Instructions
IV) Internal Analysis
7)Select either the Resource Based View (RBV) or Porter’s Value Chain Analysis (approx. 500-750 words)
A) RBV – discuss how the resources available to the company facilitate the creation of competitive advantage:
● Tangible Resources – Discuss your company’s physical assets, financial assets, technological resources and organizational resources
● Intangible Resources – Discuss your company’s human resources, innovation resources, and reputational resources.
● Organizational Capabilities – What are the company’s competencies in transforming inputs into outputs, and combining tangible and intangible resources? To what extent is the company entrepreneurial? To what extent does it have a capacity for “re-inventing” itself as time goes on?
● Competitive Advantage –To what extent are the company’s resources/capabilities valuable, rare, inimitable, and non-substitutable? What are the implications for competitiveness (e.g. does the company have competitive disadvantage, competitive parity, temporary competitive advantage, or sustainable competitive advantage)?
B) Alternatively, you may conduct Porter’s Value Chain Analysis (focus on discussing how value is created rather than merely listing the company’s assets/activities). Do not conduct both an RBV and a Value Chain Analysis.
● Identify how the company’s primary activities facilitate value creation (adapt Porter’s generic value chain diagram to apply to your specific context).
● Identify how the company’s support activities facilitate value creation.
Solution
Internal Analysis: Volkswagen
Volkswagen Company is a car manufacturer based in Germany, with operations across the world. The firm is also one of the leading automobile companies in the world and the primary car producer in Europe. A Resource-Based View (RBV) provides an analysis of the corporation in order to understand and interpret internal resources that it can use to formulate an effective strategy (Lin & Wu, 2014). Internal resources are inputs that help a business to support its operations. Volkswagen’s RBV shows the tangible and intangible capital, as well as organizational capabilities that it uses to create a sustainable competitive advantage. Although the business has many other interior and outside factors that inform its success, the resources and capabilities are the most important since they are at the core of the busines and can be controlled by the management.
Tangible Resources
Tangible resources are the monetary and physical resources that the company could use to create a competitive advantage. The organization identifies and values them in its financial statements. One of Volkswagen’s tangible resources is the manufacturing plants, such as the nine built in Germany over the years. Some of the plants are situated in proximity to the its headquarters in Wolfsburg. The advantage drawn from the location is the closeness to the Midland Canal and steelworks in Peine and Salzgitter. The corporation also benefits from the central European location due to the availability of steel and other raw materials used in its production operations. Besides the plants in Germany and Europe, the firm has about 70 other production sites and exists in 150 countries around the world, which have made it successful (Volks Wagenag 2018). Over time, the business has maintained a robust financial performance. Regardless of a recent emissions scandal involving some of the corporation’s cars, it has continued to lead in terms of sales revenue and profits in the international automobile industry (Volkswagen Aktiengesellschaft, 2017). The business has substantial financial assets and adequate capital to support its operations.
Intangible Resources
Volkswagen Car Company has numerous intangible resources to support its operations and gain a competitive advantage. The firm has a strong human resource team with diversified skills and abilities in car manufacturing, research and development, as well as sales and marketing, among other specializations. Through research and development, the enterprise has a strong innovative capability. As a result, it manufactures some of the most marketable luxury cars in the world with brands, such as Bently, Lamborhini, Porsche, Bugatti, Audi, SEAT, and Škoda. Through its abilities and resources, the organization can manufacture 26,600 vehicles daily (Brands and Models, 2018). In terms of reputational resources, it faced a major scandal relating to cheating the level of emissions to pass tests in the US. The scandal affected its operations around the world. However, the management implemented remedies, such as recalling the flawed vehicles and firing involved leaders, to help recover their good reputation. Since then, the corporation has been performing well in the market. Another essential resource for the corporation is the ability to expand to the international market, thus creating a strong brand presence. Volkswagen is a well-known brand across the world.
Organizational Capabilities
Volkswagen has essential competencies that it derives from its diverse workforce. Its human capital works in the various departments, including production as well as research and development to transform input, such as raw materials, into output, such as cars and other automobile products, which it presents to the market. The corporation has the innovative capability to blend its tangible (such as capital assets) and intangible resources (such as human resources) to obtain a competitive advantage. The organization is entrepreneurial to the extent that it uses its resources to create products that are profitable in the international market. Besides, the company can “re-invent” itself with time. For example, in 2015, its management had to re-strategize to overcome the negative effect of the emissions scandal (Schmitt, 2017). Such is an example of the way the corporation continues to transform and adapt to changes in the market. As a result, Volkswagen has been able to meet the diverse demands of its global customer base.
Competitive Advantage
The organization has built and maintained a sustainable competitive advantage in the market. The firm’s resources and capabilities are valuable and contribute to its commendable performance. All its resources and capabilities (financial position, technology, product development, research & development, plant & equipment, marketing and sales, and business expansion) are valuable, but only product development is rare. Technology, product development, research & development, as well as plant and equipment are inimitable. The company has used the resources and capabilities to build a competitive advantage in the automobile industry. For example, it uses research and development, technology, product development, as well as plant and equipment to manufacture competitive car brands in the international market. The capabilities have created a reputable brand in the market, which beats the competitors, such as Toyota.
Conclusion
Volkswagen is one of the leading automobiles and car manufacturers in the world. The RBV of the business identifies how its tangible and intangible, as well as its organizational capabilities, contribute to its sustainable competitive advantage. The corporation has retained a significant competitive advantage in Europe and internationally due to its unique approaches to different levels of its operations.
References
Lin, Y., & Wu, L. Y. (2014). Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), 407-413. http://dx.doi.org/10.1016/j.jbusres.2012.12.019
Schmitt, B. (2017). It’s official: Volkswagen is world’s largest automaker in 2016. Or maybe Toyota. Forbes. Retrieved from https://www.forbes.com/sites/bertelschmitt/2017/01/30/its-official-volkswagen-worldslargest-automaker-2016-or-maybe-toyota/#5acd5d876b0b
Brands and Models (2018). Volkswagen. Retrieved from https://www.volkswagenag.com/en/brands-and-models/volkswagen.html Volkswagen Aktiengesellschaft. (2017). Volkswagen Group delivers 10.3 million vehicles in 2016. Retrieved from https://www.volkswagenag.com/en/news/2017/01/VW_Group_deliveries.html
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