International Assignment part i The Chinese University of Hong Kong Global Enterprise Management Professor Tatiana Kostova July 12, 2016 Carla Yvonne Valle Acosta Bruis Van Vlijmen Shiyuan Xu Lishan Sung Jiwon Sung Political Environment Analysis Mexico Mexico is a federal presidential representative democratic republic, whose government is based on a congressional system. Hereby the president of Mexico, Enrique Pena Nieto, is both head of state and head of government. As member of the once dominant Institutional Revolutionary Party (PRI), he returned the power to his party with a clear win in the presidential elections of 2012. Nieto will be in office until his term ends in November 2018. The hegemony of PRI started in 1929 and lasted for the majority of the 20th century. In the 1980’s huge oil reserves were discovered off the shores of Mexico, in southernmost end of the Gulf of Mexico. The president at the time, Portillo, promised to use the oil money to fund a campaign of industrial expansion, social welfare and high-yield agriculture. The government borrowed huge sums of foreign money, at high interest rates, to develop the oil field, however it turned out that the oil was of low grade. Leaving Mexico with the world’s largest foreign debt. In 1992 president Salinas, US president Bush and Prime Minister Mulroney of Canada sign the North American Free Trade Agreement (NAFTA). This agreement calls for phasing out longstanding trade barriers between the three nations. During the last two decades the dominance of the PRI in Mexico’s political landscape has degraded. 70 years of PRI rule came to an end when the corruption-plagued PRI lost the presidency election in 2000. Vicente Fox came to rule, a conservative reformer who was a former Coca-Cola executive,. His policies focussed on improving trade relations with the United States, calming civil unrest and fighting corruption, crime and drug trafficking. Despite good efforts, reforms slowed down and opponents gained ground. In 2006 President Calderón came to power, after winning in a close election, with less than one percentage point difference. Calderon originally promises to push business and technological development, however the ends up addressing the issues of poverty and social injustice while in office. The current president Nieto promised major changes when coming to power 4 years ago and has not disappointed in that regard. Nieto has pushed reforms, including closing corporate tax loopholes, liberalising the telecom industry and opening the longstanding state energy monopoly to private competition. However, gang violence, corruption and weak state authority remain sores. Still Mexican politics face two great challenges, corruption and the rule of law, with the latter the most severe. Economic Performance of México Currently, Mexico becomes the second largest economy in Latin America. With the benefit of signing the North American Free Trade Agreement (NAFT.

1. International Assignment
part i
The Chinese University of Hong Kong
Global Enterprise Management
Professor Tatiana Kostova
July 12, 2016
Carla Yvonne Valle Acosta
Bruis Van Vlijmen
Shiyuan Xu
Lishan Sung
Jiwon Sung
Political Environment Analysis Mexico
Mexico is a federal presidential representative democratic
republic, whose government is based on a congressional system.

2. Hereby the president of Mexico, Enrique Pena Nieto, is both
head of state and head of government. As member of the once
dominant Institutional Revolutionary Party (PRI), he returned
the power to his party with a clear win in the presidential
elections of 2012. Nieto will be in office until his term ends in
November 2018.
The hegemony of PRI started in 1929 and lasted for the majority
of the 20th century. In the 1980’s huge oil reserves were
discovered off the shores of Mexico, in southernmost end of the
Gulf of Mexico. The president at the time, Portillo, promised to
use the oil money to fund a campaign of industrial expansion,
social welfare and high-yield agriculture. The government
borrowed huge sums of foreign money, at high interest rates, to
develop the oil field, however it turned out that the oil was of
low grade. Leaving Mexico with the world’s largest foreign
debt.
In 1992 president Salinas, US president Bush and Prime
Minister Mulroney of Canada sign the North American Free
Trade Agreement (NAFTA). This agreement calls for phasing
out longstanding trade barriers between the three nations.
During the last two decades the dominance of the PRI in
Mexico’s political landscape has degraded. 70 years of PRI rule
came to an end when the corruption-plagued PRI lost the
presidency election in 2000. Vicente Fox came to rule, a
conservative reformer who was a former Coca-Cola executive,.
His policies focussed on improving trade relations with the
United States, calming civil unrest and fighting corruption,
crime and drug trafficking. Despite good efforts, reforms
slowed down and opponents gained ground.
In 2006 President Calderón came to power, after winning in a
close election, with less than one percentage point difference.
Calderon originally promises to push business and technological

3. development, however the ends up addressing the issues of
poverty and social injustice while in office.
The current president Nieto promised major changes when
coming to power 4 years ago and has not disappointed in that
regard. Nieto has pushed reforms, including closing corporate
tax loopholes, liberalising the telecom industry and opening the
longstanding state energy monopoly to private competition.
However, gang violence, corruption and weak state authority
remain sores. Still Mexican politics face two great challenges,
corruption and the rule of law, with the latter the most severe.
Economic Performance of México
Currently, Mexico becomes the second largest economy in
Latin America. With the benefit of signing the North American
Free Trade Agreement (NAFTA) over 22 years, Mexico's $2.2
trillion economy has increasingly moved toward manufacturing
industry (CIA, 2016). After receiving a giant success in
NAFTA, Mexico has joined Trans-Pacific Partnership, formed
Pacific Alliance in 2012, and put almost 90% of trade under the
free trade agreement. Considering the US as the country near
Mexico, being the main market for the majority of the
companies, many foreign firms are seeking to set up a
subsidiary in Mexico. Besides, the research has proved that by
2016, the hourly wages in Mexico in dollars terms are 40 per
cent lower in China.
Although Mexico continued to expand at a moderate annual rate
of growth of 2.5 percent during 2015 as well as became the US’
second largest export market and third largest source of
imports, Mexico’s growth is still predicted below potential.
Given the decreasing of oil prices, the falling of oil products,
the gradual tightening of monetary policy in the US and the
slowdown growth perspective in China, these factors together
lead to the depreciation of Mexican peso.

4. In order to revise this current situation, Mexican government
decided to slowdown the growth forecast and tried to narrow the
gap down, reducing the fiscal deficit gradually to 2.5 percent of
GDP by 2018. Although, the economy is easily fluctuating
under the external pressure, such as lower oil prices, the
development of extracting oil, the advantages of nation’s
location near the US, and the strategy of implementing free
trade over 46 countries will continue to make the Mexico
increasingly competitive among the world.
· Mexico’s GDP, GDP Per Capita, and GDP Growth Rate
The gross domestic product is an important indicator of the
economic strength of a nation. It refers to the market value of
all goods and services produced within a country’s borders in a
given period of time. By the end of 2015, Mexico has gained
2.227 trillion US dollars and ranked as the 12th top country
among the world’s GDP comparison. Mexico has received a
remarkable growth since the year 1994 after joining the
NAFTA. Although Mexico did not approach to an outstanding
ranking of GDP Per Capita (ranking, 94), it could still beat
some of the peers in the developing world and gain a relatively
stable growth over the past few decades.
· Inflation
The inflation rate in Mexico by the end of 2015 was 2.7% (CIA,
2016). Through the comparison provided by CIA, being 139th
country indicates that Mexico is facing the problem of the
relative high Inflation. Generally, the inflation rate has a strong
relationship to the healthier of an economy. Suffering from the
high inflation rate issue will easily make countries to collapse
for the high inflation rates are associated with high-interest
rates that make it hard for individuals and firms to borrow from
banks. However, compared to Mexico’s inflation rate in
2014(4%), we are still able to identify the efforts that Mexico
government has made to reduce the inflation rate.

5. · Unemployment
Despite the high inflation rate in Mexico, its unemployment rate
did not seem to be the primary concern. However, according to
CIA (2016), the underemployment rate in Mexico may be as
high as 25%, which results in the under- utilization of the
worker. Such high underemployment rate implies that more
employees have enough skills but are not able to find the
knowledge-based positions as they expect.
· FDI inflows and Country competitiveness index
According to the World Investment Report 2016, Mexico has
risen to become the 13th top FDI inflow countries in the world.
As of the top six countries in the developing world, Mexico
received 26 billions of dollars in 2014 and even received over
30 billions of dollars in 2015. In fact, Strong flows to Mexico
(up 18 per cent to $30 billion) were the principal motor of FDI
growth in Central America.
Basically, the country competitiveness index is divided into 3
main parts driven by factor, efficiency and innovation. As the
overall score ranked in 57th place, Mexico more focused on the
efficiency and innovation than the basic requirements for its
ranking in efficiency and innovation reached above the average
of Mexico’s overall ranking of the country competitiveness
index (WEF, 2015).
Institutional Factors of Mexico
When President Enrique Peña Nieto came into office in
2012, he made constitutional reforms in education, energy, and
telecommunication to help improve the wellbeing of the people
living in Mexico. Although Mexico has lagged notably in
promoting an effective rule of law and strengthening its legal
framework, Mexico has transitioned and replaced the current
inquisitorial paper-based judicial process with an oral
adversarial system in order to increase the quality,

6. transparency, expediency of the Mexican justice system. The
judicial system still remains vulnerable to political interference,
and property rights are not strongly protected
· Corruption
Mexico currently has a score of 35 ranking in at 95th in the
world. Corruption is deeply embedded culturally in Mexico, as
it is led by narcotic drug dealers and their billions of dollars in
dealing drugs all around the world. In 2014 the murder of 43
college students by a gang after a political protest has been a
poignant reminder of Mexico’s ongoing epidemic of violence,
impurity, and corruption. In the court system contracts are
generally upheld, but
courts are inefficient and vulnerable to political interference.
· Global Competitiveness
Mexico currently has a score of 4.36 ranking in at 53 (2012-
2013)
· Market
Over the years Mexico has reduced its tariff and non-tariffs
barriers unilaterally and through trade agreements. Mexico’s
current average tariff rate is 5.4 % which is considered low in
comparison to the world making it easier for foreign countries
to trade with Mexico. Mexico has a trade freedom rating of
79.2. In Mexico oil and gas reserves are owned by the
government, however the energy sector is becoming liberalised.
Mexico’s financial sector is also becoming more competitive
and open with bank also remaining relatively stable.
Mexico's legal systems
Mexico has embarked on the modernization of its legal, judicial
systems and has introduced a substantial deregulation and
improvement in the enforcement of its laws. Mexico’s legal
environment has also improved through its membership in
international organizations such as the NAFTA, the

7. Organization for Economic Cooperation and Development, the
World Trade Organization, and the Asia-Pacific Economic
Cooperation.[footnoteRef:1] [1: http://www.mexconnect.com]
· Banking System
As a part of the modernization process of the Mexican financial
system, the commercial banking system was privatized. The new
commercial banking system can provide investment and banking
services and make venture capital investment with banks
participating as temporary minority
shareholders.[footnoteRef:2] [2: http://www.mexconnect.com]
· Labor Law
The Mexican workforce is young and tends to grow at the rate
of more than one million employees per year. In general,
companies have found that with proper training programs, the
skills of Mexican workers can be upgraded and high-quality
work can be obtained. The Mexican Federal Labor Law (LFT)
regulates employment relationships in Mexico regardless of
nationality or place of entering into the employment agreement.
In Mexico, there are some mandatory employee benefits such as
Profit Sharing, Christmas Bonus, Paid Holidays, Holiday
Premium, Legal Holidays, Training, Employer Housing
Contribution, Minimum wage, and Health and Safety.
Furthermore, in Mexico, government legislation allows any firm
with more than 20 employees to unionize. Union contracts must
be renegotiated every two years. Although unions are given the
right to strike during negotiations, strikes, slow-downs and
other conflicts, strikes are relatively uncommon. Unions also
have the right to strike in sympathy for other striking unions,
leading to the possibility of widespread general strikes.
Government labor regulations now contain a provision that in
the case of legal interpretation, the most favorable treatment of
the employee will always take precedence.[footnoteRef:3] [3:

8. http://www.economia-
snci.gob.mx/sic_php/pages/canada/invierte/doing_business/labo
r_law.htm ]
· Corporate Income Tax
Corporate income tax is 34.0% in Mexico. This rate is favorable
since it is lower than that in Canada, the United States, United
Kingdom, Germany and Japan, and also lower than that in some
developing nations, which have been successful in attracting
foreign capital, such as Malaysia and Thailand.
· Employment of Foreigners
The employment of foreigners in Mexico is restricted. The
Immigration Laws provide that no foreigner may be accepted
for work unless it is shown to the entire satisfaction of the
Central Immigration Office in Mexico City that there is no
Mexican National available for that type of work. There are,
however, some enterprises which are in need of persons with
training that still are not available in Mexico and, such being
the case, the Immigration Office grants the necessary permit to
the employer in Mexico for the admission of such aliens.
Cultural environment of Mexico
In the Mexican business culture , interpersonal skills such as
"fit " , cultivate relationships, sometimes is considered more
important than professional competence or experience. Due that
is establish a relationship based on those skills, you can return
as many times to Mexico to strengthen these ties . This culture
offers a warm, cordial atmosphere with a slower pace. Mexicans
prefer to do business only with people they know. Demonstrate
honesty, sincerity and integrity are crucial to building
relationships . Most Mexican families are extremely traditional ,
with the father as the visible head, representing the figure of
authority and who makes family decisions. Many Mexican
companies are family owned .

9. · Trading Strategies
Business cards should be exchanged at the beginning of the
initial meeting. It is advisable that cards contain professional
and educational qualifications . If they are destine to a
counterparty of multinational company , it would be
recommended that they contain presentation in English. Expect
to answer questions about your personal , family history and
vital interests. The first meetings are formal. The documents
should be available in English and Spanish. Agendas are not too
used. A Mexican entrepreneur and executive like to demonstrate
their power by taking firm positions and giving a sense of
security in their approach . It is preferable to recognize their
power and not face them to gain stronger positions. At the time
of the debate , entrepreneurs will accept new ideas and concepts
, however, they rarely change their opinions. Negotiations will
include a lot of " haggling " and therefore considering that are
usually long . In
the initial offers should always leave ample room for
negotiation
In this culture, although subordinates are encouraged to give
their opinion , only the highest authority, often the owner of the
company , makes the final decision . And when the final
decision comes , you must ensure that it is followed by a written
agreement.
CIA (2016). The World Factbook. Central Intelligence Agency.
Retrieved from
https://www.cia.gov/library/publications/resources/the-world-
factbook/geos/mx.html
WEF(2015). The Global Competitiveness Report. Retrieved
from http://www3.weforum.org/docs/gcr/2015-
2016/Global_Competitiveness_Report_2015-2016.pdf
http://www.history.com/topics/mexico/mexico-timeline

10. http://www.worldbank.org/en/country/mexico/overview#1
https://www.cia.gov/library/publications/the-world-
factbook/geos/mx.html
http://www.mexconnect.com
Strategy－ shiyuan xu
Volkswagen Group refers to a multinational car manufacturing
company in Germany that was established in the year 1937, and
its headquarters are located at Wolfsburg in the Lower Saxony.
This multinational corporation is known for the designing,
manufacturing and the distribution of the commercial and the
passenger vehicles, turbo machinery, motorcycles and also the
engines (Muir, Gregg, & Aschwanden, 2001). It is known for
offering other services such as management of the fleet,
financing and also leasing. In the year 2012, the company was
in a position to produce a large number of the motor vehicles
thus making it attain the second position where it was ahead of
the General Motors and lagged behind the Toyota Company.
The company has been in a position over the two decades to
maintain the largest share of the market in Europe.
The subsidiary of the Volkswagen Group in Mexico is referred
to as the Volkswagen Beetle in the two plants Puebla and Silao.
This subsidiary was introduced in the country in the year 1954
under the exhibition referred to as the German and its industry.
The products that were offered by the Volkswagen Beetle in
Mexico were four different types of vehicles. These vehicles
included a convertible, a VW bus that was in luxury trim and
two sedans that were in the export trim. During this period, the
market for the cars in Mexican was mostly comprised of the
makes and the models from America, which were large and also
had large engines thereby making a huge contrast with the
German entrant that was new in the market. This made the
vehicle unique and as a result of this, during the exhibition held
in the city of Mexico at Ciudad Universitaria, a large number of

11. the embers of the public greatly admired the vehicles.
One of the competitive positioning of the Volkswagen
subsidiary in Mexico is that it was able to produce unique
products that could be easily differentiated from those of its
competitors. In this, the company manufactured cars that were
small in size and those that small engines, unlike the American
car manufacturers that produced large vehicles with large
engines (Tyler, (2004). This thus acted as an advantage to the
company due to the increased admiration by the public in the
new market thereby meaning that it would be in a position to
attract a large number of customers. The other core competency
is that the subsidiary in Mexico brought out their models that
had an oval window. This thus made people such as the
president in Mexican to travel to see the vehicle as a result of
the differentiation that was making it peculiar.
As the name Volkswagen, which means people’s
automobile suggests, the company produces vehicles that are
highly affordable by people across all classes. This is one of
core competencies that the company enjoys. Before this, cars
were only owned by the few people who were in the upper class
in the society and those who had a lot of wealth. This company
manufactured a vehicle that could help meet the needs of the
people in all the different classes. This acted as a strategic
advantage to the company since it was in a position to meet the
needs of a large number of the people in the middle class who
could not afford the cars that were currently on the market
produced by the American manufacturers due to the high prices.
This on the other hand also acted as an advantage to a large
number of the customers in the market due to the affordability.
References:
Muir, J., Gregg, T. & Aschwanden, P. (2001). How to keep your
Volkswagen alive : a manual of step by step procedures for the
compleat idiot. Emeryville, Calif: John Muir Publications.

12. Tyler, J. (2004). How to restore Volkswagen Beetle : your step-
by-step illustrated guide to body, trim & mechanical restoration.
Dorchester, England: Veloce Pub.
Human Capital of the Organisation - Lishan Sung
Organisational culture
The past 20 years Volkswagen has been a part of a corporate
group that is one of the world leaders in the automotive
industry. They aim to provide the highest quality cars and
components to their customers but also strive to provide the
best service through their highly educated and trained
personnel. At Volkswagen they have a variety of different staff
consisting of direct and indirect production workers,
apprentices, trainees and interns. Within the Volkswagen
community they perform tasks on a daily basis and with
involvement, provide each sector with all the necessary
information in order to overcome difficulties and celebrate
victories. Volkswagen Group is a community linked by ties of
work which include everyday routines, rules of practices and
values (Volkswagen-poznan.pl, 2016). In the long run
Volkswagen aim to become a world leader and achieve long
term success, but in order to achieve this, Volkswagen have
identified that they must have highly motivated, engaged and
well established personnel with the company.
Volkswagen core values include sense of responsibility, respect,
cooperation, learning, trust, strong attitude towards success, and
determination. These values are prominent throughout the
company ands shape the way the company operates. It
influences the way employees behave, the attitude they have
towards duties and how they treat each other. These values are
intertwined throughout the company and applies to everyone,

13. the President, the Body Shop and Foundry workers all work
together towards a common goal of achieve success.
In order to survive Volkswagen must become a top
performer, lead by example, be actively involved in research
and development and be socially responsible for their actions.
To become a top performer Volkswagen need employees who
are enthusiastic and give their best. They need to be balanced
and not over stretched to reach the optimum performance and
results. Volkswagen Group’s principle is to “Lead, Demand and
Promote”. The only way they would be able to achieve this is
through exemplary leadership and constructive cooperation
between management and the workforce. VW’s corporate
culture doesn’t only focus on people but also aim to have a
sustainable economic and social goal.
Volkswagen has a main goal of becoming the economic
and ecological leader of the global automotive industry. They
currently have 15800 employees in Puebla and 600 employees
in Silao (Group, 2016).
The current President of Volkswagen Mexico is Andreas
Hinrichs. He has been the CEO of Volkswagen in Mexico since
March 1, 2011. He had previously been in charge of the
Volkswagen subsidiary Autoeuropa in Portugal. Other members
that are a part of the board include Alfons Dintner who is
responsible for production and logistics, Björn Ehlbeck who is
responsible for finance and organization, Dieter Neuhäusser
responsible for human resources, Dirk Grosse-Loheide
responsible for North American purchasing, and Mike Glenning
responsible for sales.
References:
Volkswagen-poznan.pl. (2016). Corporate culture | Volkswagen.
[online] Available at: http://www.volkswagen-

14. poznan.pl/en/corporate-culture [Accessed 18 Jul. 2016].
Group, V. (2016). Volkswagen Group Basic information Puebla
and Silao. [online] Volkswagenag.com. Available at:
http://www.volkswagenag.com/content/vwcorp/info_center/en/t
hemes/2014/01/Volkswagen_de_Mexico/Basic_information_Pue
bla_and_Silao.html [Accessed 18 Jul. 2016].
General Assessment - Jiwon Sung
Assessment of Volkswagen
Volkswagen was founded by German Labor Front in 1937. What
they have focused on were fuel efficiency, stability, simplicity,
economically efficient process, and convenient supply of
components. In 1949, Volkswagen’s cars have launched in the
United States market and sold successfully being called as
‘Victory Wagon’. In 2009, Volkswagen sold 6,336,000
automobiles accounting for 11.3 percentage of market share in
the world’s automobile industry. Moreover, in 2011,
Volkswagen had been appointed as the best of Research and
Development part among automobile companies in the world.
Volkswagen is now the biggest automobile company in
Germany and ranks number 2 in the world’s automobile
industry. It has more than 60 factories around the world,
including Europe, Asia, and Africa and exports to more than
153 countries. In each country, about 370,000 employees
produce about 26,000 cars in the factories every day. In
addition, Volkswagen has been appointed as the most
‘innovative high-volume brand’ in ‘Automotive Innovations
Award 2016’ as well as the best ‘conventional drive systems’
and ‘connected car’.
Assessment of Volkswagen in Mexico
Volkswagen opened the engine factory in Silao, Mexico in
2013. This Silao engine factory is the 100th factory of

15. Volkswagen and it produces 330,000 engines per year.
Volkswagen constructed this factory to enhance the strategy of
North America market. The amount of this investment was 0.4
billion euro.
In 2015, Volkswagen declared the plan of investing a billion
dollars to enlarge Puebla factory in Mexico. This project is
expected to have an effect of employing 1900 new people.
Puebla factory was constructed in 1964 and it is the biggest
factory in Volkswagen Group and also in Mexico. The reason
why Volkswagen continues its investments to Mexico is that
Mexico has competitive advantages such as low tariff, low labor
costs, and geographical characteristic which is the middle of the
North and South America’s markets.
Recent Issues of Volkswagen
In 2014, there was a scandal concerning the irregular
carbon dioxide emissions of its vehicles. Volkswagen was
accused of duping environmental tests in order to improve tests.
Consequently, there was an urgent recall of its products and a
class action lawsuit against the company. Volkswagen ruined
their reputation and had to face large amount of financial losses.
Recently, in 2016, the Mexican government had
imposed 8,900,000 dollars to Volkswagen Mexico concerning
the fact that Volkswagen sold 45,494 automobiles without the
certificate of carbon dioxide emissions. The Mexican
government is still investigating Volkswagen’s illegal actions
concerning this scandal.
References:
Jongwon, Choi. (2015). Volkswagen, Enlarge Mexico’s
production capacity, Korea’s Automobile Industry Report 2015.
Volkswagen News. [online] volkswagen.co.kr. Available at
: http://www.volkswagen.co.kr/ko/company0/news.html

16. [Accessed 18 Jul. 2016]
Volkswagen Basic Information. [online] terms.naver.com.
Available at :
http://terms.naver.com/entry.nhn?docId=650313&cid=43167&ca
tegoryId=43167 [Accessed 18 Jul. 2016]
Organization - Bruis van Vlijmen
Volkswagen Group’s headquarters is placed in Wolfsburg, a city
in Germany which identity is formed by the presence of the
multinational automotive manufacturing company. Despite its
connection to the German city, it is all but a local company.
Since its beginning VW has grown out of its own traditional
‘beetle’ line and gained huge market share by a series of
acquisitions in the automotive industry. The list of subsidiaries

17. of the VW Group include famous automotive brand names like
Audi, Lamborghini, Bentley, Bugatti, Porsche, Ducati, MAN,
Scania, SEAT, Skoda and the original Volkswagen Commercial
Vehicles and Volkswagen Passenger Cars.
Of this list, VW passenger cars and Audi are the two
subsidiaries earning the biggest share of revenue as seen in
figures ? & ?. Volkswagen Group is active nearly all over the
world, with their biggest market in Europe and then South
America. With the European market seeming to have flattened
out, VW is now set their goals on overtaking Asia and the U.S.
Especially the latter will be most challenging, as VW has
ignored the market for the last 20 years. [footnoteRef:4] [4: III,
A. (2012). Volkswagen: Das auto giant. [online] Fortune.
Available at: http://fortune.com/2012/07/10/volkswagen-das-
auto-giant/ [Accessed 19 Jul. 2016].]
One of the core strengths of VW is the ability to take their
competitive advantage all over the world, wherever they
operate. This advantage is maintaining its brand identity whilst
achieving economies of scale and economies of scope. The
mechanism that allows this has been called “platform
sharing”[footnoteRef:5] by VW. Through this platform the
automaker is able to use the same key components in 16
different new vehicles. This standardization cuts great amounts
of costs and therefore it can be said that VW has a strong
product division structure. However, local responsiveness is
also apparent as different regions tend to sell different cars
according to the needs and budget of the local
customers.[footnoteRef:6] [5: III, A. (2012). Volkswagen: Das
auto giant. [online] Fortune. Available at:
http://fortune.com/2012/07/10/volkswagen-das-auto-giant/
[Accessed 19 Jul. 2016].] [6: Wikipedia. (2016). List of
Volkswagen Group factories. [online] Available at:
https://en.wikipedia.org/wiki/List_of_Volkswagen_Group_facto
ries [Accessed 19 Jul. 2016].]

18. With the appointment of Matthias Muller as CEO of
Volkswagen Group in 2015, the supervisory board has decided
on a reorganization [footnoteRef:7]of the regional operations.
The main goal of the restructuring is to strengthen the brand and
combine efforts in the same region. Mainly in the North
America market, comprised [7: Group, V. (2015). Volkswagen
Group The Volkswagen Group is restructuring: Supervisory
Board passes resolutions for new organization. [online]
Volkswagenag.com. Available at:
http://www.volkswagenag.com/content/vwcorp/info_center/en/n
ews/2015/09/organization.html [Accessed 19 Jul. 2016].]
of USA, Mexico and Canada, this will be notable. The whole
region, which is targeted as a market with expansion potential,
will be led by former Chairman of the Board of Directors at
Skoda: Prof. Winfriend Vahland. These are characteristics of a
‘global’ organization which moves towards efficiency and
centralization. This is also supported by the fact that VW’s
largest factory outside of Germany is located in
Mexico[footnoteRef:8]. [8: Wikipedia. (2016). List of
Volkswagen Group factories. [online] Available at:
https://en.wikipedia.org/wiki/List_of_Volkswagen_Group_facto
ries [Accessed 19 Jul. 2016].]
Mexico’s Puebla factory used to be the largest plant still
producing the iconic Beetle massively introducing them in the
USA, however in 2011 this production moved to Vietnam.
However Puebla remains to be strongly connected with the VW
factory, with a strong identifiable working community. The
operation in Mexico is ran by subsidiary manager Andreas
Hinrichs, who oversees a nearly 17,000 people organization.
Together with 4 other German board members they make up the
board of management in Mexico. These 5 man lead this ‘global’
organization with a strong product division structure in Mexico.