If one were to chart the growth spurts of Volkswagen over the past three decades

Question

If one were to chart the growth spurts of Volkswagen over the past three decades, the chart would look like a roller coaster. Plans were for former BMW boss Bernd Pischetsrieder to fix ailing VW when he came aboard in 2002. However, best-laid plans often go astray. VW’s share price is down almost 50% and profits fell by 36%. What is wrong at VW? First, VW has always been able to charge more for its cars because of quality, innovation, styling, and an implied lifetime guarantee. In recent years, however, consumers have decided that the company is going to have to come up with more value for the dollar if loyalty is to be retained. Second, sales in China’s booming market (VW was one of the first car makers on the scene in this giant economy) have plummeted and GM has driven VW from its number one ranking. Third, cost-cutting moves have not worked. Fourth, VW uncharacteristically has labor pains. The CEO has had little luck in reversing these problems because his consensus management techniques are having little impact on VW’s change-resistant bureaucracy. Over half of the company’s 100 managers are not used to making their own decisions. This spells even more trouble for the company in the year ahead.

Explanation / Answer

After analyzing the case of Volkswagen, we can come to a point that VW did not adopted change management and due to this it is unbale to cope the changes in the macro environment. VW rode with the success of its past and tried to emulate the same method and model to sustain and scale in the market. At one point of time everything was in favor of VW to get the desired result but later gradually thing changed in the market and VW was not able to read the changes that was incurring. This problem can be attributed mainly because managers were not used to make their own decision. This led to top down approach and the top management only took decision on the strategic issues and implementation. This strategy does not fit well in the current business scenario because market is changing rapidly. I think there were strategic issue due to which VW suffered a lot

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