Problemas Globales

I N T E R N A T I O N A L
IMD141
(GM 912)
v. 25.11.2004
GLOBALIZING VOLKSWAGEN: CREATING EXCELLENCE
ON ALL FRONTS
Research Associate George
Rädler prepared this case
under the supervision of
Professor Z. Jan Kubes as a
basis for class discussion
rather than to illustrate either
effective or ineffective handling
of a business situation.
Is there room for Volkswagen? As its marketshrinks, Europe seems to
have one carmaker too many. Could it be troubled Volkswagen? (…)
The biggest danger is that with its problems at home and abroad, VW
will have to abandon any notion of becoming a global car maker.
The Economist, August 28, 1993: 59
No doubt about it: Volkswagen CEO Ferdinand Piëch engineered one
of Europe’s greatest turnarounds ever. The grandson of auto pioneerFerdinand Porsche inherited a loss of more than $1 billion and
declining market share in 1993. With a battery of new models, Piëch
seized European market share from Ford Motor Company and General
Motors Corp. Including its Audi, Skoda and Seat brands, VW now has
almost 19% of Western European car sales, up from a low of 15% in
1994. Profits last year topped $1.2 billion on sales of $71.4 billion.Business Week, November 22, 1999: 20
When Dr Ferdinand Piëch took over as CEO of the Volkswagen
Group (VW) in early 1993, things did not look good: Customers
complained about high prices, the main factory in Wolfsburg,
Germany was only breaking even at utilization rates above 100%
and Japanese competitors enjoyed a cost advantage of up to
€2,500 per car in their newly built plants in the UK.1992 ended
with profits down 85%.
By 2001 the situation looked totally different. VW was
marketleader in Europe, China and South America (refer to
Exhibit 1 for market data); sales of the VW brand in the US had
increased sevenfold between 1993 and 2001. Overall, VW was
the world’s fourth-largest car company offering 65 models (up
from 30), reported record profits, and newly acquired luxurybrands created growth potential. At home, VW engaged in
unusual ventures: “Autostadt,” a €420 million auto theme park,
followed by a revolutionary €180 million car plant and event
center in the heart of Dresden.
With Piëch stepping down in April 2002, how could VW maintain
spectacular results, clearly outperforming the competition?
Copyright © 2002 by IMD - International Institute forManagement
Development, Lausanne, Switzerland. Not to be used or reproduced without
written permission directly from IMD.
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I N T E R N A T I O N A L
- 3 - IMD-3-0912growth up to the year 2010, but the overall market estimates varied between 58.6
million units and 77.3 million units (refer to Exhibit 7 for estimated market sizes
by 2010). In addition, the development of new technologies (e.g. fuel cells,
telematics) was very costly and could only be financed by several players. As a
result, it was not unusual for the survivors to cooperate with theircompetitors, e.g.
Peugeot was building a joint factory with Toyota while developing a new engine
with BMW. Such combinations were not uncommon in the car industry. Many
observers saw the car industry as a model of the modern, networked company:
“Car makers look at each other as competitors, partners, friends and role models.”
Volkswagen AG (VW)
Early Beginnings
VW traced its beginnings back toAustrian-born Ferdinand Porsche. He started his
career as an engineer designing cars for Mercedes-Benz in Stuttgart, Germany. In
1930 he set up his own vehicle development center and this was the foundation of
the Porsche AG, a leading sports car maker.
In 1934 Porsche started to develop a small car with an air-cooled rear-mounted
engine. This project was financed by the national socialist...