2010)

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3.7 Challenges involved in platform consolidation & sharing
planning.
1. High amount of list & very low returns.
2. Need for product adoption.
3. Behaviour of consumer.
Fig10.Top 5 OEMs- Platform strategies
(Sehgal & Gorai, January 2012)
3.8 Digital Planning increased efficiency of operation planning:
Volkswagen wanted to increase efficiency & vehicle body production planning they also
wanted to achieve higher planning without increasing staff. Then Siemens came up with a
digital product called Technomatix which is a production planner software through which the
world planning can be done both internally & externally. With the help of this software
Volkswagen reached increasing planning needs by not adding new staff, cost of production
reduced, faults were mitigated.
(Siemens, 2014)
4.Analysis of portfolio of Capacity management and critical analysis of
corresponding constraints in as applicable to Volkswagen:
To understand Capacity management one must get to know what is capacity, Capacity is
defined by Federal Bureau of Economic Analysis “ That output attained within the normal
operating schedule of shifts per day & days per week including the use of high cost
inefficient facilities”.
Capacity means to store or to receive. Capacity management in preview of operations
management it is the time dimension. Capacity management is referred to as total number of
output as of total time taken to produce. A production manager needs to take care of both
input & product outputs. (B.Chase, et al., 2011)

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Capacity management in service sector means the proper scheduling of work force. If the
work force is scheduled properly they are not kept idle but if it is not scheduled properly then
there are major chances of revenue loss & huge operating cost.
(Heizer, et al., 2011)
Capacity management includes capacity planning, capacity planning helps in determining
demands, helps analysing future technological implications, helps to convert prediction into
reality, helps to mitigate losses, helps in determining needs & economic effects, helps in easy
implementation of operation planning & strategy. (Buffa, 1984)
To have an efficient capacity management Volkswagen uses two concepts-
1. Modular Tool kits.
2. Turntable.
As the product criticality increases the company must start laying its hands on optimal
capacity management in order to give the best quality to the end user without any
improper production systems.
To provide maximum gains at an affordable price to the consumer is very challenging
task but it can be achieved by proper capacity planning & capacity utilization. Capacity
Management can be done on the basis of logical construction & remarkable principles of
design. This can be achieved by standardization of manufacturing process & functional
equipment at prior stage.
Concept consistency is followed by Volkswagen which checks that all the assembling
technique at minimum time & at minimum space, sequences of product fixing & starting
are taken in to here. This also takes in consideration effective transportation & production
process.
Modular tool kits helps in designing the production sites flexible according to the
requirement of the product. Modular tool kits helps in using single platforms for different
brands which helps in efficient capacity management. For example- the skoda kvasity in
republic of Czech it will also manufacture an automobile brand seat in 2016 out of fourty
passenger car locations of Volkswagen nineteen are already multiple brand plants of
Volkswagen.
(Aktiengesellschafi, 2015)
Modular toolkit strategy for company has caused thunder in automotive sector the
decidedly flexible platforms with which are called as MQB- Modular Transverse Matrix,
now many automobile manufacturers are trying to go for MQB. Volkswagen
benchmarking MQB is appreciated by the other industry rivals that is Toyota & Ford.

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These MQB helps Volkswagen to give a tailor made product to different parts of their
markets at an minimizing cost as much as possible, which is indirectly giving
Volkswagen a competitive edge. The modular components have 3 components MQB,
MLB,MSB which will help in placing vide variety such as power trains, diesel & gas
engines, to batteries & electric motors.
(Johnson, 2013)
Turntable is also a concept of capacity management which is used when there are sudden
changes in demand or frequent fluctuations & if there is shift from one segment to
another segment. At present turntable are at Emden, Wolfsburg & Zwickau.
(Aktiengesellschafi, 2015)
Resources needs to be made productive it is not possible that they themselves become
productive. An organizational capability is to get a stipulated & firm output from
employee resources at various constraints. Generally, organization capability &
competence are used interchangeably.
“Prahalad & Hamel” gave the word core competence in order to bifurcate fundamental
capabilities to a organizations operation strategy & performance. According to Prahalad &
Hamel core competencies are those that are -
1. Coming up with a remarkable efficiency to which the value is provided or to provide
disproportionate contribution to the end user for life time value.
2. Creating platform for entering a new market.
(ITAMI & NOTO, 2007)
4.1 CLASSIFYING CAPABILITIES
1. Functional analysis
Functional analysis determines the key performing sections of the
organization & identifies capabilities of the organization in respect to performance.
2. Value chain analysis
This analysis separates each action into consecutive chains.
Michael porter’s value chain analysis bifurcates between support actions & primary
actions.
3. Capability as Routine
Organization capability needs are the ability of one to combine
with capital equipment, technology & few other resources. The require routine of a set of
activities are known as organizational routines.
In production level a set of beaten path checks the way of raw materials & constituent
through the manufacturing process to the factory gate.
Organizational routines needs to be
done on a regular basis if not performed then it will be difficult to execute at the future
level. There is a need of set direction to be given right from beginning till end.

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4.2 MAKING CAPABILITY & RESOURCES ANALYSIS TO WORK
1. Identifying the key resource & capabilities analysis to work
In order to practically operate one must understand
Volkswagen’s key resource capabilities such as efficient supply chain system, new
product development system, global presence etc. Identifying these strengths &
working on it by creating operational framework.
Fig-11. Appraising V.W. capabilities & resources.

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2. Appraising capabilities & resources
There are to bars to appraise those are-
i. Assessing the importance of Volkswagen- Volkswagen importance are there
development of new product at a frequent time, global foot print.
ii. Assessing relative strength- It means the company must assess its
competitive strengths & key areas of weakness were it need to work and give
thorough focus.
3. Developing Implimentation framework
Developing a framework in order to execute
the capacity plan this decisions are taken by the production process in line with top
mangement.
Fig-12. Appraising V.W. capabilities & resources. (Hypothetically)
Fig-13. Capacity Utilization by different companies.
Fig-14.Average Capacity Utilization by different companies in 2008.

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Fig-15. Number of cars manufactured by different companies in 2008.
5.EVALUATING THE MODERN MANAGEMENT PRACTICES AND
TECHNOLOGY DEPLOYED BY VOLKSWAGEN
5.1 INFORMATION & TECHNOLOGY SOLUTION FOR THE STAKE HOLDERS:
At Volkswagen stake holders means which include dialogs, symposium, workshops, social
media, questionnaires, debates, projects, evaluation in order to use them for documentation &
also for future reference Volkswagen use stake holder management system information
technology.
Future tracks- Future trucks is a programme which Volkswagen is developing clarification
for axiological cataclysm & difficulties at the top level management. It creates a common
platform for all the actions which will be employed now, past & future.
Fig-16. Piloted driving by Volkswagen in Audi

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5.2 Benefits of piloted driving
1. Increased safety-
Around 90% accident are all determinable of human faults.
Automated driving can be solution to reduce accidents as believed by many experts.
2. Improved fuel economy-
Around 3 to 5% fuel consumption will be reduced because
compared to human piloted cars have sensors which analyses where, when & how to
accelerate, brake the gearing system it drives according to standard sets.
3. Added efficient use of roads-
Vehicles which are automatic use lesser space as when compared
to human that means around 30% of parking space can be utilized by the city for
movement
4. Freeing up driver’s time-
Automated driving have system that they can take control of
the car while driving or they can leave it to piloted driver whenever required.
5.3 98% dealer satisfaction from centralized service desk deployed by
Volkswagen with help of Tata consultancy services:
Volkswagen group sales India Private Limited was undergoing many hurdles in giving
effective reporting & resolution to the ultimate user problems as there were huge number of
vendor list to abutment current dealer applications & a service base with in a set of bound
capabilities. In order to give absolute backing for Volkswagen’s Dealer Management
Systems & Applications, it wanted to create a centralized service desk. One more objective of
this was to minimize Information & technology & Operational costs. Tata Consultancy
services in order to provide End-user & Dealer a remarkable experience & contentment, they
developed & actualized a centralized operations centre also a tool for service end using
cloud. This resulted in lesser dependability on a single vendor & dealer had one solution to
all the queries & problems.
((TCS), 2015)
5.4 DISASTER RECOVERY SYSTEM:
Wolfsburg, Germany is the headquarters of the Volkswagen group which is one of the
world’s dominant car producers & also the biggest car producer in Europe. The engineering
team of Volkswagen is supported by the product data management wing who are operational
at various places over four continents. The aerial amount of geographic break is transparent
completely in cognizance to access of information. A data centre provides data from a central

20 | P a g e
setup which is known as Volkswagen’s hub. The spoke data base use to give information at
the site exactly, were as the hub use to give information about the centre at the site.
To apparatus hub & spoke system company uses oracle streams for Bi-Directional Carbon
copy. Data guard is the securing system for hub in case of it fails then data guard takes the
role to give information temporarily & also keep in tune with spoke in order to mitigate
information failure.
(Kuhr, et al., July 2007)
5.5 TOYOTA PRODUCTION SYSTEM:
Japan had lost 2nd
world war after that president of Toyota he wanted to grab up with U.S.A
for productivity & quality, he wanted to go beyond their standards in coming 3 years. So he
developed a system called Toyota Production System(TPS) for which the yardsticks were
1. Just-in-time (JIT) &
2. Jidoka
Fig-16. Toyota Production System.
1. Just-in-Time-
Just-in-time means getting the ancillary products in the factory during the
time of production just-in-time of process which means zero inventory.
2. Jidoka-
Jidoka means automation. It was invented by toyoda sakichi founder of
Toyota.

21 | P a g e
5.6 LEAN PRODUCTION
Lean production was coined by womarla, Jones & Rossin the year 1990, they defined lean as
“a way to create new work rather than simply destroying jobs in the name of efficiency”.
Lean production means managing, organizing, suppliers, operations & customer relation for
product development. (Ahrens, 2006)
Problem of funding of projects & how information & technology solved it in Volkswagen of
America.
Volkswagen of America had an unusual problem that there high priority projects were not
been funded & this lead to informal inserting of the unfunded projects into the information &
technology department.
This was caused because there were fourty projects of 210 million dollars but only sixty
million dollars was provided by the Volkswagen headquater. This resulted in lots of
confusion around, so then Volkswagen used information & technology with a standard
process through which all the funding problem were solved the system would select
automatically the right project to be funded this prevented informal inserting projects for
funding. (AUSTIN, JUNE 14,2007)
Fig-17
(AUSTIN, JUNE 14,2007)

22 | P a g e
5.7 DIGITAL VOLKSWAGEN FACTORY AT SLOVAKIA:
Volkswagen Slovakia plant is totally digital plant with minimum error & human interface this
is because of the top management’s decision to update this model in order to forever testing
of new production programme it’s called “WERK-MODEL”. (Marek & Martin, September
2008)
6.Analysis of Key Critical Success Factors of the Industry and
critical evaluation of the strategies adopted by the Volkswagen to
gain competitive advantage through innovations in Supply Chain
Management
6.1 SUPPLY CHAIN MANAGEMENT
The concept of supply chain management delivered from the evolution of value chain
network which consists of characteristic operational existence bond to accommodate
information & resources in order to gain the intention of competent management of supplies
& parts flow.
In order to maintain company to be in this voka world company must always need to get the
knowledge of supply chain Management which has become perquisite for successful
operations.
(Bratić, 2011)
Innovative supply chain gives successful results it helps in continuous improvements it
provides operational solution for requirement in demand & supply.
(Kushwaha, January 2012)
6.2 SUSTAINABLE VALUE ENHANCEMENTS
Volkswagen always incorporates sustainable development as one among their core principles
& the company also believes that fostering it will be a competitive advantage, but in relating
to the emission issue company has literally failed & also expressed this in their Annual
General Report, but the company is thriving hard to come up with emission free products &
working on various fronts to tackle this problem which is making its stake holders lose faith
in the company.

23 | P a g e
Fig-18
6.3 Key indicators to performance for producing alternative drive system,
customer, fuels& connectivity attributes:
Example- Scania is distributed to one lakh sixty thousand networked truck are been used by
customers. These vehicles transfers their real time information that where is there current
location, consumption of fuel, fuel availability, frequency of driving at regular intervals. As
majority of the consumers are fuel centric which means they wish to save fuel & also for
different driving system .
Example- Man & Scania are using natural gas as it is considered clean fuel which does not
emit harmful materials to the environment. Company is also testing E-Caddy in the
commercial vehicles which are light, Volkswagen is looking for a bigger environmental
picture.

24 | P a g e
Fig-19.
(Aktiengesellschaft, 2015)
6.4 VOLKSWAGEN SHOWCASES LATEST LOGISTIC INNOVATION:
Different brands under the Volkswagen roof will have a rapid innovation in coming days said
Thomas Zernechel, the head of Volkswagen logistics group. Growing digitalization it will
help logistics to move to a next peak. Smart glasses which prevents error another innovation
was fully automatic load pickup & Drop from warehouses. Some others are robots which can
transport single person with automated GPS functions. Exoskeletons which help in
recognizing objects.
Fig-19.
(Tredway, 23 November 2016 |)
Fig-20.

25 | P a g e
6.5 Environmental efficient production
6.6 Different brands different sustainable environment strategy.
Brand Strategy
V.W. passenger & commercial cars Think blue
Audi Ultra-strategy
Skoda Green factory
SEAT Eco-motive
Bentley Environmental Factory
Porsche Resource efficient production
Scania Blue rating
Man Climate strategy
Fig-21.
Company records on the input, output & consumption variability & quotes the data on an
open forum in order to exchange a healthy practices. Company has recycling of water system
these layout reuses the water which is used & cleans it in order to minimize the usage of fresh
water. Hannove & smelter plant which reduced emission output to seven thousand tonnes per
year.

26 | P a g e
Fig-23.V.W of America
(AUSTIN, JUNE 14 2007)
6.7 GREEN LOGISTICS:
Logistics comprises of major sustainability so company is trying to minimize consumption of
fuels. Company is focusing on collaborating & trying to reduce the transportation process by
using Logistic Process Partner Management. Currently company is very much concerned in
developing process efficiency as it reduces the consumption.
Fig-24.successful strategic alliances
.
(Zamir, et al., February 2014)

27 | P a g e
Fig-25.New energy
Vehicles which will run by electricity will have batteries which can accumulate higher energy
& can charge their vehicles when it is parked without the help of driver & even it can create
power from on board fuel cells.
(Aktiengesellschaft, 2015)
6.8 RECONFIGURATION OF SUPPLY CHAIN AT VOLKSWAGEN
GROUP TO DEVELOP GLOBALLY:
Volkswagen holds 2nd
rank in automobile industry after Toyota. The reason is reason to be
among top is its approach which is established on experiential breakdown to find the growth
& arrangement alteration of the supply chain management at Volkswagen. The Resende
industry in brazil which started producing in the year 1996 was an accomplishment of
Volkswagen to move in modular industry & modular manufacturing which has modularized
operations & products also. Volkswagen accepted “modular consortium” manufacturing
model other rivals adopted suit.
Modular setup gives description of responsibility centres which include assembly points &
supply points it is an affiliation between these two points. The modulist & Volkswagen had
an agreement which was not supposed to disclose to others, the modulist generally became a
subcontractor to Volkswagen as they needed to do partial operations like mounting the
chassis etc. Resende is the best successful example for this as Volkswagen could focus
strategy formulation & implementation rather than only in manufacturing process. To
administer the quality “Maestors” were employed who were the employees of Volkswagen.
This helped in detecting the problem at its roots, it helped them for analysing the root cause
analysis. (Csizmazia, December 2014)

28 | P a g e
Fig-26. V.W. Suppliers location.
(Panitchpakdi, 2010)
6.9 Establishing compeititive advantage
1. Scarcity- if resources are very scarce then they should made using operational tactics
like supply chain.
2. Relevance- if there is an innovation that must be properly followed up in order for
future growth.
6.9.1 Sustaining compeititve advantage
1. Durability- product durability is the critical role player in the sustainable
compeititve advantage if any companies operations team cannot produce durable
commodities then those companies are out of the horizon of compeitition.
2. Transferability- Transferability is major in sustainable compeitive advantage for
which the tools like supply chain management are used.
3. Replicability- company should be able to replicate best practices, practiced in the
industry & incorporate them to get the addded advantage.

29 | P a g e
CONCLUSION
Impact of Volkswagen on its eco system - 8 strategy to rebuild itself & become global
automobile leader.
1. Focus on emerging markets-
Volkswagen should now focus emerging markets like
china, India & diversify its infrastructure to these rapid developing economies.
2. Hybrid & electric power train on priority-
Volkswagen is focusing electrifying every
segment & also looking for single battery installation which will give it a competitive
advantage.
3. Focusing on passenger safety-
It was always kept on priority & is carried forwarded for the future.
4. Position Volkswagen as a pioneer in sustainable mobility & synthetic fuels-
Volkswagen has evolved itself in creating synthetic fuels which are replicable to fossil
fuels which does not emit harmful components, these fuels are 100% drop-in.
5. Connected cars as a basic & major focal point- Technology connected car
expanding in developing & developed economy in this segment is still very back as
compared to the industry rivals.
6. Bring Porsche, Audi & other brands to limelight- Currently Volkswagen in USA is
focusing on ‘Clean Diesel’ dynamism now company must bring to limelight Audi &
Porsche in high price segment & in low price segment Skoda & Seat.
7. Greater focus on commercial vehicles- Volkswagen has two brands MAN &
SCANIA which are doing remarkably well in Europe it neds to be taken to the global
foot print.
8. Rigorous voluntary Testing & Certification- After learning from crisis of America
& Europe Volkswagen should now go for certification as per local government norms
& get test clearance reports from them.
(Frost & , 2015)
Fig-27. Volkswagen to become the market leader by 2020
(securities, July 15, 2015)

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