Resources, Competitive Advantage And Internationalisation Strategies Of Global FirmsEssay Preview: Resources, Competitive Advantage And Internationalisation Strategies Of Global FirmsReport this essayTable of ContentsIntroductionЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎ1Resources Audit of VolkswagenЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎ.ЎЎ..ЎЎ..2Strategy Analysis-Country SelectionЎЎЎЎЎЎЎЎЎЎЎЎЎЎ.ЎЎЎЎЎ.7ConclusionЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎ.ЎЎЎ.Ў..10ReferencesЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎЎ11IntroductionThe resource-based perspective regards the organisation as a heterogeneous bundle of resources and organisational capabilities that may enable the firms to deploy its resources more efficiently than rivals. In order to stand out in todayЎЇs fiercely competitive and globalised market, firms must dynamically manage their unique resources and capabilities to achieve competitive advantage. Therefore, the performances and the decision-making processes of firms are primarily driven by their unique resources and capabilities. In the intensely competitive automobile industry, there must be resources and capabilities specific to Volkswagen that permit them to product at lower cost in relation to other business with inferior resources and capabilities in the same industry.
In this essay, I will first examine the various resources of Volkswagen, including both tangible and intangible resources, to identify the core competences of the company. Following, I will identify VolkswagenЎЇs capabilities, as a resource of competitive advantage, that differ from the others to make themselves consistently outperform the industry average, and how sustainable is their competitive position. In the second part of this essay, I will discuss how managers in Volkswagen making decisions of selecting China to expand with their distinctive resources and capabilities.
Resources Audit of VolkswagenBarney (1991, p101) define resources of organisations ÐŽoinclude all assets, capabilities, organisational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectivenessÐŽ±. A resource refers to an asset or input to production (tangible and intangible) that an organisation owns, controls, or has access to. An organisationЎЇs resources may be classified under a few categories, for example physical, technical, financial, human and intellectual resources (Johnson et al., 2005).
Volkswagen gains competitive advantage through its superior physical resources. According to VolkswagenЎЇs report, the Group operates 47 production plants in eleven European countries and a further seven countries in the America, Asia and Africa (Volkswagen, 2006). The nature of these plant and machines, such as the age, condition and location of each resource, will determine the usefulness of such resources. However, the value of the physical resources will depreciate over time, either through physical depreciation, obsolescence or changes in the demand for the resources in question.
Another source of competitive advantage of Volkswagen is financial resource. According to figure 1, as of September 30, 2006, the largest proportion of subscribed capital of Volkswagen was held by foreign institutional investors, and German institutions only held approximately 10% of the total shares. International capital markets are important for the funding strategy of Volkswagen as they provide liquidity at favourable conditions.
Figure 1. Proportion of subscribed capitalFurthermore, the technical resources in Volkswagen also play an important role in helping the organisation to achieve competitive advantage. Volkswagen has launched a diversified range of models with high quality standards and customer benefits form the vehicles, including Skoda, Bentley, Bugatti, Audi, SEAT, Lamborghini and commercial cars. The modular strategy implemented by Volkswagen enables it to manufacture diversified products at competitive costs, thereby allowing it to maintain the individuality of the models.
Moreover, employeesЎЇ knowledge and expertise are a key factor contributing to the development of Volkswagen. In the Volkswagen Group, more than 343,000 employees produce over 21,500 vehicles or are involved in vehicle-related services on every working day around the world. And most of them are highly educated, 64.8% of employees held vocational qualification in an area relevant to Volkswagen, while 11.2% were graduates (Volkswagen, 2006). In 2005, Volkswagen secured 1,340 patents, of which 1.024 were in Germany and 316 abroad. The large number of patent applications indicates the highly innovative nature of the employees. In the past 8 years, Volkswagen have progressed form the old classic training approach in the direction of integrated personnel development. This comprises, in addition to specialist training, in particular cross-functional and social skills, including interpersonal, teamwork and communication skills.
The Volkswagen Group is committed to producing an inclusive and open-minded community of employees, as part of its business strategy. For Volkswagen, the vision is to promote a collaborative, and inclusive, culture. Volkswagen leadership and management will play an integral role in driving this vision.
A positive example of their strategic, collaborative approach may be the initiative to create a global platform for sharing knowledge and expertise: The Volkswagen Group aims to make a platform for sharing knowledge, technology and leadership. The idea is to generate jobs in a place where individuals and firms are committed to finding and maintaining leaders who bring together a wide range of expertise, technology and people of different interests. The company has the following objectives: to increase the level of innovation and the efficiency of its operations: expand its global reach through its global network of headquarters: to expand its online platform for learning: develop new and innovative skills for its customers: implement a more efficient management system and more efficiently develop new business models, and to improve and expand its team: strengthen its global reach: encourage the creation of a European market: improve the driving force of Volkswagen across a wide range of sectors: increase its competitive edge with other car manufacturers: create global trade links and bring the company into the global automotive industry. The company also aims closely to help the European regulatory regime enhance and promote compliance with those requirements of the European Commission. To develop policies and programs which will facilitate the adoption, implementation and acceptance of the Volkswagen Brand, and promote this initiative the company will implement: • a policy framework. Under this policy framework, Volkswagen will establish a standard for its cars on its vehicles fleet and be required to provide vehicles to the EU (and international consumers in particular) on a set of products that are available to all countries on their fleet. • a mechanism to encourage the participation of more than 20,000 members of the global workforce and businesses. • a policy agenda. Over 10,000 of the 5.03 billion Volkswagen business units (EBAYs) (including approximately 1.7 billion European industry units and 4.7 billion automotive companies and dealers ) are located in seven countries; these countries are China, India, Russia, Brazil, Germany, and South Africa, as well as Japan, South Korea, the United Kingdom, and other emerging markets.
The Volkswagen Group also aims to strengthen the European market with partnerships with industry, research, development, and logistics partners, in particular to promote employment by German companies and international consumers. In addition, the company will promote access for more than 600 new job opportunities for new VW hires to reach the highest level possible in the automotive industry, and to improve in-house training that is widely available. The company is also committed to providing leadership to create a more inclusive, open-minded, and open-minded environment within it by facilitating a better ability of young German staff to interact with a wider variety of work activities at its local factories, as well as by facilitating the development of skills in the field of transportation.
By following this leadership program, Volkswagen will also strengthen its overall business prospects in the European market by increasing its ability to compete with other car makers in the market for global markets.
Budget 2016, Operating Expenses
Total Operating Expenses $2,086 $13,853 $13,500 $3,240 1,959 7,936 $9,092 $6,370 Expenses, net 1,959 1,811
Aircraft:
Operating Expenses 1,094 1,859 1,811 1,811 2,111 2,100 Other:
Maintenance and repair expenses 1,929 1,866 1,9
Additionally, the innovation projects of Volkswagen make it more competitive than the others in the industry. Volkswagen is taking various approaches to reducing fuel consumption and emission levels as response to the tough emission standards and rising oil prices. Volkswagen researchers are working on a new diesel Combined Combustion System, along with the low-consumption TSI generation of engines (Volkswagen, 2006). Volkswagen also uses high-strength steel to significantly reduce the vehicle weight. Finally, Volkswagen has a good reputation around the world. It has developed drive-assistance systems, which increase vehicle security and reduce accidents.
Among all these resources, innovation seems one of the core competences of Volkswagen. This is because innovation provides Volkswagen with potential access to wide variety of markets and makes a significant contribution to the benefits of the product, such as the driver-assistance systems developed by the Volkswagen researchers. And also,