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Internal Analysis
This section identifies the core competence of Volkswagen AG and then VRIO analysis is
used to identify the capabilities which lead to a sustainable competitive advantage for
Volkswagen. Industry benchmarking is used to compare performance of Volkswagen against
Tesla Motors and General Motors

Core Competences
The Core competences are the interrelated set of activities, skills and resources which are
used for differentiating an organization with the others. It helps in delivering value to the
consumers and can also help in creating new opportunities in the market (Prahalad&Hamel,
2006).

Volkswagen Key activities

Value chain analysis is used to identify organizational activities which act as organization’s
strength. Value chain analysis consists has two set of activities one is primary set of activities
and another one is support activities. There are five primary activities are related to
manufacturing, production and delivery of the end product. The four support activities are the
ones which support primary activities and help in enhancing effectiveness and efficiency of
primary set of activities (Johnson et al. 2011).

Figure 1: Value Chain Analysis

Source: (Johnson et al. 2011)

Primary activities

Inbound logistics

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Volkswagen has an extensive supplier base which helps in supplying various objects such as
chassis, door knobs, seats etc. Volkswagen usually relies upon single supplier source and
avoids multiple sourcing (Sullivan, 2018). This strategy has not proved to be very feasible for
the organization as it has lead to disruption in production at some instances and affected the
company’s inbound logistics many times (Schwartz & Cremer, 2016).

Operational management

Volkswagen has 5 manufacturing and production plants in North America, 31 in Asia Pacific
and 71plants in European countries (Volkswagen, 2018). The organization is extensively
involved in manufacturing, production and designing of cars, and also has portfolio of
miscellaneous brands. The company is actively involved in launch of new products. The core
capacity of the company is its engineering ability and innovation tactics. The innovation
tactics is evident from the number of patents being filed by the company in the year 2016
(Marketline, 2018a).

Outbound logistics

The outbound logistics of the company are exceptional as it has now successfully entered in
the online sales and also the company has a very strong distribution network with a
remarkable presence in Asian markets and Europe (Reuters Staff, 2017).

Marketing and sales

The efficient sales and marketing of the organization is evident from its high market share
and capacity to maintain large brand portfolio and products. Volkswagen has won 23% of
Western European market and has got market share of 12% in the world (Marketline, 2018a).

Service

Volkswagen has strong policy of after sales services and aims towards ensuring 100% of
customer satisfaction (Volkswagen, 2018).

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Supporting activities

Company Infrastructure:

The company has a very strong infrastructure as it has more than 6000 patents under its name
and has more than 100 production plants across the world (Volkswagen, 2018). The company
also has a very strong financial background and has already created revenue of €217,267
million, net profit of €5,370 million and has gained operating profit of €7,103 million and in
2016 (Marketline, 2018a).

Human Resource Management:

The HRM of Volkswagen is not considered good due to rise of scandals in the company
(Crête, 2016).

Technological inclination:

The company has a strong focus on R&D. Volkswagen has filed for more than 6000 patents
in the year 2016 throughout the world (Marketline, 2018a). The organization can be
considered as technological leader.

Procurement

The single source procurement strategy has created problems with manufacturing and
production in the company and has also lead to disputes with suppliers which affected the
production deadline of the organization (Schwartz & Cremer, 2016).

Key Resources of company

 The company has a very strong infrastructure as it has more than 6000 patents
under its name and has more than 100 production plants across the world 71 of
them are in Europe (Volkswagen, 2018).
 Volkswagen employs more than 620000 employees as reported in March 2017
(Marketline, 2018a).
 The company also has a very strong financial background and has already created
revenue of €217,267 million, net profit of €5,370 million and has gained operating
profit of €7,103 million and in 2016 (Marketline, 2018a).

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Key Skills of Volkswagen

The key skills of Volkswagen are:

 Innovation and Strong R&D

 Customer Service.
 TSI diesel engines
 Strong Brand name
 Marketing and Promotion
 Fuel efficient vehicles

VRIO Analysis
Core Valuable? Rare? Inimitable? Supported by Competitive Benchmarking
competence organisation? implications Toyota Tesla
Financial Yes No Yes Yes Competitive Yes Yes
situation parity
Distribution Yes Yes No Yes Temporary Yes Yes
network competitive
advantage
Engineering Yes Yes Yes Yes Sustainable Yes Yes
competitive
advantage
Global Yes No No Yes Competitive No No
Presence parity
Production Yes Yes No Yes Temporary No Yes
plants competitive
advantage
Supplier Yes Yes No Yes Temporary Yes Yes
Network competitive
advantage
Patent Yes Yes No Yes Sustainable Yes Yes
portfolio competitive
advantage
Brands Yes Yes Yes Yes Sustainable Yes No
competitive
advantage

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TSI diesel Yes Yes Yes Yes Sustainable No No
Engines competitive
advantage
Customer Yes No No Yes Competitive Yes Yes
service parity
Electric car Yes No Yes Yes Temporary Yes Yes
technology competitive
advantage
Figure 2: VRIO TABLE

The above table shows the VRIO analysis of Volkswagen as well as the benchmarking of the
organisation against TESLA Motors and Toyota Motor Corporation. The Analysis shows that
there are four sustainable competitive advantages of the company which includes its brand
portfolio, its patent portfolio, TSI diesel engines and engineering capability of the company.

Toyota Motor Corporation also has huge patent portfolio, and has several brands to its credit
(Toyota Motor Corporation, 2017). In addition, the company has invested in battery and
hydrogen fuels in offer fuel-efficient vehicles (Marketline, 2018b). However, the patents are
unique to an organisation and same fuel efficient technologies. Tesla Motors is solely focused
on developing battery based cars which gives it competitive advantage over both these
companies (Tesla, 2018). However, the difference in the technologies and the design leads to
a difference among companies. But the approach of distribution, manufacturing of electric
motors, and fast charging network adopted by Tesla Motors makes it a completely different
than its competitors

However, it is important to note that the TSI diesel engines are going to become redundant
capability with the passage of time as the market is moving towards fuel efficient vehicles, as
observed from the external analysis.

Corporate strategy
Corporate strategy is defined as a direction that should be pursued by an organisation with
respect to their resources, capability, products and markets (Johnson et al. 2011). The vision
of Volkswagen is to become a leading provider of sustainable automobiles (Volkswagen
Group, 2018).

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In order to propose corporate strategy for the company, Ansoff Matrix could be used. Ansoff
matrix is a two by two matrix that shows connection between new and existing products and
markets (Johnson et al. 2011).

Figure 3: Ansoff Matrix

The external analysis conducted in first assignment showed that electric cars are going to
become increasingly popular in the near future and environmental regulations will get stricter
with time. This presents three strategies for Volkswagen; they are market penetration, product
development and market development.

Market penetration

Volkswagen derives its competitive advantage from TSI diesel engines. These engines are
fuel efficient engines which have enabled the company to succeed in its respective market.
Volkswagen can adopt market penetration strategy in UK market, by increasing the
production of these vehicles in its plants and reducing per unit cost of these vehicles in order

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to offer the vehicles at a lower cost. This will enable the company to manufacture vehicles at
lower costs and offer them at affordable prices, which in turn will enable the company to
pursue this strategy.

However, TSI diesel engines are going to get redundant in the future as the market for
electric cars is going to be in demand. Therefore, although this strategy can be adopted by the
company, this strategy is not appropriate in the long run.

The company has the resources and capability to pursue this strategy as the company has a
strong brand presence in UK which could be exploited in order to sell the cars. Moreover, the
company has production plants that will ensure that the company is able to manufacture the
vehicles at affordable prices.

Product development

As already observed from the external analysis, fuel efficient vehicles such as electric and
hybrid cars are going to be in demand in the future. In line with this, Volkswagen has already
begun to work towards development of electric vehicle technology and has begun to
incorporate its module electric tool kit in compact passenger vehicles. However, in
comparison to its competitor such as Tesla, the technology is far behind (Tesla, 2018). This
means that the company should increase its investments in electric technology so as to
develop this technology further.

Volkswagen has the necessary funds and the required engineering capability to pursue this
strategy. Adopting this strategy will ensure that the company is prepared for the future. In
order to pursue this strategy, Volkswagen will have to make use of its engineering ability and
R&D investments.

Market development

Volkswagen can adopt a market development strategy by manufacturing electric vehicles.

However, this requires perfecting the electric vehicle technology. In order to do so, the
company will have to pursue a product development strategy and then pursue a market
development strategy.

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Currently, Volkswagen cannot pursue this strategy because the company has not perfected
the technology of electric vehicle. The company has yet to improve its technology, and
therefore this strategy seems inappropriate. If the company intends to pursue this strategy, it
will have to pursue a product development strategy.

Thus to conclude, the diesel TSI engines of the company are fuel efficient engines and taking
the existing situation into consideration the company can offer these vehicles in the market.
Therefore the company should pursue a market penetration strategy by manufacturing
vehicles equipped with these engines. The company should use its existing production plants
for manufacturing these vehicles, and they should manufacture these cars at a massive scale
in order to reduce the production costs and offer cars at low costs. Besides this strategy
Volkswagen should also pursue a product development strategy taking into consideration the
fact that the demand for electric cars is going to increase in the future and in accordance with
it the company should develop electric vehicles technology.

Speaking about the resources, Volkswagen has the financial, engineering and people
resources to pursue this strategy.

Business strategy
In order to propose business strategy for Volkswagen, strategy clock could be used.

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Figure 4: Bowman’s strategy clock

Source: (Faulkner & Bowman, 1995)

Based on the external analysis, it is clear that electric vehicles are going to be the future, and
therefore it is important to offer these cars at an affordable cost. At the same time, in the
existing market there is a considerable demand for fuel efficient vehicles such as TSI diesel
engines and the technology for electric vehicles still remains a distant dream.

In accordance with this, Volkswagen has a range of options that it can pursue. In line with the
company’s market penetration strategy the company can adopt low price strategies or hybrid
strategies. Considering the various brands under its portfolio and the production capacity of
the company, the company should adopt hybrid strategies, as this will enable the company to
cater to the needs of a diverse set of consumers and this will ensure that the company is able
to maintain a market share (Fernández & Usero, 2009).

Volkswagen has several brands under its portfolio and numerous production plants which
mean that the company has the necessary resources to pursue hybrid strategy.

Marketing Mix Strategy

To implement the proposed strategy, it is essential for Volkswagen to have an appropriate
strategy (Pleshko & Heiens, 2008). Marketing mix can be used in order to propose a
marketing strategy as this enables companies to exploit their competitive advantage in the
targeted market (Baker & Saren, 2016).

Marketing mix is a useful tool for convincing customers to buy a product (Shapiro, 1985).
Customers are the essence of a company and therefore it is vital for a company to understand
the needs and requirements of customers (Kotler et al., 2005) in order to create customer
value and satisfaction (Kotler et al., 2009). Marketing mix consists of 7Ps; they are product,
price, place, promotion, physical evidence, process, and place (Armstrong & Kotler, 2018).

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Products

Based on the proposed corporate strategy the product of the company should be TSI engine
based vehicles. TSI engine offers competitive advantage to the company; however the future
lies with electric vehicles. Therefore the product should also include electric vehicles.
However, as the technology will be developed at a later stage. Therefore, initially the product
should be TSI based engines and then it should be electric vehicles.

Price

The corporate strategy of the company is market penetration and the business strategy is to
adopt hybrid strategy, therefore the pricing strategy should be such that it caters to masses.
Thus the pricing of the vehicles should be targeted towards low range to mid range
consumers (Porter, 1985).

Place

Volkswagen has a strong distribution network which could be used in order to sell these
vehicles. Moreover, the recent foray of the company into online selling, also presents an
opportunity to use this medium to sell the product.

Promotion

Promotion is the method of convincing customers to consume a product (Abdullah, 2016).

Volkswagen should use its existing sales promotion techniques and advertising in order to
maintain and preserve the company’s brand identity.

People

Volkswagen has a huge pool of employees, which the company can tap into in order to
accomplish this strategy. Volkswagen can use its sales employees in order to sell cars. In
addition to this, the company also needs to offer training to its employees so as to be effective
at selling (Singh & Mohanty, 2012)

Process

The company should use its service deliver in order to offer best post sales service experience
to its customers. In addition to this, Volkswagen should also take customer feedback into

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consideration in order to understand their needs in a better manner and translate it into the
products.

Physical evidence

The stores and the online sales platform of the company can be used for attracting and
information customers about the products and services of the company.

Strategy evaluation
Strategy could be evaluated on the basis of three criteria: Suitability, Acceptability and
Feasibility (Johnson et al. 2011).Suitability is related with strategy appropriateness with
regards to the industry situation, acceptability is related to acceptance by stakeholders and
feasibility is related to the possibility of actual implementation of strategy (Johnson et al.
2011).

 Suitability
The external analysis of the industry showed that the government regulations are getting
stricter, and the demand for technologies such as hybrid vehicles and electric vehicles will
rise in the future. This entails that the strategy of product development is appropriate

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 considering this fact. Moreover, the external analysis also shows that the industry is
witnessing a demand for fuel efficient vehicles; in line with this market penetration strategy
for TSI diesel engines is also appropriate because it is a fuel efficient vehicle.

 Acceptability
Customers, environmentalists, governments, board, engineers and suppliers are some of the
key stakeholders for the company. Firstly taking the market penetration strategy into
consideration, the strategy will resonate with the board as this enable them to gain higher
profits. And in regards to the other stakeholders, as the vehicle is a fuel efficient technology it
will be acceptable to customers, environmentalists and governments. The engineers and
suppliers will also accept this strategy because the technology already exists and will not
present any challenges to the company.

Taking the product development strategy into consideration, the strategy will resonate with
environmentalists and customers. Employees and suppliers might find it hard to accept this
strategy due to the challenges presented by this strategy. Lastly, the board and shareholders
might find it hard to accept the strategy because it will consume significant capital, however
by taking a long term perspective, they will agree to this. Taking the shareholder matrix into
consideration, it will be important to engage closely with the board.

Minimal Effort Keep Informed

Environmentalists Employees
Customers Suppliers

P
o
w
e
r

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Keep Satisfied Key Players
Board

Interest
Figure 5: Mendelow’s Matrix

Source: (Johnson et al. 2011).

 Feasibility
There are different parameters that have to be considered at the different strategic levels.
However, the manufacturing and technology are the main enablers of the proposed strategy
and based on the VRIN analysis, the company has the necessary resources, and competitive
advantage to implement this strategy.

Introduction 1

This report is based on Ryanair Holdings Plc. The aim of this report is to evaluate strategic
and marketing options for Ryanair Holdings Plc and offer recommendations to the company.
The report evaluates possible strategies for Ryanair and proposes an appropriate approach,
based on the external and internal analysis. The previous assessment conducted external
analysis, and this assessment will conduct internal analysis in order to propose appropriate

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strategy to the company. This report will be useful for the Board of the Ryanair to identify an
appropriate future direction for the company and how to achieve it.

Based on the external analysis conducted earlier, the report found that the external
environment of the company is volatile. The external analysis revealed that the company is
facing various challenges such as rising fuel prices, increase in landing charges, changes in
rules and regulations due to Brexit, rise in pensionable age population, and rise in
administrative costs. The external analysis also revealed that there are some opportunities as
well such as strong aviation market in UK, rising number of air travellers and possible
scrapping of EC 261 regulation. The report recommended Ryanair to search potential markets
to minimise the impact of Brexit, increase the flights costs to deal with the rising fuel and
administrative costs, make internal changes in the organization to minimize delays, and hire
EU staff for EU flights.

This report will conduct internal analysis by collecting data from market reports, company
reports and journals. Further, based on the findings of external and internal analysis, the
report will propose corporate strategy and business strategy, followed by a marketing plan.
The aim of the marketing plan is to enable Ryanair to operate successfully in a post-Brexit
Britain and to minimise the impact of Brexit. In addition, it aims to exploit the improve the
company’s market position by exploiting the opportunities and addressing the challenges.

The next section of the report will begin with value chain analysis of the Ryanair followed by
VRIN analysis in order to identify the core competencies of Ryanair. Further, the report will
evaluate the possible strategic directions for Ryanair by using Ansoff Matrix and suggest the
most appropriate strategic direction by justifying the proposed strategy. Following this, the
business strategy will be evaluated, using Porter’s generic strategy matrix and the most
appropriate business strategy will be proposed. Furthermore, a marketing plan will be
prepared for the company by using Kotler’s marketing mix. The report will conclude by
summarising the findings of the analysis and lastly offers recommendations to the company.

This report will demonstrate the ability to deploy strategic and marketing management tools
in relation to internal and external environment of the organization to synthesise, evaluate and
develop strategic and marketing options in a dynamic environment.

Introduction 2

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This report applies critical and in-depth knowledge of strategic management and marketing to
propose an integrated and efficient strategy for Vauxhall Motors Limited. The strategy will
be proposed after undertaking an internal analysis of the company. The report will use the
findings of external analysis conducted in the first assessment and results of internal analysis
obtained from this assessment, to come up with a range of strategy options available for the
company.

The external analysis conducted in the first assessment revealed that the key industry trends
in the passenger automobile sector were increase in import and export tariffs post-Brexit,
rising investments on electric vehicles, currency fluctuations, stringent environmental
regulations. The industry drivers identified from the PESTLE analysis were preference for
on-demand cars, increasing investments in R&D, ageing population, ownership preference,
and preference for environment friendly travel.

The recommendations offered in the report were increasing R&D allocation for electric
vehicles, developing strong relationships with car aggregators, identifying potential markets,
shifting production sites in the wake of Brexit, increasing vehicle costs and creating long
term relationships with technology companies.

In this report, internal analysis of Vauxhall Motors Ltd will be carried out by using value
chain analysis and VRIN analysis. The value chain analysis and VRIN analysis will inform
the company about their key value adding activities and resources, skills and core
competencies, respectively. Building upon the findings of external and internal analysis, the
report will employ Ansoff matrix to identify the possible strategic directions for Vauxhall.
Further, the report will employ Porter's generic strategy matrix to identify the different
business strategy options for the company. Using the suitability, acceptability and feasibility
(SAF) criteria, the evaluation of strategy will be carried out. The choice of the strategy will
be determined based on the company’s resources, skills and competencies identified from the
VRIN analysis. In order to achieve the proposed strategies, the report will prepare a
marketing plan, comprising of marketing mix, implementation plan and control plan.

The report begins with an analysis comprising of internal analysis, corporate strategy
exploration, business strategy exploration, strategy evaluation and marketing plan. Further, a
conclusion will be offered discussing the key findings of the report and the strategies
proposed to Vauxhall. In addition, the conclusion will determine the challenges that might
affect the strategy implementation by Vauxhall. The report will end by offering

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recommendations to Vauxhall that will enable them to ensure successful execution of the
strategies proposed.

This report will serve as an important guide for decision-making at Vauxhall Motors. This
report is developed for Vauxhall’s Board of directors, Vauxhall’s CEO, Opel’s Board and
Opel's CEO.

Introduction 3

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