Principles of Organization and Management: Volkswagen

1^st August, 2012 was a big day for world automobile industry, when European Automobile Giant Volkswagen AG took over Porsche, another Sports Car Group one of its kind. After long speculations and several attempts of Porsche to swallow the much larger Volkswagen, the takeover finally came off. For those who are not aware, here is a link from Sydney Morning Herald. You can also check this.

So our today’s topic is, I don’t think it needs an intelligent guess J, Volkswagen AG.

Volkswagen, translated to 'People's Car', is one of the leading car manufacturers in the world. The group owns a huge array of prestigious marque brands including Audi, Bentley, Bugatti, Ducati, Lamborghini, SEAT, Porsche, Giugiaro, 19.9% of Suzuki and Škoda marques and the truck manufacturer Scania. In this post, we shall look back in its history, have glimpses of its journey and will also talk about its present structure and position. Welcome to the ride !

History:

28 May, 1937 - the company was founded by the Nazi trade union, the German Labour Front. The purpose of the company was to manufacture the Volkswagen car, originally referred to as the Porsche Type 60, and later better known as the Volkswagen Beetle. During World War II the Volkswagen plant near Fallersleben primarily manufactured the military vehicles. Only a small number of Type 60 Volkswagens were made during this time period. The plant also manufactured the V-1 flying bomb, also known as the "Buzz Bomb" or "Doodlebug", making the plant a major bombing target for the Allied forces. Much of the workforce at the plant was slave labor, primarily from eastern Europe.

After the war in Europe, the British took charge of the bomb-shattered company. In 1948, the British Government handed the company back over to the German state, where it was managed by former-Opel chief Heinrich Nordhoff.

Production of the Type 60 Volkswagen (re-designated Type 1) started slowly after the war due to the need to rebuild the plant and because of the lack of raw materials, but production grew rapidly in the 1950s and 1960s. The company began introducing new models based on the Type 1, all with the same basic air-cooled, rear-engine, rear-drive platform. These included the Volkswagen Type 2 in 1950, the Volkswagen Karmann Ghia in 1955, the Volkswagen Type 3 in 1961, the Volkswagen Type 4 in 1968, and the Volkswagen Type 181 in 1969.

On 1 January 1965, Volkswagenwerk acquired Auto Union GmbH from its parent company Daimler-Benz. The new subsidiary went on to produce the Audi models, the Audi F103 series, shortly afterwards. From the late 1970s to 1992, the acronym V.A.G was used by Volkswagen AG as a brand for group-wide activities, such as distribution and leasing.

On 30 September 1982, Volkswagenwerk made its first step expanding outside of Germany by signing a co-operation agreement with the Spanish car manufacturer SEAT and gradually went on to increase its stake it the latter. 4 July 1985, the company name was changed to Volkswagen AG to indicate its increasingly global nature.

In 1991 another step to the expansion of the group's activities was made through the signing of a joint venture partnership agreement with Škoda automobilová a.s. of Czechoslovakia. In 1998, three prestige automotive marques were added to the Volkswagen portfolio: Bentley, Lamborghini and Bugatti.

Porsche and Volkswagen shared an old relation. In December 2009, Volkswagen AG bought a 49.9% stake in the former. through a long tug-of-war between the two parties, Volkswagen finally managed to hold the upper hand.

Another significant feat includes purchasing 19.9% of Suzuki Motor Corporation's issued shares on 15 January 2010.

Vision and Mission Statement:

Volkswagen brand vision is to become a most innovative high volume manufacturer offering the best quality in the respective class.

The internal mission statement of the group is not available to the public. However, on November 25, 2010 – the Group agreed to a "mission statement for responsible actions in business. It serves as a national mission for the group and focuses the Volkswagen leaders on the benefits of responsible business to consumers.

The six principles of this shared mission statement are:

Business must serve the good of the people.
Business that serves the good of the people requires competition.
Business that serves the good of the people is based on merit.
Business that serves the good of the people takes place globally.
Business that serves the good of the people must be sustainable.
Business that serves the good of the people demands responsible.

Awards and recognitions:

Volkswagen Group have won 3 World car of the year awards:

2009 - Volkswagen Golf

2011 - Volkswagen Polo

2012 - Volkswagen Up!

The Group have also produced four European Car of the Year winners:

1973 – Audi 80

1983 – Audi 100

1992 – Volkswagen Golf

2010 – Volkswagen Polo

Products:

The Products can be subdivided into three categories:

Original Marque - Volkswagen Passenger Cars

Major subsidiaries – Audi,Bentley, Bugatti, Lamborghini,Porsche, SEAT and Škoda

Volkswagen Commercial Vehicles – Swedish truck, Scania AB, MAN SE

From 2002 up to 2007, the Volkswagen Group's automotive division was restructured so that two major Brand Groups with differentiated profile would be formed,

- Audi Brand Group focused on more sporty values – consisted of Audi, SEAT and Lamborghini

- Volkswagen Brand Group on the field of classic values – consisted of Volkswagen, Skoda, Bentley and Bugatti – with each Brand Group's product vehicles and performance being respectively under the higher responsibility of Audi and Volkswagen brands.

Plants:

The group has 94 production plants in 18 European countries and a further eight countries in the Americas, Asia and Africa. It is the third largest automaker in the world. It produces 34,500 vehicles per day on an average. The group has a workforce of 501,956 employees as of 31 December, 2011.

Distribution of Plants:

Europe – 58

Asia – 11 (in India, Pune and Aurangabad)

North America – 3

South America – 9

Africa - 3

Organizational Structure:

Volkswagen AG and the Volkswagen Group are managed by the Volkswagen AG Board of Management in accordance with the Volkswagen AG Articles of Association and the rules of procedure for the Volkswagen AG Board of Management issued by the Supervisory Board. Within the framework laid down by law, the Group Board of Management ensures that Group interests are taken into account in decisions relating to the Group’s brands and companies. This body consists of Board members and selected top managers with Group management functions.

Each brand in the Volkswagen Group is managed by a senior brand manager. The Group targets and requirements laid down by the Board of Management of Volkswagen AG or the Group Board of Management must be complied with in accordance with the applicable legal framework. Matters that are of importance to the Group as a whole are submitted to the Group Board of Management for approval. The rights and obligations of the statutory supervisory bodies of the relevant brand companies remain unaffected.

The companies of the Volkswagen Group are managed separately by their respective managements. In addition to the interests of their own companies, each individual company management takes into account the interests of the Group and of individual brands in accordance with the framework laid down by law.

The Board of Management of Volkswagen AG comprises of eight members

Chairman – Dr. Martin Winterkorn

Other Members –

Dr. Francisco Javier Garcia Sanz

Prof. Jochem Heizmann

Christian Klingler

Dr. Michael Macht

Prof. Horst Neumann

Hans Dieter Pötsch

Rupert Stadler

The Supervisory Board headed by Chairman Dr. Ferdinand K. Piëch has 20 members.

You can follow this link to get a better view of the management structure.

Financial position:

Highlights:

gross cash flow in the reporting period amounted to €18.9 billion, €3.3 billion more than in the previous year
Cash flows from operating activities declined to €8.5 billion from €11.5 billion

Net Assets:

At €253.6 billion, 27.2% higher than in the previous year, driven by organic growth in the Automotive Division, the acquisition of Porsche Holding Salzburg and the consolidation of MAN.

Sales and market share:

1st in Europe as per unit production
3rd in the world

Social Initiatives:

Social involvement constitutes a key element of the Group’s entrepreneurial activities

Following are some of the activities conducted all over the world:

Volkswagen Community Trust
A Chance to Play
Rally to Road
Vocational Programmes
Green Future Environment
A Seventh Sense
Green City, Green Life
Project Nature etc.

You can find more about it from this link.

Well, it is a long post indeed :) But hope you enjoyed it. Do share your feedback. and, of course I would like to acknowledge the contribution of the following sites in providing me with adequate information regarding the post:

You can refer to them as well for more information.

So have a great time. Happy learning !!!

Principles of Organization and Management

Wednesday 8 August 2012

Volkswagen - A Chronicle

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