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History and Background
New Process for Managing Priorities
Old vs. New Process
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History and Background
Specific breakdown provided by using textbook and various website providing history of VW:
Introduction - VW
- Terra has already created this slide w/our names & title of case
The history of the company - with all its trials and tribulations - is first and foremost a story of impressive success.
Rita's First Slide
(whatever you want to call it)
- Ferdinand Porsche designed first Volkswagen
"Volkswagen" means, literally, "peoples car"
: - In 1934, Adolph Hitler announced that a car shouldn't just be a privilege of the wealthy. He summoned Ferdinand Porsche to talk about his plans for a car. Hitler said it should be small, durable and air cooled. Hitler called it Volkswagen, which means the peoples car and stipulated it should be less than 1,000 marks, about $250.
Slide suggestion for Terra - photo of prototype of original Beetle 1932
for reference only:
for reference only:
NEW SLIDE #2
Beetle - known as Volkswagon Type 1 - economy car
- company's signature platform
- 1950 - Type II Volkswagen introduced, originally known as transporter or bus or camper.
The Volkswagen Bus, still today known to many as the "VW Bully".
Pictures if Terra wants to use:
- Continual growth for about 20 years,sales of Beetle grew, company's total worldwide vehicle sales past $1 million.
- Employees and dealers from Germany and abroad celebrate the production of the one millionth Volkswagen Beetle in Wolfsburg.
Volkswagen of America
) was founded. It is the US subsidiary of the Volkswagen automobile company in Germany.
- 1969 high point of Beetle's sales
NEW SLIDE #3
- Beetle popularity declined in US, importation was discontinued
- Production of Beetle continued into 1990s in Latin America
- Beetle remains the best-selling car of all time
- On February 17th, 1972 Volkswagen breaks the world car production record:
with 15,007,034 units assembled, the Beetle surpasses Ford Motor Company's Model T, popularly known
as the "Tin Lizzy", between 1908 and 1927.
- 1973 Passat introduced
- 1974 First Golf built
- 1977 Rabbit introduced
(for reference only
- 1979 Jetta introduced -small family car
NEW SLIDE #4
Slide suggestion: Pg
450 The "Himalayas Chart"
- After peak in late 1960s, the pattern of sales for the NA subsidary of VW settled into a trying cycle of ups & downs that became known, due to its jagged contours, as the "Himalayas Chart".
- Sales fell until the introduction of the Rabbit in 1977, recovered briefly before dropping sharply again.
- Jetta introduction prompted another short-lived recovery, followed by several-year new low point in early 1990s known w/in company informally as the "Valley of Despair"
- It seemed some midlevel managers w/in VWoA had fallen into an unhealthy habit of waiting for the "next" round of new models to rescue them from present difficulties.
NEW SLIDE #5
Changes by Executives
- Executives wanted to break the pattern of sales.
- Began a more proactive approach to developing & introducing new models
(New Golf, New Jetta, New Passat, & New Beetle).
- Sales rose into the 21st century.
- New brand positioning & effective advertising helped move VW into competition with other upscale brands.
- Senior Executives began to broaden their view of the traditional VW Group portfolio of vehicles.
- 2001 VW Group chairman, Dr. Bernd Pischetsrieder initiated a strategy of diversifying the product offerings
- New diversification strategy would create a portfolio that matched the global demand for vehicles.
- Pischetsrieder consolidated VW Group automotive brands into two groups:
"Classic" - Bentley & Skoda
"Sporty" - Audi, SEAT & Lamborghini
: purpose of consolidating brands into groups was to force some alignment among brands to help determine their requirements for future models in new segments. Both brand groups proposed a number of new models to be developed & launched over the period from 2004 to 2008.
NEW SLIDE #6
Gerd Klauss, VWoA's CEO - Thoughts & Ideas
- If all models proposed in 2002 were approved and produced, VWoA would grow from importing 9 models in 2002 to over 22 models in 2008.
Slide Suggestion: Pg 452 Exhibit 2
The Strategic Change
: This sort of growth in product offering was unprecedented in VWoA history. In order to prepare for this escalation and the associated sales & service expansion...
NEW SLIDE #7
- Instituted an organizational readiness program called "Next Round of Growth" (NRG)
Slide suggestion: Pg 452 Exhibit 3
Next Round of Growth Enterprise Goal Area
: Aim of NRG program to: define goals, functions, & organizational changes required at VWoA to support & enable new global product diversification strategy. Klaus understood some things company currently engaged in must
, new things must
, and other existing activities must be
Klaus challenge: Which activities belonged in which categories?
NEW SLIDE #8
VWoA Core Processes and Major Organizational Functions
Slide suggestion: Pg 453 Exhibit 4
: VWoA organized itself around core processes than enabled sales & marketing, logistics of vehiclee distribuiton, and after-sales service. These functions would need to be robust as the VW & Audit brands' product variety increased. Plans also called for a continued push to reposition Audi as a tier-one premium brand.
NEW SLIDE #9
Enterprise Goal Ranking for Project Prioritization
Slide suggestion: Pg 453 Exhibit 5
: Central to the NRG program were a set of ranked high-level business goals. By 2003, sales had leveled off slightly but at a higher level (though still not at late-1960s levels). Repositioning of brands generated higher margins. Overall, prospects for VWoA seemed favorable, despite worldwide auto industry overcapacity, unfavorable currency exchange rates, and high oil prices.
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