Category: Volkswagen

Abstract

Volkswagen is one of the biggest vehicle makers on the planet. For quite a long time the organization has concentrated on delivering alluring and naturally well-disposed vehicles, and late activities have incorporated a task to diminish CO2 generation, alongside promotions asserting lower emanation of ozone harming substances. The world was stunned to hear that Volkswagen had been creating diesel motors for its vehicles that had the capacity to trap emanations testing hardware. The motors were creating commonly the EPA models for outflows, yet they breezed through discharge tests. This case gives nitty gritty data about the embarrassment just as data about the history, tasks, and expressed estimations of Volkswagen, just as a portion of the early activities of the organization to manage the outrage.

In the ongoing decades protection and feasible condition are of extraordinary worry to the countries. The characteristic wonder, for example, globalization and furthermore condition contaminations, for example, emanation have been considered by an extraordinary number of ecological assurance offices and joined country organizations. A perceptible consideration regarding preservation and sparing green have driven Ecological Insurance Office (EPA) fix outflow control on account of destructive and mortal impacts of nitrogen oxide which is a poison found in vehicle’s fumes (Klier, and Linn, 2016). Accordingly, since 1970s EPA has declared consistently more limitations on standard of outflow for light-obligation vehicles involving little pickup trucks, autos, and sport-utility vehicles. The most stringent necessities for discharge benchmarks were for vehicle models of year 2004 (Klier, and Linn, 2016). EPA as well as government organization made critical lessening (94%) in the measure of transmitted nitrogen oxide by vehicles tailpipe from 1.25 to 0.07 grams per mile (Klier, and Linn, 2016). The new emanation standard presented enormous hardship to automakers producing eco-friendly diesel vehicles to the US car showcase. One of the market players in vehicle industry is Volkswagen endeavoring to split the US diesel showcase; thus, Volkswagen turned into a considerable dealer in automaker advertising. Volkswagen contenders specifically Honda, Hyundai, Mazda, and Nissan found new outflow norms essentially testing; hence, they settled on choice to scrap their strategies (Davenport, and Hakim, 2016). Shockingly, in the years 2015, Volkswagen was declared as ‘diesel hoodwink’ in the excellence of gear outflow test to influence diesel vehicles to appear discharging less contamination than what they truly produce (Clothier, 2015). In September 2015 it was accounted for by EPA that in an abundant number of Volkswagen vehicles, sold in around the world, a thrashing gadget or programming was installed in diesel motor with the reason for changing vehicle execution to improve required outcome. Volkswagen went for imagining that its vehicles pursue outflow norms; in this way, directed emanation test in the lab rather than on the streets (Le Page, 2015). Volkswagen autos were modified to identify the circumstance where vehicles with TDI diesel motors experience emanation test and afterward take data from brakes, quickening agent, and guiding. In this way, the program rolled out slight improvements to motor settings with the reason for lessening the nitrogen oxide level produced by Volkswagen diesel autos.

VW Background

The VW Group, headquartered in Wolfsburg, Germany, isn’t just a main producer of autos and business vehicles, yet additionally, the biggest carmaker in Europe Volkswagen works in excess of 100 processing plants worldwide and has more than 600,000 representatives. The gathering, regurgitated of post-World War II Germany, was established by Hitler in 1936 and later revamped under another administration structure. The organization protected by the British Army after the war moved toward becoming privatized in 1960(”Ferdinand Piech,2017). The German State of Lower Saxony and ahead of schedule in , the German Federal government, were given unique possession rights and board seats. The new framework was planned around profound associations between the executives, workers(union and work councils), and local lawmakers.

The gathering created, structured, produced, and showcased 12 brands of autos and trucks overall including Volkswagen Passenger Cars(50% of all Group Sales), Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial(Truck ) Vehicles, Scania and MAN. In 2016, the organization outperformed Toyota, becoming the biggest automaker on the planet with offers of 10.3 million units. It has kept up the biggest piece of the overall industry in Europe for more than two decades and positioned seventh in the 2016 Fortune Global 500 rundown of the world’s biggest companies(”Ferdinand Piech, ” 2017). Before the finish of 2015, VW sold over 10.8 million diesel-controlled vehicles worldwide with 2.8 and 1.2 million sold in Germany and the Uk individually.

People Involved

The six administrators deal with indictments of intrigue to submit misrepresentation and infringement of the U.S. Clean Air Act. Those prosecuted were Heinz-Jakob Neusser, 56, Jens Hadler, 50, Richard Dorenkamp, 68, Bernd Gottweis, 69, Oliver Schmidt, 48, and Jürgen Peter, 59, all of Germany. Schmidt was captured and charged not long ago in Miami.

The majority of the denounced have connections to Volkswagen’s motor advancement and quality affirmation divisions, both in the U.S. furthermore, Germany. They guided workers to create and introduce innovation to avoid outflows testing, at that point erroneously showcased the vehicle motors as ‘spotless diesel,’ as indicated by the DOJ.

Another previous Volkswagen representative, engineer James Liang, concede to misrepresentation charges in September. A representative for Volkswagen declined to unveil the work status of the six arraigned people, referring to an arrangement not to examine continuous examinations or staff matters.

Hans Dieter Pötsch, who seats the organization’s supervisory board, said in an announcement: ‘When the diesel matter wound up open, we guaranteed that we would get to its base and discover how it occurred – completely and impartially. . . . We are never again a similar organization we were 16 months prior.’

Volkswagen shed a few top administrators and actualized other inside changes after the outflows outrage became known. The organization additionally apologized to U.S. legislators and swore to recapture the trust of American buyers. The DOJ said those activities helped the organization dodge much more extreme punishments.

A judge should now affirm the settlement before it’s made authority. That court date has not been set, a DOJ representative said.

College of Richmond law educator Carl W. Tobias said the Volkswagen settlement makes an impression on different organizations that illicit direct can accompany unforgiving punishments. In any case, the rest of the parts of the examination will currently rely upon president-elect Donald Trump’s approaching organization.

‘Various inquiries stay, for example, who else at VW may be indicted, regardless of whether the five [in Germany] can be conveyed to equity, whether VW’s conduct will improve, and so on.,’ Tobias said.

Volkswagen is accused of scheming to dupe the administration and damage natural guidelines from May 2006 to November 2015 by introducing gadgets in its diesel motor vehicles that darken the measure of nitrogen oxide they heave into the air. Those gadgets and going with programming permitted Volkswagen to sidestep controllers for quite a long time, the DOJ affirms.

Corporate governance

“We may define corporate governance as a blend of rules, regulations, laws and voluntary practices that enable companies to attract financial and human capital, perform efficiently and thereby maximize long term value for the shareholders besides respecting the aspirations of multiple stakeholders including that of the society” (Gopalsamy, 2008, p. 21)

Effect of Volkswagen Diesel Scandal

In the year 2014, Volkswagen was the world’s second biggest automaker in vehicle industry after Toyota Motor Corporation. In the year 2015, Volkswagen conceded fixing in diesel emanation test which made the organization experience the ill effects of tremendous measure of cost trouble. Volkswagen has acquired three (3) advertising firms situated in United States, Britain, and Germany to help the organization to adapt to the emergency. In addition, Volkswagen has utilized the previous interchanges of BMW as an advisor to work 60 hours per week with pay of $22,000 every month (Hakim, 2016). Also, since this case incorporates different nations over the world, Volkswagen is required to manage distinctive universal guidelines. The essential results of this dishonest tricky embarrassment are recorded as pursue (Hakim, 2016).

1. Threatening People’s Health

By end of 2016, Volkswagen autos with thrashing gadget will have delivered extra dangerous contamination to straightforwardly trigger unexpected passing of approximately sixty (60) people only in the United States. From the year 2008 to 2015, 428,000 Volkswagen and Audi diesel vehicles siphoned out nitrogen oxide forty (40) times more than it was permitted by the Clean Air Act. It is evaluated by the analysts that with six (6) years Volkswagen and Audi diesel delivered an overabundance of 36.7 million kg nitrogen oxide to the earth (Selin, 2015b). Nitrogen oxide is an essential component of particulate and exhaust cloud matter which clears the ground for different sickness in particular coronary illness, unexpected passing, bronchitis, and respiratory and cardiovascular malady. Specialists have assessed that critical effects of nitrogen oxide created by Volkswagen vehicles imperil 60 human lives from 10 to 20 years rashly (Selin, 2015a). It is noticed that abundance of contamination from Volkswagen vehicles took part straightforwardly in thirty-one (31) and thirty-four (34) constant bronchitis and affirmation of respiratory and hearth cases separately in the United States. Extra contamination to nature will results in 120,000 minor confined action day and around 210,000 days of less respiratory signs. The affliction of individuals more than six (6) years from 2008 to 2015 will cost United States $450 million (Kalaugher, 2015). In the event that Volkswagen decreases to review vehicles with annihilation gadget, from 2015 onwards 140 unexpected losses will occur. What’s more, wellbeing cost of $840 million will be brought about by the Volkswagen diesel vehicles (Chue, 2015). Furthermore, an overabundance of nitrogen oxide to the indigenous habitat by Volkswagen diesel vehicles results in corrosive rains (The Editorial Board, 2016). The corrosive downpours not just have urgent effect on human wellbeing bot additionally have indispensable obliteration on nature and regular asset.

2. Droop in Workforce’s Bonus

When fixing in diesel discharge test was uncovered to people in general, offers of Volkswagen was influenced. In this manner, Volkswagen so as to adapt to emergency, has reported that reward of boss administration will be diminished significantly (Moulson, 2016). Volkswagen said an explanation that different models which build up reasonable and normal answer for all taken an interest parties are being thought. Thus, this prompts an extensive reduction of variable compensation. The decrease in reward will incorporate administration board and furthermore a gathering of official positions helping CEO to work the organization’s day by day schedule. It is said that the reward of German likeness directorate, which is the supervisory of Volkswagen, would not be decreased aside from Volkswagen executive Hans Dieter Poetsch (Moulson, 2016).

3. Drop in Volkswagen Sale

Although Volkswagen diesel outrage has brought about critical effect on Volkswagen bunch marks in particular Audi and Skoda, droop in offers of Volkswagen vehicles are far considerable than gathering brands. The terrible notoriety of Volkswagen has influenced its client dependability; in this way, costumers change from Volkswagen to its rivals which lead to a perceptible drop in deals (Kottasova, 2015). Since 2002, out of the blue, in 2015 offers of Volkswagen dove worldwide considerably in ethicalness of misleading embarrassment. The accompanying figure speaks to that Volkswagen’s deals is consistently diving in the United States (BBC, 2016; Sky UK, 2016; Waecsh, 2016).

4. Dive in Volkswagen Shares

A deceptive routine with regards to Volkswagen prompted a sensational droop in offer esteem. Quickly once Volkswagen outrage was uncovered, advertise demonstrated response in this manner share estimation of the organization dropped by 33%. At the end of the day, the emanation of embarrassment cleaned billion dollars from Volkswagen esteem (Gomez, 2016)

5. Making Hassel for Volkswagen Dealers

At the point when tricky outflow occurred, a bundle of explicit projects with the reason for helping retailers to adapt to Volkswagen fixing in diesel discharge test was given to Volkswagen vendors (Ausick, 2016). The program incorporates explicit measure of cash in type of offers extra, impetuses, or appropriation infused to business organize battling with lower deals and benefit. The clearance of Volkswagen diesel autos, which incorporates simply over 20 rates of all out deals, was ceased. Hence, sellers are as yet experiencing slender benefit and drowsy deals (Beene, 2016). The CEO of Volkswagen America expressed that further projects will be considered for vendors with income, yet at the same time explicit date isn’t announced for projects (LaReau and Ryan, 2015). An extraordinary number of workers are worry about their employer stability and they are disappointed to experience with clients suspending them whether they knew about organization’s outrage or not (LaReau and Ryan, 2015). Another Volkswagen dealer in east coast said that dealers of Volkswagen in the United States are not making money or merely breaking even. Moreover, the dealer adds that the given fund assists to break even or present thin profit. The other dealer of Volkswagen Bill Wallace in Stuart said that overall customer traffic has reduced significantly and also it is critical to convert shoppers to sales. Therefore, the discretionary fund assists to him to close the deals (LaReau & Ryan, 2015). General Manager of Volkswagen Tom Backer in New York said that some amount of the given fund will be utilized primarily to close deals with the owner of diesels cars who are unwilling to get into Volkswagen gasoline cars, whilst the rest of discretionary fund will be given to sales workforces with the purpose of improving their satisfaction and motivation (LaReau & Ryan, 2015).

Financial impact and lessons learned

Volkswagen took an expansive money-related blow after the embarrassment. As recently referenced, their stock was at that point in decrease because of inward issues and the Chinese market. In any case, their stock dropped an extra 30% after the outrage. This drop is about a half drop since its record high a couple of months sooner (Appendix B) As of February 24, arrangements for the embarrassment rose to $23.9 billion. In 2015, VW saw a total deficit of $6.2 billion, its first misfortune since 1993, and a 2% decrease in vehicle sales.VW is moreover eliminating 30,000 positions to recuperate costs just as cutting variable pay and rewards for its top officials for quite a long while (Kottasova, 2016).

There are three lessons learnt-

1. Suspend and additionally survey present and up and coming advertising

Gravely planned promotion crusades, which for VW’s situation ended up being deceiving, can accomplish more damage than anything else. After updates on the outrage broke, VW naturally suspended all their live advertisement battles to keep away from further harm to the organization’s notoriety. This was especially difficult for VW’s battles in the US, where their vehicles are situated as ‘perfect diesel’.

2. Take a position

There are three alternatives with regards to reacting to an emergency – they can acknowledge fault and energetically apologize (like VW has done), they can effectively guard yourself and their organization, or they can endeavour to redirect consideration far from an issue and expectation it will blur away. Every strategy can work, however poor decisions made at the beginning can blowback.

3. Brief your kin

In the event that your organization’s emergency starts to pull in media consideration, you have to guarantee that your organization talks with one voice and conveys a reasonable, steady message. To this end, any staff expected to draw in with the media should be informed appropriately. Volkswagen fell at this obstacle when they sent Paul Willis, the overseeing chief of VW’s UK task, to address the vehicle select advisory group about the outrage.

Recommendation

It is obvious that the foundation of this deceptive outrage returns to business culture and structure of the organization. The present business rehearses are far not the same as the past practices. The consistence-based business morals like Volkswagen approach decreases to treat representatives morally and furthermore workers face situation of free employment or make exploitative move; along these lines, the organization gets switch result. The activities of workers have significant job in progress or disappointment of the organization in this way it is essential to esteem representatives and improve their good to achieve errands morally. In esteem base practices chain of importance does not exist rather the representatives work in groups to accomplish anticipated outcomes. Also, esteem based business morals advance vote based system in the organization which implies officials have the opportunity to voice their grumblings to seniors or offer their thoughts inside the organization which may result in more noteworthy profitability. What’s more, clearly outflows and contaminations are of critical worry to EPA. Accordingly it is obvious that EPA new and exacting discharge norms forced outrageous strain to car industry. EPA has a basic job to lighten the extraordinary weight on automakers by giving and offering innovation and innovative work (R&D) helps. Instance of Volkswagen uncovers that stringent emanation gauges brought about inverse anticipated result with a progression of destroying occasions. Accordingly, it is noteworthy to get ready for achievable emanation principles and furthermore give mechanical and R&D backing to automakers to forbid such case to occur. All things considered, so as to avoid such embarrassment to happen in future, it is prescribed to the organizations to esteem their representatives through esteem based methodology. Moreover, EPA is prescribed to give strong projects to automakers to guarantee dimension of contaminations and discharges are leveled out.

Conclusion

As per discoveries and examination under past segments, Volkswagen tricky embarrassment is a staggering entangled case having made sensational issues for its immediate and backhanded partners. Yet Volkswagen swindling in diesel emanation test was an unscrupulous activity bringing about arrangement of tragic outcomes, the proposition of green discipline is a reasonable answer for settle this case. Electronic autos empower condition insurance offices to spare expense and time for discovering new frameworks for controlling outflow tests. Besides, along these lines, Volkswagen isn’t just punished yet in addition repays its embarrassment suitably. All in all, since this is a continuous case, there is an opportunity to stop the proposition of green discipline to make a decision to tackle the issue in a success win technique.

References:

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In this case, the defendant is Bob D’Amato while the plaintiff is Audi. Bob D’Amato is not associated with Audi in any way. On February 11, 1999, the defendant registered the domain name www.audisport.com, and began posting content to the site from June 4, 1999. Two years later, an Audi dealer by the name Champion Audi saw the webpage and approached D’Amato seeking to link D’Amato’s site to an online store that would sell merchandise with the ‘Audi Sport’ logo. These items would include hats and shirts. The online store was later established and run on a different page at www.audisport.com/boutique. The store also offered personalized email addresses @audisport.com. D’Amato was to be given a percentage of profits generated through this venture. However, it was not clear whether D’Amato sold the products personally since he maintained that “his website merely had links to goods (hats and shirts) and email hosting services offered by Champion Audi” (Samson, para. 2) Again, it is not known whether the defendant received benefited financially from this undertaking.

D’Amato engaged a graphic designer to make two logos integrating Audi trademarks to be used on www.audisport.com. The designer questioned whether D’Amato was allowed to use these marks and reminded him that Audi already had a website through which it sold similar products. D’Amato alleged he had been authorized by the Audi dealer to use the marks and continued to use them on his website. However, Audi’s agreement with the dealer barred him from permitting D’Amato to use any of the company’s trademarks.

Apart from placing the logos on his website, D’Amato’s site also misleadingly stated, “Who are we? We are a cooperative with Audi of America and will be providing the latest products for your Audi’s and information on AudiSport North America” (Samson, para. 6).

In May 2003, the Audi dealer opted to end his dealings with D’Amato since the business was not generating adequate profits. Consequently, in late 2003, and early 2004, Audi contacted D’Amato asking him to cease his activities using the website. D’Amato responded by taking down the Audi marks from his site. Besides, he added a disclaimer, renouncing any affiliations with Audi, saying “this page is not associated with Audi AG or Audi USA in any way” (Samson, para. 2). However, he still offered advertising services on his site (Berkman Center for Internet & Society, para. 6).

Audi then began legal proceedings, accusing the defendant of infringing and diluting its trademarks in breach of the Lanham Act, in addition to breaching the Anti-cybersquatting Consumer Protection Act (ACPA). The District Court ruled in favor of the plaintiff and commanded D’Amato to permanently cease further infringement into any of Audi’s marks. The District Court also awarded Audi’s legal fees under 15 U.S.C. § 1117(a) and instructed D’Amato to transfer www.audisport.com to the plaintiff. On appeal, the Sixth Circuit affirmed the ruling.

To succeed on claims of unfair use of trademarks, under the Lanham Act, the plaintiff has to prove a likelihood of confusion between the two marks in question. In the Sixth Circuit, the likelihood of confusion is determined by assessing eight topics:

“(1) strength of plaintiff’s mark; (2) relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing of channels used; (6) degree of purchaser care; (7) defendant’s intent in selecting the mark; and (8) likelihood of expansion in selecting the mark” (Samson, para. 6).

By assessing these eight factors, the Sixth Circuit found out that there was a significant likelihood that customers would be confused by the defendant’s use of the plaintiff’s trademark.

In reaching this final decision, the court considered the fact that the defendant had used the globally recognized marks that belong to Audi to market products that were similar to those that Audi was marketing, such as shirts and hats with Audi’s trademark symbols.

The resemblance between the plaintiff’s marks and the defendant’s Audi Sports mark and the domain name also sustained the idea of likely customer confusion. As potential client confusion would not be lessened by the inclusion of the generic term ‘Sport’ to the plaintiff’s mark, the court said that clients could not distinguish the two entities and confusion was highly probable.

The fact that both the plaintiff and defendant had used similar media for marketing, consumers were less likely to be cautious because the products cost less money. This gave weight to the court’s determination of likely consumer confusion. The outcome was also sustained by proof of factual confusion, exhibited in the graphic designer’s email, which enquired the nature of D’Amato’s association with Audi, considering that they were dealing in similar merchandise.

Finally, the District Court discovered that the defendant has used the plaintiff’s trademark with an aim of copying, and gaining from the activity, which also added weight to its determination of likely public confusion. This was confirmed by the fact that D’Amato had previously requested consent to use Volkswagen’s mark while registering the domain name (at which he did not receive any reply). D’Amato also used Audi’s mark throughout the site.

Consequently, the Sixth Circuit maintained that the defendant, through his actions, breached the plaintiff’s marks and contravened the Lanham Act.

In reaching this verdict, the Sixth Circuit threw out the defendant’s claims that his use of Audi’s marks was permitted by Champion Audi since the dealer had no authority to grant usage of the marks in question. The court also threw out D’Amato’s defense of unfair delay of the case (laches). The defendant registered the domain name in February 1999 and the suit only began in February 2004. According to the Sixth Circuit, in establishing whether suits are time-barred by laches, the court should look into the following:

“(1) whether the owner of the mark knew of the infringing use; (2) whether the owner’s delay in challenging the infringement of the mark was inexcusable or unreasonable; and (3) whether the infringing user was unduly prejudiced by the owner’s delay” (Samson, para. 8).

In this case, there was no evidence submitted to prove that the plaintiff had unjustifiably delayed prosecution of the suit after they had known of the defendant’s violation activities, nor that the defendant had been unfairly biased by any delay.

Lastly, the Court disallowed the defendant’s argument that any public confusion was prevented by his site’s disclaimer. The Court mentioned that an infringing domain can mislead customers as they search for websites associated with the owner of the trademark. A disclaimer as was used in the defendant’s website comes too late. Confusion had already occurred, and this was considered a violation of trademark under the Lanham Act. The Court also observed that D’Amato diluted Audi’s trademarks hence violating the ACPA. Dilution was based on the fact that the defendant used the trademarks for commercial purposes after the mark became famous (Cyber Telecom, para. 4). Since the defendant used marks similar to those of Audi, no evidence of dilution was required. The Court ruled:

“Direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence – the obvious case is one where the junior and senior marks are identical” (United States Congress Senate Committee, pp. 16).

Violation of the ACPA was further hinged on the fact that the defendant had no right to use the Audi marks for commercial purposes. The Court also found out that the defendant aimed to divert the public away from the plaintiff’s online site to his own by describing his relationship with Audi as “a cooperative with Audi of America” (FindLaw, para. 5). Interestingly, in finding the defendant guilty of breaching the ACPA, the District Court rejected the defendant’s allegations that his actions were justified under the ‘reasonable belief exception’ outlined in 15 U.S.C. §1125(d)(1)(B)(ii). This section states that a defendant who has a ‘reasonable belief’ that using the domain name is justifiable will not have breached the ACPA (FindLaw, para. 7). However, this defense should be used scarcely and only in odd cases, therefore, the Court held it unusable in this case, even though Champion Audi had permitted the defendant to use the mark.

The Sixth Circuit instructed the district court to pay the plaintiff’s legal fees. Under 15 U.S.C. § 1117(a), courts may award the main entity the legal fees in special cases. The Court maintained that this was a special case. A case is not special unless the “infringement was malicious, fraudulent, willful, or deliberate.” The Court ruled that the defendant did not limit his site to protected speech, for instance, information for Audi’s fans. Instead, he used Audi’s marks on the site and in various merchandise intending to get profit. D’Amato knew that permission was required to use the marks, and this was proven by the fact that he had earlier attempted to obtain consent from the plaintiff and persons associated with it. Consequently, the Court was right in finding D’Amato at fault for acting in bad faith under the ACPA. This finding did not require a court to find damaging, deceitful, willful, or intentional acts (FindLaw, para. 6). The Court asserted an award of the legal fees despite the alterations that the defendant had made in his website after receiving Audi’s letters.

To prevent legal action, D’Amato should have taken the following measures:

The Anticybersquatting Consumer Protection Act (ACPA) holds that if a domain name consists of a trademark or other intellectual property owned by another party, then the domain name owner has acted in bad faith and is guilty (American Bar Association and American Bar Association, pp. 12). To prevent legal action, D’Amato should have refrained from using the name Audi (which is a famous name) in the domain name of his website. It would have also been possible to add additional names to the word Audi so that it would be easily distinguishable from the prevailing party, Volkswagen of America (Ginsberg, pp. 54). Failure to adhere to this requirement would amount to dilution of Audi’s mark and result in legal action.

A second measure that D’Amato would have taken to prevent legal action would be to seek written permission from the company. Volkswagen of America, or through its authorized dealers. D’Amato had tried to seek consent from the company to use the company’s name in his domain name but did not receive success, he went on and opened his website without any authorization. Once a company offers authorization for use of its domain name, it also dictates the terms of use such as restrictions and disclaimers. Although D’Amato later included disclaimers in his website after receiving cease and desist letters from Audi, this was a late intervention and damage had already occurred (Manz, pp. 27).

Another measure would have been to prevent undertaking commercial activities on the website under question. The ACPA rules that a person is deemed to have acted in bad faith if prior use of the domain name concerning offering goods and services. D’Amato used the website to offer services such as advertising. D’Amato also used the domain name to link to a page operated by Audi Champion, which sold goods that included hats and shirts that had Audi’s logos and marks. Section VI of the ACPI states that using a trademark in bad faith occurs when:

“…the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct” (FindLaw, para. 8).

D’Amato’s use of the website for commercial reasons either personally or by linking it to Audi Champion’s page was in direct breach of the ACPA.

The Audi AG and Volkswagen of America Inc. v. Bob D’Amato (2006) case had significant and noteworthy implications now and in the future in most countries, including Australia. In Australia, any person registering a.com or.au domain name must have a legal right to use that domain (AUDA, para. 2). The domain name must be registered, and the owner issued with an Australian Business Number (ABN). Despite the strict regulations, the law has failed to protect Australians from cybersquatting acts. The weakness lies in the fact that any Australian national above 16 years can be issued with an ABN and use it to open as many domain names as possible, some of which may have a close and substantial resemblance to the name of a more recognized mark.

Despite this leeway, the case discussed above illustrates the importance of choosing a domain name carefully. Before registering a domain name, a person must be cautious so that the name does not breach any trademarks (AUDA, para. 4). This would reduce future legal proceedings than would lead to substantial financial and non-financial losses such as those suffered by D’Amato. D’Amato had to transfer the ownership of a website he had operated for almost seven years to Audi.

Works Cited

American Bar Association and American Bar Association. What Is a Trademark? Illinois: ABA Publishing, 2009.

AUDA. Domain Name Registrations. 2011. Web.

AUDA. Mandatory Terms and Conditions Applying to.au Domain Name Licences (2008-07). 2011. Web.

Audi AG and Volkswagen of America Inc. v. Bob D’Amato. 469 F.3d 534, No. 05-2359 (6th Cir., 2006).

Berkman Center for Internet & Society. Frequently Asked Questions (and Answers) about Domain Names and Trademarks. 2011. Web.

Cyber Telecom. AntiCybersquatting Consumer Protection Act. 2011. Web.

FindLaw. UDI AG v. AMATO: AUDI AG and Volkswagen of America, Inc., Plaintiffs-Appellees, v. Bob D’AMATO, d/b/a Quattro Enthusiasts, Defendant-Appellant. 2006. Web.

Ginsberg, Jane C. Trademark and Unfair Competition Law 748 (Robert C. Clark et al. eds., NJ: Foundation Press 4th ed., 2007.

Manz, William H. Anticybersquatting Consumer Protection Act: a legislative history of Public Law no. 106-113: appendix I, 113 Stat. 1501A-545, Volume 2, 2002.

Samson, Martin.Audi AG and Volkswagen of America Inc. v. Bob D’Amato. Internet Library of Law and Court Decisions, 2011. Web.

United States Congress Senate Committee. The Anticybersquatting Consumer Protection ACT. Washington DC: Bibliogov, 2010.

The recent scandal around Volkswagen cheating on nitrogen oxide emissions has raised numerous reactions in media, society and industry as Volkswagen Group violated Clean Air Act. Detailed inspections of Volkswagen Group’s products have started all over the world, and particularly in the United States. The scandal sequenced in Volkswagen Group CEO resigning as well as suspending of the head of the brand development, Audi research and development head, and Porche research and development head. The studies conducted on other car companies that produce popular car brands also showed the highest levels of emissions than proclaimed by the companies initially (Carrington par.7). There also appeared certain doubts about the reliability of the data from software-controlled machinery, causing the start of the initiatives to make the software source code available to a broad public (Dwyer par. 13). By cheating on the emissions rate, Volkswagen group has broken its Code of Conduct losing both the worldwide respect and undermined the consumer’s trust.

Reporting Issue

The Volkswagen Group has violated its proclamation on reporting issue stating, “All of our reports, records, and statements are accurate, timely, comprehensible, comprehensive, and true” (“The Volkswagen Group Code of Conduct” 17). As the sources state the problems with the emissions were reported by the European Commission’s Joint Research Centre in 2011 (Weiss et al. 37). The study research of the level of emissions from cars started in the United States in 2014, as the United States regulations are more strict than European. According to the results, the EPA issued a Notice of Violation on Volkswagen Group, stating that there are excessive emissions produced by the cars they make. The Volkswagen group presented the instrument that measured the level of vehicle emissions, and the criteria it measured was similar to EPA testing protocols. Since EPA’s results showed violations, it is obvious that Volkswagen Group was aware of them, but provided the wrong official information, thus violating its Code of Conduct statement.

Environment, Health and Safety Issue

The Volkswagen Group has violated its proclamation on environment, health and safety issue stating that they are accountable for constant improvement of their production’s environmental friendliness, implementing ecologically efficient technologies in all countries of the world (“The Volkswagen Group Code of Conduct” 19). Producing cars that cause exceeded levels of nitrogen oxide is not an environmentally friendly technology, especially today when the vast amount of international acts, laws, and protocols regulate the level of all types of harmful emissions. Thus, the continuation of the statement that says that they implement the ecologically efficient technologies “over the entire lifecycle of our products” (“The Volkswagen Group Code of Conduct” 19) is true as the Group announced the plans for recalling the problematic vehicle and replacing engines or providing a free repair as well as reviewing all the company’s diesel strategy.

Compliance with Law Issue

The Volkswagen Group followed its proclamation on Compliance with Law issue stating that each of the employees, who violated statements of the Code, will face the appropriate consequences up to employment termination and fulfilling the claims for the caused damage (“The Volkswagen Group Code of Conduct” 22). According to the information available to the broad public, Martin Winterkorn, the Volkswagen Group CEO resigned from his position; Heinz-Jakob Neusser, the head of brand development; Wolfgang Hatz, Porsche research and development head; and Ulrich Hackenberg, Audi research and development head were suspended. They are not the people who directly took the measurements, or designed the engines, but they were aware of the violations and the problems. Being the company’s authorities, they approved the ways of development and made the key decisions, so the Group follows its statement, even if partially because of the publicity of the scandal.

Management Culture and Collaboration Issue

The Volkswagen Group violated its proclamation on Management Culture and Collaboration issue stating: “In the context of leadership responsibility, the superiors guard against unacceptable conduct. They bear responsibility for ensuring that no violations of rules occur in their area of responsibility” (“The Volkswagen Group Code of Conduct” 9) as well as the fact that the exchange and transfer of professional information within the responsible employees and superiors should be the common practice. It is obvious that the information on emissions exceeds was known to all persons responsible, starting from engineers who developed engines and the staff who carried tests to top management who made the key decisions. As the top management was suspended and resigned following the statement is clear.

Law Violation Issue

The Volkswagen Group violated its proclamation on Law statement that the Group considers “compliance with international conventions, laws, and internal rules to be the basis for sustainable and successful economic activities” (“The Volkswagen Group Code of Conduct” 4). This is one of the basic violations of the Code of Conduct because the Volkswagen Group directly breaks the Clean Air Act, a federal law of the United States, as the index of emissions exceeded the established level. As the unconventional exceed of emissions caused the certain amount of deaths all over the world, might lead the Volkswagen Group accusing in breaking some criminal laws.

Conclusion

The detailed analysis of the Volkswagen Group Code Conduct has shown that that by the acts that resulted in an international emission scandal the Volkswagen Group has violated both several of its public policy important statements as well as some local laws that lead to critical consequences and wasting company’s reputation.

References

Carrington, Damian. Wide range of cars emit more pollution in realistic driving tests, data shows. 2015. Web.

Dwyer, Jim. Volkswagen’s Diesel Fraud Makes Critic of Secret Code a Prophet. 2015. Web.

The Volkswagen Group Code of Conduct. 2015. Web.

Weiss, Martin, Pierre Bonnel, Rudolf Hummel, Urbano Manfredi, Rinaldo Colombo, Gaston Lanappe, Philippe Le Lijour, and Mirco Sculati Analyzing On-road emissions of light-duty vehicles with Portable Emission Measurement Systems (PEMS). 2015. Web.

In 2018, Leslie Moonves, a former CEO of CBS, was accused of sexual harassment. After the accusations, CBS hired two law firms to investigate the case. The results of the investigation revealed that all the accusations were at least partially true. Moonves confirmed that there was sex; however, he pleaded that it was consensual. The victims, on the other hand, stated that someone from the staff was always on call for Moonves to have sex. The case was lost by Moonves, and he was fired for willful and material misfeasance, violation of company policies and breach of his employment contract without an exit package (Koblin, 2021). Moreover, the company had to pay $14.75 million as a settlement to shareholders, who sued the company for intentionally concealing valuable information from shareholders that affected the share prices and, thus, stockholders’ financial well-being (Goldsmith, 2022). In summary, the ethical case was handled poorly, as the company tried to clear its name through lies and failed to do so.

There were several alternative ways to handle the situation from the viewpoint of HR. I believe that the company’s HR department needed to start a full assessment of workplace culture, as the fact that such behavior was unreported for a long time is a sign of poor workplace culture. After the assessment, a controlled change process needed to be started to change the workplace culture in the company. The process needed to be open so that CBS could regain the trust of shareholders and society in general. A good example of a culture change with high publicity was Volkswagen’s scandal in 2015 concerning emission tests. The company publicly admitted all the flaws of its workplace culture and made environmental sustainability the key point of its strategic development, which helped to regain the trust of the stakeholders (Mansouri, 2016). I believe that CBS would have benefited from treating the ethical issue similar way.

References

Goldsmith, J. (2022). CBS Shareholders’ Suit Over Les Moonves Allegations Settles For $14.75M. Deadline. Web.

Koblin, J. (2021). Leslie Moonves Receives Nothing from CBS Exit Package.New York Times. Web.

Mansouri, N. (2016). A case study of Volkswagen unethical practice in diesel emission test.International Journal of Science and Engineering Applications, 5(4), 211-216. Web.

The Bark Side: 2012 Volkswagen Game Day Commercial Teaser can be discussed as a bad example of the advertisement which is broadcasted with the help of such social medium as the video-sharing website YouTube. The advertisement was presented for the first time on January 18, 2012 (The bark side: 2012 Volkswagen Game Day commercial teaser 2012).

The main task of this commercial teaser was to draw the public’s attention to the further full version of the advertisement associated with Super Bowl and 2012 Volkswagen Game Day. Thus, the target audience of the commercial teaser was the persons interested in the Super Bowl and in products connected with Volkswagen brand.

The effectiveness of the commercial teaser can be analysed with references to AIDA model (Clow & Baack 2002). The first factor is attention. To attract the audience, it is necessary to grab its attention with definite details, unique design, or ideas. The commercial teaser attracts the audience’s attention because of associations with the last year Volkswagen campaign based on the usage of Star Wars’ theme.

The next step is to stimulate the audience’s interest in the product or service with providing more information about the product’s benefits. However, the public has no opportunities to develop the interest based on the information about the advantages of the promoted thing because of the lack of the necessary material in the commercial teaser.

Moreover, the audience’s interest is not supported with the help of teaser because there is no information about the brand in the beginning of the advertisement. The idea of featuring 12 dogs barking the Imperial March which is associated with Star Wars and the first campaigns of Volkswagen is not effective for stimulating the audience’s desire to see Super Bowl or pay attention to Volkswagen brand.

Thus, the target audience of the commercial teaser becomes too limited and there are no guarantees that public’s interest will result in action as the most significant factor of AIDA model (Dahlen, Lange, & Smith 2009; Egan 2007).

The Dog Strikes Back: 2012 Volkswagen Game Day Commercial is the full version of the advertisement the main message of which is to promote Super Bowl and 2012 Volkswagen Beetle. This commercial was presented on YouTube on January 30, 2012 as the continuation of the teaser presented earlier (The dog strikes back: 2012 Volkswagen Game Day commercial 2012). The target audience of the advertisement is the public interested in Super Bowl and Volkswagen brand’s products.

The Dog Strikes Back: 2012 Volkswagen Game Day Commercial can be discussed as a good example of the advertisement in relation to AIDA model. Thus, the advertisement attracts the audience’s attention demonstrating the dog which tries to get into shape under the impact of observing 2012 Volkswagen Beetle. The developed plot helps to grab the audience’s attention and fix it on the advertisement (Young 2010).

The interest to the advertisement is evoked with references to the unexpected changing of the plot with references to Star Wars’ theme. Moreover, people have the opportunity to concentrate on the presentation of Volkswagen Beetle’s benefits. The audience’s desire to satisfy their interest in Super Bowl and Volkswagen Game Day is stimulated with the help of presenting the commercial’s theme “Back.

And better than ever” (The dog strikes back: 2012 Volkswagen Game Day commercial 2012). It is also possible to speak about the connection between the consumers’ desire to examine the Beetle according to the features accentuated in the advertisement and their further action in relation to the product.

Reference List

Clow, KE & Baack, D 2002, Integrated advertising, promotion, and marketing communications, Prentice Hall, USA.

Dahlen, M, Lange, F, & Smith, T 2009, Marketing communications: a brand narrative approach, Wiley, USA.

Egan, J 2007, Marketing communications, Thomson Learning, USA.

The bark side: 2012 Volkswagen Game Day commercial teaser 2012. Web.

The dog strikes back: 2012 Volkswagen Game Day commercial 2012. Web.

Young, A 2010, Brand media strategy: integrated communications planning in the digital era, Palgrave Macmillan, USA.

Rationale for the Stock

Volkswagen (VW) is among the most attractive companies for long-term investments since it fits the majority of criteria for picking stocks for long-term investments. According to Benzinga Editorial, a company should adhere to six essential principles to be suitable for long-term investments (1). First, VW has a straightforward business model, which includes building vehicles, selling them, and providing after-sales services (Volkswagen AG, 2). Second, the company is among the best in the automobile market, taking second place in the global market share after Toyota (Statista, 3). Third, the company demonstrates a steady increase in revenues during the past three years (Volkswagen AG, 4). Fourth, VW is a large-cap company since it has more than 130 warehouses, 120 production locations, and a sizeable fleet that can respond to any changes in demand (Volkswagen AG, 5). Fifth, the company has a favorable dividend policy, paying €4.80 per ordinary share and €4.86 per preferred share (Volkswagen AG, 6). Finally, the company is recovering after a well-known diesel scandal in 2015, which led to more than $30 billion in losses (Boudette, 7). However, adherence to all the six criteria is not the only reason for picking the stock.

Growing environmental concerns are pushing the governments and provoking the public to support “green” companies. After the diesel scandal, VW has set ecological sustainability as its top priority, and, as a result, it has set the goal to become the world’s largest electric vehicle (EV) producer by 2025 (Matousek, 8). This seems like a rational approach, as the EV market continues growing steadily, while the automobile industry experienced a considerable pullback in 2017 (Bullard, 9). Figure 1 below juxtaposes the graphs of EV sales with all passenger vehicle sales during the past four years. The chart makes it clear that the EV industry is a promising market, and VW is expecting EVs to comprise 40% of its global sales. Considering the reasons listed above, investing in VW seems to be rational in order to preserve and multiply the assets.

Client Description

My client is a 38-year old white male living in the US. He has a wife and two children, and he paid out his real estate mortgage and has considerable savings for a middle-class family. His goal is to save enough for college for both of his children while having an additional source of income. He has a very low risk tolerance and prefers holding his money in a bank rather than investing in a steady-growing company. However, he has a personal interest in cars, and he drives a VW Jetta. He is also an environmental activist and thinks about buying an EV.

Stock Appropriateness

The chosen stock is appropriate for the client since it adheres to his personal preferences. First, the client has a strong association with a brand and is concerned with the environment, which would help him to decide to move his assets from a bank account to stock shares. Second, VW is a low-risk investment, which is vital for the client. Finally, investing in VW shares would help to achieve both of the client’s goals since VW will pay dividends and multiple the investments, as the share price is expected to grow.

Suggested Source List for the Final Assignment

Volkswagen AG. 2019. Volkswagen Annual Report. Web.

Nathaniel Bullard. 2019. China Is Winning the Race to Dominate Electric Cars. Web.

Florian Bart, Christian Eckert, Nadine Gatzert, and Hendrik Scholz. 2017. Spillover Effects from the Volkswagen Emissions Scandal: An Analysis of Stock, Corporate Bond, and Credit Default Swap Markets. Web.

Chnar Abdullah Rashid. 2018. Efficiency of Financial Ratios Analysis for Evaluating Companies’ Liquidity. Web.

Hitesh Bhasin. 2019. SWOT analysis of Volkswagen. Web.

Sources

Benzinga Editorial. 2012. Six Rules to Follow when Picking Stocks. Web.

Volkswagen AG. 2019. Brands and Business Fields. Web.

Statista. 2019. Global Car Market Share of the World’s Largest Automobile OEMs in 2018. Web.

Volkswagen AG. 2019. Income Statement. Web.

Volkswagen AG. 2019. Sales and Marketing. Web.

Volkswagen AG. 2019. Dividend. Web.

Neal E. Boudette. 2017. Volkswagen Sales in U.S. Rebound after Diesel Scandal. Web.

Mark Matousek. 2019. Electric Vehicles are a Tiny Piece of the Global Car Market, but Volkswagen Is Making a Huge Bet on Them. It Doesn’t Have a Choice. Web.

Nathaniel Bullard. 2019. China Is Winning the Race to Dominate Electric Cars. Web.

Volkswagen Company has been using various strategies to expand globally. These strategies include taking opportunity of other companies’ or competitor’s weakness to expand its market share. Despite having its product quality issues, Volkswagen Company in the United States has utilized Toyota’s negative headlines after a series of embarrassing recalls to increase its sales.

Due to this back slide by Toyota Company Volkswagen Company ceased the opportunity and put a target of emerging biggest automobile by 2018. Volkswagen Company has expanded globally through purchasing various motor vehicles companies in the world.

It bought 20 percent stake in Suzuki motor to cover up the emerging market opportunities in India and Southeast Asia. Its current plans include securing stake in BMW, Audi, and SEAT from Spain, Skoda from the Czech Republic and Mercedes in the next three years. Also, it intends to steal customer from Toyota, Honda, Ford, and other companies selling vehicles in American by introducing new styles at affordable prices.

Improving its reputation by making reliable and under priced vehicle than Subaru and Kia is one of its strategies. Volkswagen Company is pushing hard to make its vehicle brands known in Toyota’s strongholds such as south East Asia. Rewarding employees for speaking their minds and rising new ideas is also another strategy used by the company to expand globally.

The latter includes board brainstorming ways to become the world’s biggest automobile makers. Building Volkswagen Company plants in various countries in order to tap those customers opposed to idea of importing cars is another strategy used by Volkswagen Company to expand globally.

There are various specific and general forces in the environment which affects the success of Volkswagen Company strategies. Environmental forces which are political, economic, technological, socio-cultural, and international influence the strategies of Volkswagen Company.

Environmental forces determine the success of this company’s strategies. These forces vary among countries hence influencing the applicability of these strategies in those countries. Negative and unfavorable forces deter Volkswagen Company’s strategies success. Merging of opponent companies has created a strong pricing and market share competition against this company. Natural disaster and war are other environmental forces which negatively affect Volkswagen Company.

Volkswagen Company new initiative of becoming the world’s largest manufacturer of cars by 2018 is advancing on well. In the past few years Volkswagen Company had growth market share and sales proliferation. Although Toyota remains the largest automaker in the world, Volkswagen Company has narrowed the gap and it intents to overtake both General Motors and Toyota Company by 2018.

In effort to gain bigger market share and create public positive image, Volkswagen Company has opened a plant in Chattanooga to cater for the large market in the United States. This was after realizing that many people from the United States did not prefer purchasing imported vehicles, but opted for locally assembled vehicles. This move was also geared to facilitate accessibility of Volkswagen Company’s vehicles such as Audi as compared to Mercedes and BMW.

Also, Volkswagen Company is focused to make its existing brands stronger rather than acquiring more global companies. Volkswagen Company has acquired new markets in China. Studies show that Volkswagen Company sells more vehicles in China than General Motors. In addition, Volkswagen Company has been working relentlessly to acquire new markets in South America, India and Africa.

Introduction

In today’s competitive business environment, it is especially important for organizations to develop and implement strategies that enhance their competitive advantage in the marketplace. Organizational sustainability through the development of core competencies and reassessment of management strategies must rank high on the agenda of management to achieve performance improvement and success in the business arena.

Through a critical analysis of the article ‘Globalizing Volkswagen: Creating Excellence on All Fronts,’ this paper purposes to demonstrate how transformation in VWs organizational structure, systems, HR policies, and corporate culture ensured successful implementation of its strategies.

Organizational Structure

From the article, it is clear that one of the reasons why Volkswagen (VW) financial performance was deteriorating prior to the arrival in 1993 of Ferdinand Piech was an organizational structure that was unresponsive to the needs of competitive business environment. For instance, although VW manufactured 30 vehicle models on 16 platforms, there was minimal integration among the brands, resulting in wastage of human and physical resources (Radler 6).

VW Group had acquired other brand names, including Skoda, Seat, Bentley, and Bugatti, and owned a minority stake in Scania (Radler 7). In total, the Group ran seven brand names, which was rather complicated than previously thought. Piech structured the Group’s operations in such a way that Board members were put in charge of particular brand names, and it worked (Radler 16) Piech saw opportunities in such an expansive organizational structure.

Despite the challenges occasioned by the economies of scale, VW emphasized on keeping the brand names distinct to have the capacity to serve all important car markets with outstanding brands (Radler 11). In essence, the ‘full product range’ approach bore fruits for VW in terms of successful implementation of its strategies.

In the 1990s, VW embraced physical differentiation of its range of products due to the twin reasons of increased price differentiation between products and increased fragmentation of markets (Radler 12).

Again, VW’s huge organizational structure allowed an enabling environment for the physical differentiation, especially in its VW and Audi dealerships, inarguably placing the Group ahead of competition. The differentiation, more than anything else, assisted in arranging and formalizing the many components that existed to provide organizational efficiency and effectiveness (Erickson, 2005). This arrangement ensured successful implementation of VW’s strategies.

Organizational systems

In simple terms, a system can be defined as a collection of parts that are purposely integrated together to accomplish an overall objective (McNamara para. 1). To return to profitability, VW had to transform and rationalize its car production systems to cut back on costly duplication of investment (Radler 8).

The Group adapted the platform approach to car production, leading to shorter design and development times, lower production outlays, and economies of scale. The platform approach made it possible for VW to assume a global manufacturing system which enabled the motor vehicle giant to optimally utilize all of its facilities worldwide and minimize wastage of resources.

The similarity of the platforms was of particular importance to VW since, not only did it allow for shorter lead times in plants, thereby improving flexibility, but it also allowed underutilized plants to request for work from other plants (Radler 9).

All components in a system must be interrelated and work in harmony to achieve the desired outcomes. In this spirit, VW, under the leadership of Piech, undertook to align production and sales (Radler 10). The previous system of production was not viable since it required cars to be produced and stocked for months before they could enter the market in peak season, thereby constraining the much needed working capital.

Under the new system, employees were obliged to work for up to 48 hours weekly during the peak season, and appreciably less during other times. This system paid dividends in terms of increased flexibility, reduced costs, and efficiency of production. The Group also embarked on an ambitious project of enhancing its global sales, especially in North America, Asia, and Europe realizing that manufacturing excellence alone could not drive its business agenda in the competitive automobile industry (Radler 11).

The addition of the financial services arm brought increased business in car financing and diversification of services in other areas beyond car financing. Specifically, VW came up with financial packages aimed to benefit specific groups sharing unique needs such as retail customers, fleet customers, dealer services, and banking services, thereby increasing its profit margins manifold (Radler 14). This venture ensured successful implementation of VW’s strategies.

HR Policies

When Piech assumed the leadership of VW, the Group had an excess 30,000 employees. According to Radler, “…rather than laying them off and sending whole regions in an economic freefall, he [Piech] decided to introduce a four-day workweek…workers had their annual work-time reduced by 20% and received 16% less salary” (15).

It could be said that VW HR policies were favorable to employees and thereby gave them the urge to give their best. When other companies were fighting against employee unions, VW, through the intervention of Piech, advocated for the formation of a global employee council. This proactive approach towards employee interests must have contributed towards the success of VW.

Corporate Culture

Personal responsibility for decisions taken was what transformed VW’s corporate culture. Before the entry of Piech as the Group’s CEO, nobody was assuming responsibility of the failures and dismal financial performance witnessed (Radler 17). To ensure successful implementation of VW’s strategies, such a protectionist approach had to be overhauled and individual brands were required to assume responsibility for their actions.

Second, all top managers were required to convene once a month in secret locations to test their products and exchange ideas, concepts, and new technology trends. It can be said that VW employed an open corporate culture, enabling brand managers to meet and exchange ideas on what worked best and how (Radler 17)¹.

According to Rhodes et al (2004), such a corporate culture encourages creativity and innovativeness – much needed assets in the automobile industry. In addition, it is well known that businesses thrive on new concepts and ideas. VW’s open corporate culture ensured communication of ideas, concepts, and visions in an accurate and objective manner which is critical in ensuring successful implementation of its strategies.

Assessment of Piech’s Management Style

Although he has been called a firebrand CEO, Piech’s management style reflects of someone who is in touch with what is happening on the ground. He is responsive to the needs of employees as long as they deliver to expectations, and is always ready to question, probe and ask for clarity at the plant level. His can be called participative management style as it involves sharing critical information with employees, including involving them in important decision making processes (Buzzle.com para. 2).

At the management level, Piech’s management style can be termed open, precise, and often assertive. He introduced glass offices for managers and board members in an attempt to encourage open communication, and sacked managers who were adamant to respond to his management style (Radler 15). Such managerial authority is needed to streamline the objectives of the organization and ensure that the executives entrusted to champion the company’s growth agenda are pulling in the same direction.

Concerns for Piech’s Successor

The immediate concerns for Piech’s successor would be to consolidate the impressive growth patterns already achieved by engaging cost-cutting measures and entering into new markets. He should also be concerned about building brand teams, processes, and networks of relationships that will be resilient enough to maintain and expand growth. This can only be achieved through developing and implementing processes that the will enable the Group to reap maximum benefits from its core competencies.

Works Cited

Buzzle.com. Participative Management Style. 2010. Web.

Erickson, R. The Importance of Structure in an Organization. 2005. Web.

McNamara, C. Thinking about Organizations as Systems. (n.d.). Web.

Radler, G. Globalizing Volkswagen: Creating Excellence on all Fronts. International Institute for Management. 2003.

Rhodes, J.T., Pitts, S.T., & Kamery, R.H. Creativity in the Workplace: Management’s Responsibility for Positive Communications. Journal of Organizational Culture, Communications, and Conflict. 2004. Web.

Footnotes

¹ “The way we handle our culture is unique. In other car companies, a leading brand or a group streamlines the others. Here, it is an open market. You put your ideas out, and the other brands can accept it or not.” CEO Ferdinand Piech.

Introduction

The budget for the IT initiatives was developed by the parent company. The branch in operation in the US had made a proposal for a total of forty projects which at estimation would require up amount to a tune of $210 million.

It was anticipated that the finances could be provided by the mother company in Germany. A mechanism was put in place and before the funds were released they had to be approved first.

This approving led some of the projects dropped and probably modification made to some. The process of approving which projects were to be dropped, modified and finally funded was quite detailed and involved a number of offices and several representatives from the various project units (Austin, Ritchie & Garrett, 2007).

Control of Budgeting

It is worth noting that the Next Round of Growth (NRG) was controlled by executive officers and representatives from the IT departments. The NRG was required to steer the VWoA to the next level of growth hence the need for close cooperation with various departments.

The presence of an IT representation in the NRG program was meant to assist in ensuring that the IT initiatives were accorded all the necessary support and that significant initiatives were not dropped unnecessarily. There was also the Program Management Office (PMO) which was meant to harmonize the projects and ensure that the prioritization was done in the correct way.

This was very significant as it was a step to ensure that funds were allocated in the right way and to the right projects such that the object of the NRG program could be achieved. Another element that played a significant role on the issue of funding was the Digital Business Council (DBC).

The DBC had representation from the various e-business units. In regard to who controlled the financing of the VWoA, it is clear that a number of people played significant roles in controlling process. All the teams that were involved had significant roles that they played in the funding process.

Who should control the Budget?

I believe that a corporate budget should take into consideration all the units within the corporate body. One way of ensuring that all the units are considered carefully is to carefully make a representation of all the units in the team that will oversee the drawing of the budget.

By having all the units represented in the budgetary control committee or team, it is possible to avoid overlooking aspects which may undermine the productivity of the company. It is worth noting that in times of financial constraints it will be very significance to have the representation of the various departments as it will be possible to practically come up with the lowest amount that a business unit can operate with.

The department unit representative will give the lowest budget estimation under which the department or unit being represented can operate without necessarily affecting the productivity of the whole firm. I believe that such estimations are very good especially during financial hard times when reductions in budget has to be carried out.

By consulting the various heads, it becomes possible for the reduction to be carried out in a manner that will not affect the business units as well as the whole company in general. Therefore, budget control should not be a reserve of the top executives but rather an activity that should be shared by the various heads of a company. Similar ideas have been proposed elsewhere (Blocher, 2005).

IT Budget

As pointed above, there is a need for collaboration when budgetary issues are discussed. In regard to that, it therefore will not be wise that the IT unit should have its own budget per se.

The IT unit should make its own estimation which at all times should be in line with the company objectives but again it should be noted that these estimation should be subjected to modifications under the directions of the IT unit heads in collaboration with the head departments (Budgeting, 2011).

References

Austin, R. D., Ritchie, W., & Garrett, G. (2007). Managing IT priorities. USA: Harvard Business School.

Blocher, E. (2005). Cost management: a strategic emphasis. New York, NY: Prentice Hall.

Budgeting. (2011). Budgeting: Planning for success. Retrieved from https://www.principlesofaccounting.com/

The Sustainable Competitive Advantage of Volkswagen

Rugraff (1) stated that the global automobile industry has been suffering from unsteady competitive advantage for the last three decades due to changing the choice of the customers, market rivalry, outsourcing technological development, a new division of labor and increasing oligopolies nature of global component suppliers that generated new business opportunity and welcomed new entries.

As a result, the automobile industry players looked for their competitive advantages on environmentally friendly technology and their internationalization through intensive investment in abroad while Volkswagen explored its competitive advantages through its expansion in the emerging market with 53% foreign employment and 76% of its revenue generated from foreign sales.

According to the Volkswagen Group (7) the company’s green mobility, eco-friendly production processes, continuous effort to develop resource efficiency, 62 production facilities all over the world, characteristic global labor relations including its brand image and prolonged culture have provided the company with stability and a clear competitive advantage than its competitors.

The company added that the appropriate utilization of competitive advantages provided the company huge opportunity to uphold its ecological principles, brand image, introduction of attractive vehicle models with low emissions targets, strong position in the global market, low fuel consumption, responds to the customers needs, and to fulfill the cost target of the regional customers.

Das Auto (3) added that German-engineering, strong resale values, fuel-efficiency safety, clean technology, carefree maintenance program covered by the total cost of ownership have generated further competitive advantages that provided the customer excellence, operational excellence for all brands, product-excellence with a variety of models, location excellence through local distributors and the customers identified it as a symbol of their dignity.

Growth Strategies of Volkswagen

Volkswagen Group (11) added that its growth strategy has based on gorgeous vehicles that plead the customers all over the world meeting different regional requirements linked with their cost targets through it innovation, quick implication, and improved efficiency with huge brands that facilitated the company at an unparalleled position in the global market.

Here the paper analyzed its growth strategies.

Market Penetration Strategy

Wen (52) pointed out that the market penetration strategy of Volkswagen Group has organized with three different modes, such as, Acquisition and Greenfield, Joint Ventures & Strategic Alliances with the local companies and Foreign Direct Investment in the emerging markets and the company has long evidence to practice all three strategies where they feel appropriate.

At present, the company holds at least seven famous brands and all of the brands have experienced successful acquisition Volkswagen starting from 1964 to 1998, later on, the company has taken cautious measures for further investment and condensed its acquisition activities shifting to the foreign direct investment and strategic alliances through the joint venture.

Market Development Strategy

The Times of India (1) reported that the global giant of Automobile manufacturers Volkswagen is a multinational carmaker in Europe has aimed to turn itself at the top of all automaker by 2018, through its market development strategy to address such challenges.

The marketing team of Volkswagen has focused on the further innovative approach of market development through communications and advertising to all prospective markets.

For instance, Volkswagen in India has introduced itself as a landmark automaker by its digitalized marketing campaign and introduced first talking newspaper using light-sensitive chips, while the readers turned the pages of the newspaper that readers regarding the products of Volkswagen, such digitalization has provided the company huge brand awareness measured at 38% to connect with customers.

Product Development Strategy

The Alternative Mobility Department of the Volkswagen Group has engaged to develop the conceptual framework for strategic product development keeping its close observation to the international and regional market integrating with new technologies, research, market trend and competitors analysis that brings future success by meeting customers demand while the product diversification strategy acts as an integral part of this strategy.

Works Cited

Das Auto. Volkswagen of America Corporate Fleet Sales. 2010. Web.

Rugraff, Eric. The new competitive advantage of automobile manufacturers. 2011. Web.

The Times of India. Marketing Solutions: Volkswagen India Case Study. 2011. Web.

Volkswagen Group. Sustainability Report 2010. Web.

Wen, XiaoFeng. The Investigation of Volkswagen’s Entry Strategy in China’s Car Market. 2007. Web..