Introduction Four Functions Approach Important Success Factors Challenges that will face next 5 years Findings Recommendation Solar Power and Tidal Resignation of Volkswagen's CEO Martin Winterkorn Who is liable if collision occurs? i. Planning Long-term objectives Strategies Difficulty of individual goals ii. Organizing Employees report to me Centralisation or Decentralisation iii. Controlling iv. Leading

1. Introduction
Volkswagen is operating a business of German automaker founded in 4 January 1937 by
the German Labour Front which is headquartering located in Wolfsburg, Germany. In other
words, Volkswagen is translated as “People Automobile” in German
In year of 1937, the company is set up by the Nazi trades union organization, the
Deutsche Arbeitsfront. During that era, there are only wealthy Germans owned cars because
majority of the citizen is not affording to own an automobile. For this reason, Volkswagen group
aim was to create a “people’s car”. Subsequently, Hitler decrees that “an automobile should carry
two adults and three children at 100km/h (60mph) and the item should not be luxury items,
costing no more than a motorbike to buy”.
After a year, the company, initially called the Gesellschaft zur Vorbereitung des
Deutschen Volkswagens mbH, is renamed Volkswagenwerk GmbH. Same year, a factory is built
for the company in the new town of KdF-Stadt, now modern-day Wolfsburg. Almost 336,000
people subscribed to buy the car via a monthly savings plan but by the outbreak of war only a
handful of car is completed and none are delivered to customers. Between the years 1939 to 1945,
during World War II, civilian car production ceases and the firm switches to making vehicles for
the German army, using more than 15,000 slave laborers from nearby concentration camps. It is
a practice that is widespread among German firms during the war. In year 1998, survivors file a
lawsuit against Volkswagen, which sets up a restitution fund.
By the year 1949, Volkswagen passes to German’s Nazi control under manager Heinrich
Nordoff. It becomes an important element of post- war West German regeneration. The state of
Lower Saxony, where Volkswagen has its main factory, takes a 20% voting stake in the firm. As
production increasing dramatically, sales of the Beetle reach one million in year 1955.
In year 1964, Volkswagen buys Auto Union, owners of the historic Audi brand. After 5 year,
Volkswagen buys NSU Motorenwerke, and eventually merges this with Auto Union to create the
modern Audi firm as its luxury vehicle brand. Audi has the technological expertise needed as
demand for Volkswagen’s original air-cooled models goes into reverse. At 1973, with sales of
Beetles declining, Thus, Volkswagen switches to produce a new generation of cars with front-
wheel drive and water-cooled engines such as the Passat, Scirocco, Golf, and Polo.

2. Volkswagen Group is created as a holding company for the growing car maker in year
1975 to monopolize the automaker market. At 1982, Volkswagen signs a co-operation agreement
with the Spanish car maker seat. It buys a majority share in 1986 and acquires seat outright in
1990.Next year, Volkswagen signs a co-operation agreement with Czech car maker Skoda,
which then becomes Volkswagen’s fourth brand as it raises its equity share to 60% in 1994 and
70% in 1995.At 1998, Volkswagen embarks on a round of acquisitions of famous names, buying
up Britain’s luxury car maker Bentley, France’s Bugatti and Italy’s sports car maker
Lamborghini.
In 2012, Volkswagen’s Audi subsidiary buys the Italian motorbike maker, Ducatti. Same
year, years of wrangling between the two firms and families comes to an end when Volkswagen
buys the remaining half of Porsche’s car making operations. Porsche’s chairman, Wolfgang
Porsche, has ultimately been thwarted by his older cousin, Ferdinand Piech, who is
Volkswagen’s chairman.
Next year, Germany wins its court battle with the EU over Volkswagen, after rewriting
the Volkswagen Law. Under this revised law, for important decisions an 80% majority of all
shareholders will be needed. Volkswagen is one of the biggest firms in automotive market in
based on Fortune Global 500 Companies 2014. It has factories in 31 countries, and it is products
are sold in 153 countries across the global market. The company reported revenue around
$197billion and is still recognized as a growing market. In 2015, the Volkswagen has recognized
BMW, Audi and Toyota as their main competitor in global market.
To achieve the economic and ecological of the global automotive industry, Volkswagen
set a mission and four objectives to make Volkswagen the most successful in the world by 2018.
To build a long-term strategic partnership with our customers and assist them by making the
right choices for their needs by minimizing fleet costs and providing world class customer
service is the main mission for Volkswagen. One of the objective is Volkswagen intends to attain
long term relationship with customers through advance innovation and high quality.
In annual report 2014, Volkswagen came out a strategy to become the leader of global
automotive industry. Volkswagen group pays attention and focusing on the environmental
protection and profitability of our Volkswagen vehicle projects, so that our group can produce
the right product contribute to success even in more challenging economic conditions.

3. Meanwhile, ours group can controlling the size of capital expenditure. After those process, our
attractive range of environmentally- friendly vehicles, which our group are selectively extended,
become an excellent position for individual brands in the whole world market by sufficient use
of the group’s assets and strongly improvement our competitive advantages.

4. Four Functions Approach
i. Planning
Planning encompasses defining an organization’s goals, establishing an overall strategy
for achieving those goals, and developing a comprehensive hierarchy of plans to integrate and
coordinate activities.
Volkswagen is no exception from this as they have planned their company’s future based on the
guideline. Below are their objectives, strategies and goals.
Long-term objectives
The Volkswagen Group plans to increase its unit sales and profits in long run. And, below are
the details of what makes up their long- term objectives:
1. Volkswagen intends to deploy intelligent innovations and technologies to become a world
leader in customer satisfaction and quality, and they see high customer satisfaction as one of the
key requirements for the company’s long- term success.
2. Have a goal of generating unit sales of more than 10 million vehicles a year; in particular,
Volkswagen intends to capture an above- average share of growth in the major growth market.
3. Making return on sales before tax of at least 8% so as to ensure that the group’s solid financial
position is guaranteed and that it retains the ability to act even in difficult market periods.
4. Volkswagen aims to be the most attractive employer in the automotive industry. The aim is to
have the best team in the sector: highly qualified, fit and above all motivated.
Strategies
Currently, they are focusing on environmentally friendly orientation and profitability of
their long-range electrical vehicle projects, and selectively expanding their range of vehicles to
safeguard the strong position enjoyed by their individual brands and to systematically increase
their competitive advantages. In addition, Volkswagen is looking forward to expanding customer
base by increasing satisfaction among existing customers and acquiring new customers around
the world, particularly in the growth market. To ensure this, they’ve adapted their products and
services to the specific local requirements. They also take measures to increase productivity and

5. quality regardless the economic situation and without any time limit. Last but not least, they
standardize processes in both the direct and indirect areas and are reducing production
throughout time.
Difficulty of individual goals
-Individual planning components are determined on the basis of the timescale provided.
-The long- term unit sales plan, which sets out market and segment growth and then derives the
Volkswagen Group’s delivery volumes from them.
-The product program as the strategic, long- term factor determining corporate policy.
-Capacity and utilization planning for the individual location.
ii. Organizing
It’s the designing of an organisation’s structure. It includes determining what tasks are to be done,
who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions
are to be made.
Volkswagen has designed its organisation structure based on this approach. Volkswagen
is managed by Board of Management in accordance with their Articles of Association and the
rules of procedure. Its strategic management is largely conducted at group level by committees
which composed of representatives both of the relevant central department and the corresponding
functions in company. Hence, there’s lesser chance of overriding and abusing of power.
Employees report to me
The number of people reporting to a manager is called ‘span of control’. It refers to the
number of subordinates that a manager or organisation can manage effectively and efficiently.
Typically, span of control is either narrow or wide resulting in a flatter or more hierarchical
organisation structure. Each type has its pros and cons.
So, what is the ideal or optimum span of control for an organisation? An ideal span of
control in an organization is approximately 15 to 20 subordinates per supervisor or manager.

6. However, some believe that 5-6 subordinates per supervisor or manager is ideal. In general,
however, optimum span of control depends on various factors including:
Organisation size and nature, jobs’ nature, skills and competencies of manager, employee skills
and abilities, type of interaction between subordinates and superiors.
Centralisation or Decentralisation
Centralisation is said to be a process where the concentration of decision making is in a
few hands. All the important decision and actions at the lower level, all subjects and actions at
the lower level are subject to the approval of top management. On the other
hand, decentralisation is a systematic delegation of authority at all levels of management and in
all of the organization. In a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies concerning the whole concern. Rest
of the authority may be delegated to the middle level and lower level of management.
The degree of centralization and decentralization will depend upon the amount of
authority delegated to the lowest level. Decentralization is not the same as delegation. In fact,
decentralization is all extension of delegation. Decentralization pattern is wider in scope and the
authorities are diffused to the lowest most level of management. Delegation of authority is a
complete process and takes place from one person to another. While decentralization is complete
only when fullest possible delegation has taken place. In other words, everything that increases
the role of subordinates is decentralization and that decreases the role is centralization.
Decentralization is wider in scope and the subordinate’s responsibility increase in this case. On
the other hand, in delegation the managers remain answerable even for the acts of subordinates to
their superiors.
Job designation Job design is the process of combining responsibilities and duties into jobs
that enhance organisational effectiveness and employee satisfaction. Job
design should take employee motivation and job satisfaction into account to
the following characteristics of a job.
Skill Variety The degree to which the job involves different tasks and uses different skills.

7. Task Identity The degree to which the job requires the completion of a whole/complete
piece of work - doing the task from beginning to end.
Task
Significance
The degree to which the job has importance to the organization and others.
Autonomy The amount of independence and discretion the employee has in completing
their work.
Feedback The degree to which the employee is given direct information about the
effectiveness of his/her performance.
iii. Controlling
Besides planning and organizing, Volkswagen does practice leading and controlling.
Leading act as a very crucial role in a business organization and leader means someone who sets
the direction and motivates the people to follow that direction. If there is a bad leadership, the
business will most likely cannot accomplish its target. For Volkswagen, it has a very good
leadership as they can lead their employee very well.
For example, as they stated on their website, ‘’ Motivations and participation ;We are all
pulling in the same direction’’, employee participation is one of the keys to motivating at
Volkswagen. We are interested in opinions of and mood among employees, but also in the
numerous ideas and important suggestions of our employees. This results in satisfaction and
success. Volkswagen wants to make sure that their employees are actively involved. That's why
every year Volkswagen will carry out a survey call “barometer of opinion” to every employee to
voice out their opinion to the company. In the year 2014, around 443000 employees around the
globe took part in the survey, get their genuine opinion, feedback and discuss with their superior
and determine appropriate improvement for the future.

8. Besides conducting the survey, Volkswagen allows their employees to give improvement
ideas. This is idea management which involves and motivates employees and also helps to find
hidden talents, ideas and innovation within all the employees efficiently. So, if anyone in the
company has some ideas for improvement, they can just give their opinion online. By this,
Volkswagen can get new ideas while motivate their employees by participating in the company.
According to data, so far Volkswagen employees in Germany have summited over 2 million
improvement ideas. In this way, they are contributing to optimizing the manufacturing of
components and cars. Over the course of 65 years, Volkswagen has been able to save €3 billion
and has paid out over €528 million in bonuses.
iv. Leading
Continue with controlling. ‘control’ in a business means the management make sure that
the actual works fit in with the objectives and planned activities. The aim of control is to keep
deviations from planned activities so the goals can be achieved with fewer problems.
For example, Volkswagen manages a good information system. Volkswagen information
technology group consist more than 9300 IT employees, 700 running systems and over 2 million
daily users around the world. This group is responsible for developing and improving their
current application and operations system. They are currently running over 1500 IT projects and
they provide support to the entire stage in the automotive production chain and they do also
provide support to the colleagues in sales department, technical development, and other field. By
this application development sector, it can help to ensure the production line can complete their
order in time. Besides application development, this group also responsible for the IT operations
which is maintaining, providing, and further developing the infrastructure needed for their
system. It includes monitoring the system support, 10 international data processing centers,
system support and provision of software for their users and implementing new technologies
from the area of tablet and smartphones.
The Volkswagen group is trying to control the employees ethical behavioral, so the
Volkswagen ombudsman group creates an anti-corruption system to maintain it. In regard to
corruption, the Guideline aims to raise the awareness of each employee and sensitize them for

9. the scope of the topic. Any of the Volkswagen employees can file a complaint if he or she
suspected any who involve in the scandal to the highly- respected lawyers who plays as an
independent representative. The person who submits the complaint will be undisclosed, so he
does not have to afraid of any consequences.
As we say, controlling is to keep deviations from planned activities so the goals can be
achieved with fewer problems. And Volkswagen is trying to reduce the risk of getting problems.
They implement a risk management system that can helps them to spot risks and existing risk
positions. With the monitoring by the chairman of the audit committee, Dr. Ferdinand Oliver
Porsche and his committee, whom has the experience and expertise dealing in the accounting and
risk management issues, including the internal control system and compliance the risk is highly
reduced.

10. Important Success Factors
As the time goes on, we can see that Volkswagen Company has gone towards
successfully. Based on the annual report 2014, Volkswagen comes out a strategy to become the
leader of global automotive industry. Volkswagen group pays attention and focus on the
environmental protection and profitability of our Volkswagen vehicle projects, so that our group
can produce the right product contribute to success even in more challenging economic
conditions. Meanwhile, our group can control the size of capital expenditure. After the processes,
our attractive range of environmentally-friendly vehicles, which are selectively extended,
become an excellent position for individual brands in the whole world market by sufficient use
of the group’s assets and strongly improvement our competitive advantages.
Based on what we have found, one of the factors is that Volkswagen Company will open
to their employees to give them opinions by carrying out the “barometer of opinion” that has
been mentioned in one of the management functions, which is leading. By carrying out this
“barometer of opinion”, Volkswagen Company has received more than two million over the
years. The “barometer of opinion” has been helping them to develop quality ideas and creative
ideas.
Challenges that will face next 5 years
However, Volkswagen Company might probably face a challenge over next five years
which is running out of petroleum on earth. Therefore many of car companies are trying to
innovated electrical operated car which is Tesla automotive. Hence, Volkswagen Company is
one of them. Based on Volkswagen Company’s future strategy plan is “Strategy 2025”.
During the past few years ago, Volkswagen Company has involved in a emissions
scandal, they hopes to increase efficiency as their headline objective. Therefore, one of their
strategic to achieve this by putting emphasis and investment on electrification, with 30 new
models expected to launch by 2025.
Volkswagen Company has promised that, with greater focus on autonomous driving
technology. They will develop own self-driving system capable everyday usage by 2025, and

11. together with the newly announced battery development, will raise the projected investment in
the future. Therefore, it is a challenge for them to get back their good reputation.
Findings
As referenced for POLC of Volkswagen Group, the group has a good planning which is
their long -term objectives for the future. The problem may rise is that Volkswagen Group is
achievable?
First and foremost, Volkswagen Group has a complete hierarchy organisational structure.
The group mainly divided into two main divisions which is Financial Services Division and
Automotive Division in figure 1. Each division is divided into individual brand and each
individual brand has their own organisational structure. For this reason, the top executive
management is easy to set objectives for each brand of Volkswagen. For example, Volkswagen
sets to generate unit sales of more than 10 million vehicles a year. Each brand need to set a sales
target for different region such as Audi targeted to sell 50 units in Malaysia. Therefore, it is easy
for mangers to perform task oriented on lower levels of organisational structure.
Figure 1 Volkswagen Hierarchy Organizational Structure

12. Next, they are focusing on long-range
electrical vehicle projects. In 2016, Volkswagen has
unveiled the model of electric concept vehicle
which is I.D in figure 2. The concept car range is
between 240 miles to 330 miles and it is suitable to
replace diesel car which create heavy losses in
emission scandal.
Lastly, Volkswagen makes a wise decision in handling diesel emission scandal. They do
not blame others but quickly take the responsibility tackle to recall all 8 million vehicles that
obliged across the 28-country. This may cause heavy losses approximately $18 billion charge to
cover the cost of the emission scandal. Across back to their objective which is “to become a
world leader in customer satisfaction and quality”, they have prove it to the world that serious
care about the long term relationship with customers and provide them high satisfaction which
will bring benefits.
Figure 2 shows I.D.concept car

13. Recommendation
Referring to the previous section,to help Volkswagen solve the problems and gain more
profit,the following recommendations are proposed:
Solar Power and Tidal
By the year 2080, the world's supply of petroleum will be in dramatically decrease.That is
why we need other renewal sources of energy to alternate the petroleum in the future,and solar
power is not a bad choice because it can converse the sunlight into electricity and sunlight is
unlimited resource.We have seen from news that some people already invented solar car to solve
the problem of lacking petroleum but we rarely see a solar car on the road now.However,we
might see all of the cars on the road in the future are solar powered.Most importantly,Solar
power will not pollute the earth.
Besides that,Tidal is not a bad idea to alternate the petroleum,just like solar power,it does
not pollute the earth as well .Tidal is a power that can be obtained by using the natural changes in
water level across the globe.Tidal can't be used directly for transportation, but may help power
future electric cars with the electricity produced from these power plants.
Resignation of Volkswagen's CEO Martin Winterkorn
In the case of emissions scandal,Martin Winterkorn said that he was”not aware of any wrong
doing” on his part,but still resigned in the company’s best interest.Martin Winterkorn need not
resign if he did not include in this case but Martin Winterkorn need to take the responsibility it
because he is the leader.It is very unfair for him,actually most of the times the leader would not
know most of the bad things from his subordinates,what their see from the surfaces are usually
being modified by their subordinates.Volkswagen is a big company,their security system usually
are superb.For example,nobody knows the secret recipe of KFC until now even their employers
from each stores except for some insiders.
We need to collect more evidences to decide that the leader should be responsible for the
scandals or not,but look likes Volkswagen just sacked Martin Winterkorn hasty for closing this
scandal as fast as possible to reduce the damages of their goodwill.

14. Who is liable if collision occurs?
It sounds great when autonomous driving want to be developed and has been given a
expect,but,there is a question,what happens if collision occurs?For example,if you are in a
autonomous driving car,for some reasons,your car will surely hit one of the two cars on the
road,which car should we hit?Usually the accident is uncontrollable,but now we can control it,we
can control which car we need to hit,whichever car has been chosen, somebody needs to take the
responsibility for intentional homicide.
Now we have a new question,who is liable if this happened?The car designer?The person in
the car?If the car designer need to take the responsibility,it is obvious that the designer would not
even sell the car because the percentages of car collision is high and nobody will want to bear the
high risk of it.In the other hand,if the person in the car need to take the responsibility,but literally
the person does not even move or control the car to let the car to cause the collision because it is
autonomous driving.
So,Volkswagen need to find a way to solve this problem before they want to release since
this is a quite serious issue for the car developer.Maybe the country need to add a new law
regarding for autonomous driving car,the current law does not include anything abut autonomous
driving car.

15. Conclusion
This report shows that Volkswagen is a age-old brand that has experienced some important
events like World War Two.During that time,Hitler encouraged the German to engage in his
savings plan, almost 336,000 people wanted to buy their car via monthly savings plan but only a
handful of car were complete and none were delivered to customers because of the World War
Two.
Obviously, Volkswagen will always plan to increase their unit sales and profit in the
future.To make this planning be success, Volkswagen need to organize the management with
lesser chance of overriding and abusing of power because their committees is composed of
representatives both of the relevant central department and the corresponding functions in
company. Besides that, controlling and leading are important to Volkswagen as well. Controlling
is to make sure that the actual works fit in with the objectives and planned activities, and if there
is a bad leadership, the business will most likely cannot accomplish their objectives.
Based on the annual report from 2014, we can see that Volkswagen Company has gone
towards successful. Volkswagen has proved that they did their management very well and
outstanding. Even though they did well in management, there are a lot of problems that waiting
for Volkswagen to solve it. For example, the lack of petroleum on earth and emissions scandal.
However, Volkswagen does not blame others but quickly take the responsibility to tackle the
problems.
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