Background of Volkswagen and Its Mission
Discuss About The Entrepreneurial Theory Of The Multinational.
This report provides a detailed analysis of frequency and innovativeness in Volkswagen’s operation as well as assesses how culture and structure of Volkswagen support innovation and entrepreneurship. Innovation is certainly required in business as the market environment in each industry has become dynamic. The purpose of the report is to assess innovation and entrepreneurial activities of Volkswagen with theoretical underpinning. The current market of automobile sector indicates that customer needs and expectations are changing, high demands of vehicles causing the entry of new organizations in the sector; consequently, marketers observe a long-lasting competition among the organization. Therefore, the organizations are in the need of bringing innovation to the business, which would help to differentiate themselves from others and provide a set of competitive advantages. So, this report discusses how innovation and entrepreneurial activities are introduced and managed in Volkswagen. In order to derive an authentic outcome from the analysis, the data has been collected from the reliable sources.
The Volkswagen brand is known as world’s most successful volume vehicle manufacturer. The major brand of the organization maintains the facilities in 14 nations based on which, the brand produces vehicles for customers in more than 150 nations. Particularly, in 2013, the brand produced 6.23 million cars (Volkswagen.co.in 2018).
Volkswagen Mission: Volkswagen does not have any official or proper mission statement but there is a closet statement known as VW’s group and its mission is associated with company’s overall gaols
“The goal is to provide attractive, safe and environmentally sound vehicle which could compete in an increasingly tough market and develop global standards in their respective class”
The major focus on positioning the Volkswagen Group as a global economic and environmental leader among the automobile producers. Volkswagen has four goals that intend to make Volkswagen the most successful and sustainable car manufacturer in the world by 2018.
The major purpose of VW’s operation is to serve the world with a product that change people’s personality and way of living and to meet this purpose, the firm applies innovation to all its functions and operation. When it comes to innovation, the brand VW receives multiple accolades for innovation as the aspect of plus X award. The Plus X award remains as the most leading innovative award in the global environment for technology, and lifestyle (Volkswagen.co.in. 2018). This particular fact implies that the organization pays a significant attention to innovation. The innovation is helping the brand to lead in; for example, the efficient technologies encompassed by VW Blue Motion Concept helps the users to minimize the consumption and emission. On the other side, it is identified that entrepreneurship is at the core of Volkswagen because organization’s goals are inspiring the other brand to join the mission. The CEO of Volkswagen in the recent time have mentioned that entrepreneurship remains as the persistent progression towards an innovative solution to the key concern. According to Teece (2014), entrepreneurship is about imagining new ways to resolve problems and generate values. Therefore, Volkswagen is determined to balance its vision with the intention to embrace the change.
Importance of Innovation and Entrepreneurship in Volkswagen
As put forward by Agarwal and Shah (2014), the significant outgrowth of new global force taking shape is an increased focus within the sector on the Research and Development. It is identified that such increased focus is appearing in almost every sector as put forward by the recent survey. Therefore, the innovation is highly considered as the crucial aspect of R& D at Volkswagen (Volkswagen.co.in 2018). The following figure demonstrates the process of applying innovation into the operation.
Figure 1: Innovation at Volkswagen
(Source: Lin, Chen and Huang 2014)
The figure indicates how technology and market assessment has been generated by incorporating innovation and collecting the responses from the innovation. Then, the development of technology and their execution has been conducted on the basis of the responses of the market. However, the figure does not indicate another three operational aspects associated with the process of innovation such as managing R&D, emphasising on innovation and integrating technology planning with the business strategy. It is identified that the new innovation process was introduced to Volkswagen to revive within the operation. The entire process is particular based on the sense respond and learn approach, which is not similar to the “forecast-make-sell” (Kale 2017).
The business mode that has conventionally been used in the sector. Hence, the intention of the innovation technique is to make sure that a steady stream of product and technology option is formed based on organization’s sense of where the sector is headed. These options are certainly potential responses that Volkswagen use to capitalize swiftly on the emerging opportunities. The technique is designed to be dynamic, with the new information as well as ideas moving persistently through the system. Each time Volkswagen goes through an innovative cycle, they discover new knowledge and ways to apply them to the subsequent product and technology aspects.
As the report is determined to gain an authentic outcome, the data has been collected from the validated and reliable data sources. The analysis has been done by collecting the secondary data, the sources of data that have been used in the analysis is annual reports Volkswagen, Blog reports, peer-reviewed journals and official corporate website of Volkswagen and newsletter.
Self- Reporting- Volkswagen reveals its internal information such as operation functions status, innovative programs, entrepreneurship initiatives on the official annual report, corporate sustainability report and Volkswagen blogs.
External commentary- Unlike collecting information through self-reporting process, the information has also been collected from external commentary such as the industry survey report conducted by group of automobile manufacturer, the commentators of the market, and press conference data of business analysts and some other relevant data sources.
Process of Applying Innovation in Volkswagen
Apart from the collection process of the data, the analysis has been performed by comparing the information with the theories. The facts and findings of peer reviewed journals have been compared to each other to find out the reliability of the findings. More specifically, it can be mentioned that the analysis has been performed by considering the mission, vision and goals of the organizations.
When it comes to innovation, Miravete, Moral and Thurk (2015) mentioned that Volkswagen is always determined to offer people that they have never experienced before. According to the annual report, it can be mentioned that Volkswagen wishes to shape the current phase of technological transformation in the automotive sector. Thus, the organization is trying to develop a new generation, which is fully networked electric vehicle on the basis of “Modular Electrification Toolkit”. Hence, the MEB concept car I.D.BUZZ brings the legendary VW camper van feeling right up to date (Rodríguez-Ferradas and Alfaro-Tanco 2016). On the other side, Baier, Rammer and Schubert (2015) performed an analysis and found that exclusivity as well as the social acceptance, innovation, tradition, performance, usability, design and functionality; all these are the brand values of luxury car manufacturer Volkswagen.
As the initiative of innovation, Volkswagen continues to move towards the emission-free urban mobility as well as logistic in the fiscal year of 2017. For example, the e-crafter is presently in the eventual stage of real-world testing and deliveries and production tend to hit new heights of the reporting year. On the contrary, to speed up the process of innovation and broaden the product cycle, the commercial vehicles of Volkswagen could stand for superior mobility with its fundamental values such as reliability, profitability as well as partnership. The new Crafter produced by Volkswagen have observed a successful marker launch in the last year because the vehicle has completely been redesigned on the basis of customer requirements and provide a user-friendly functionality and real worked solutions for the drivers as the transportation needs.
According to Studeny et al. (2017), as Volkswagen is globally running its operation, it maintains a frequent modification in the products and innovation in products is applied through the mediation process. Most of the products of VW have been redesigned by incorporating innovation into the products. Recchia and Kleeberger (2016) mentioned that to hold innovation at its core, the organization has delivered almost 498 vehicles in the past fiscal year with the increase of 2.6% compared with 2016. Conversely, the overall sales in European nations have increased by 4.1%. VW observed a continuous growth in its commercial vehicle because in 2017 the commercial vehicle brand increased by 16.0% in 2017 and the figure reached 490 with the inclusion of the vehicle crafter (Volkswagen.co.in 2018).
Data Collection and Analysis Process
In 2015, almost 10% of all vehicles in Europe, India and China could be low cost cars with the sales price of between EUR 3000, and EUR 7000. Certainty, this segment is under growing cost pressure and provide a small amount of profit. Nonetheless, Siano et al. (2017) mentioned that most of OEMs could want to have a low-design in their portfolio to serve the market as an “entry model” and low large organizations are working on the low cost models. So, R&D in all new low cost model could never pay with respect to regained sales profits but it holds tremendous promise probably never pay with respect to regained sales profits. This is a risky initiative of VW because the low cost model of vehicles could create a negative market impression if the products are not embraced by the customers in its chosen market. Moreover, the chosen market has the maximum records of inflation, continuous downturn in the economy. For example, demonetization in the last year in India and Economic Volatility have a strong impact on the global economy; as the consequence of downturn, most of the suppliers dealers and suppliers refused to come into the deal for long period; thus, running a low cost mode of operation holds as set of risks.
On the other side, Ferrell et al. (2016) mentioned that even though the low cost models of operation brings about the financial risks but conversely the organization gains advantages because customers may receive some unique features such as minimizing the metal content to save on raw material costs, foamed lightweight structure, integrated small-engine power-train concepts and coated polymer windows.
According to Hsu et al. (2014), innovation and entrepreneurial activities can be brought in place when the organizations have sufficient capability with respect to integration, structure and culture. Particularly, a large organization of all size certainly need entrepreneurial behaviour to survive and perform operation in a competitive environment. Furthermore, Behram and Özdemirci (2014) also mentioned it is easy for a large firm to apply innovation to business because the large firm has the ability to bear the possible risks of initiatives. Volkswagen developed a flat organizational structure with the multiple layers of management in each segment of operation. A different set of activities in a large start-up venture as well as the management of new small firms by an organization with large size in its fundamental business are very significant segment of corporate entrepreneurship. Therefore, the “Volkswagen Group” was appropriate enough to deal with and apply innovation to business. For example, with the launch of FAST initiative (Future Automotive Supply Tracks) is to work together to apply technical innovation rapidly than before to understand vehicle project more efficiently (Volkswagen.co.in 2018).
Innovation Focus in Volkswagen
However, Audretsch and Lehmann and Wright (2014) mentioned that the execution of an entrepreneurial as well as innovative culture could be separated in three different distinct steps; for instance, the assessment of present safety for the entrepreneurial activity and execution of an entrepreneurial climate, the control and assessment of corporate entrepreneurship. Thus, VW is very concerned about its entrepreneurial activities; so, the structure and culture is often redesigned to meet the external needs. Volkswagen relied on the corporate entrepreneurship based on the readiness of the workforce to assume the entrepreneurial behaviour and maintain a bureaucratic culture to resolve different barriers to manufacturing of new products and services.
Conclusion
In conclusion, it can be stated that innovation is the key to Volkswagen and to apply innovation in a continuous way, the organization had to come under the collaboration with the other brands. A significant fact derived from the analysis is that maintaining the entrepreneurial activity and applying innovation to business becomes easy when the organization has flat structure with the multiple segment. This means if innovation is applied to one particular segment, the possible implementation rusk only resides in that particular segment. However, to embrace innovation throughout the business process, the organization bureaucratic organizational culture will help to generate the support from the workforce. Lastly, it can be mentioned that the collaboration with other brands will certainly strengthen the market position of the organization in the sector and apply innovation to lead ahead.
References
Agarwal, R. and Shah, S.K., 2014. Knowledge sources of entrepreneurship: Firm formation by academic, user and employee innovators. Research Policy, 43(7), pp.1109-1133.
Audretsch, D.B., Lehmann, E.E. and Wright, M., 2014. Technology transfer in a global economy. The Journal of Technology Transfer, 39(3), pp.301-312.
Baier, E., Rammer, C. and Schubert, T., 2015. The impact of captive innovation offshoring on the effectiveness of organizational adaptation. Journal of International Management, 21(2), pp.150-165.
Behram, N.K. and Özdemirci, A., 2014. The empirical link between environmental conditions, organizational culture, corporate entrepreneurship and performance: The mediating role of corporate entrepreneurship. International Journal of Business and Social Science, 5(2).
Ferrell, A., Ondracek, J., Saeed, M. and Bertsch, A., 2016. Failed Decision-making at Volkswagen. In Annual Eurasian Business Research Conference. Manila, Philippines.
Hsu, C.C., Tan, K.C., Jayaram, J. and Laosirihongthong, T., 2014. Corporate entrepreneurship, operations core competency and innovation in emerging economies. International Journal of Production Research, 52(18), pp.5467-5483.
Kale, D., 2017. Sources of innovation and technology capability development in the Indian automobile industry. Institutions and Economies, pp.121-150.
Lin, R.J., Chen, R.H. and Huang, F.H., 2014. Green innovation in the automobile industry. Industrial Management & Data Systems, 114(6), pp.886-903.
Miravete, E.J., Moral, M.J. and Thurk, J., 2015. Innovation, emissions policy, and competitive advantage in the diffusion of european diesel automobiles.
Recchia, M. and Kleeberger, J., 2016. 8 Service innovation at Volkswagen. An Introduction to Industrial Service Design, p.69.
Rodríguez-Ferradas, M.I. and Alfaro-Tanco, J.A., 2016. Open innovation in automotive SMEs suppliers: an opportunity for new product development. Universia Business Review, (50).
Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. “More than words”: Expanding the taxonomy of greenwashing after the Volkswagen scandal. Journal of Business Research, 71, pp.27-37.
Studeny, M., Bartels, A., Rauch, M., Scheiblich, M., Just, V. and Buchmüller, M., 2017. Innovation Management, Environmental Sustainability, and Market Competitiveness.
Teece, D.J., 2014. A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies, 45(1), pp.8-37.
Volkswagen.co.in. (2018). Volkswagen History | Volkswagen India. [online] Available at: https://www.volkswagen.co.in/en/about/volkswagen-history.html [Accessed 5 May 2018].
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