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A Comparison of the Operations Strategy of Volkswagen, BMW, Porsche

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Executive Summary

This paper presents a comparison of the operations strategies of Volkswagen, Porsche and the BMW companies. Operations strategy is vital for any company that aims at surviving in the business environment. This results from the fact that the present-day market is continually changing and resource availability as well. Through the operations strategy, business executives embrace the fact that all aspects of the business environment are interrelated. This means that business executives have to ensure that they scrutinize all aspects of the business to assess where the company strengths lie. If a company sacrifices some facets of its operation, it would probably be creating a way to succeed. Focusing on operations means that the future of the company is evaluated. The objectives and aims of the company can also be achieved in the process.

A Comparison of the Operations Strategy of Volkswagen, BMW, Porsche 

A Comparison of the Operations Strategy of Volkswagen, BMW and Porsche

Introduction 

Volkswagen, Porsche and the BMW companies are leading car manufacturing companies in the globe today. These companies have set operating strategies that have aided in the success of the companies. This paper presents a comparison of the three companies’ operations strategies in an attempt to assess their contribution to the continued existence of the companies. 

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The Operations Strategy and the critical Operational Performance Objectives of Volkswagen, BMW and Porsche

  • The Operations Strategy and the critical Operational Performance Objectives of Volkswagen

As seen in the research conducted by Schmidt (2008), it is valid to argue that the operation strategy of Volkswagen has been changing with time. These changes have been witnessed in product specification and service delivery, marketing of the products and services and marketing its operation. In terms of making huge savings, it is evident that VW Company has sought to share its platform to save as much as expected in manufacturing its cars. Schmidt (2008) indicates that VW renovated its platform sharing approach that has seen the company save about 1,000 dm forever car assembled. This is to mean that the company is a notch higher in terms of savings. Automatically, this will keep the company running due to a reduction in the costs incurred in manufacturing.  

On another viewpoint, VW’s operations strategy has sought to ensure that the company engages in combined productions. According to Schmidt (2008), these joint productions will not aim to produce vehicles of the same sizes and models but will see the manufacturing of cars with various components in their many brands. Economies of balances come into play in this context, as the company focuses on making considerable savings in the course of production and manufacturing car brands that will suit the needs of different clients (Volkswagen, 2013).  

The company’s strategy also aims at adopting eleven module systems as opposed to the existing four. Through this strategy, the company seeks to higher returns on investment. From Schmidt’s (2008) work, this strategy has seen expanding VW’s profit margins from car sales. Additionally, vehicle servicing, financial services, and new cars’ production are yet other approaches targeted by the company.  

The work of Marsh (2012) indicates that the VW Company unveiled its fourth grand plan that would see the car manufacturing architecture based on the seat casing, engines and transmission packages improved. The wheelbases and track widths were to be reproduced, and the inner pressings rebranded (Marsh, 2012). This means that the company will have better products for its clients and have minimal time for repair. This platform strategy will automatically ensure that the economies of scale are attained regarding the costs incurred. 

For the company’s future, Volkswagen’s (2013) annual report indicates that the company plans to investigate the customer response regarding its products by 2018. This will lead to an improved model of satisfying its clients based on their feedback. The report also recounts that the company is on the move to hire the most competent human resource that can fit the company’s production (Volkswagen, 2013). 

The above analysis warranted that the Volkswagen operations strategy focuses on propelling the company forward and ensuring its survival in the industry, even with the tough times in the market

Operating profit

The above graph gives a logical explanation of the profits of the Volkswagen Company. The figures have escalated greatly till 2014.

  • The Operations Strategy and the Critical Operational Performance Objectives of BMW

The case of BMW is no different. As seen in BMW Group’s (2012) compilation, BMW has continually re-formulated its strategy to fit in the constantly changing global market. With the economic uncertainties, BMW has sought to boost its profits and enhance its value by adopting changes that will survive. Among the company’s changes include structural and technological changes that will aim to focus on the pillars of profitability, technology access, client satisfaction, and determining its future (BMW Group, 2012). BMW Group (2012) also indicates that BMW focuses on its premium segments to remain the world’s leading provider of premiums products and services for its clients. 

On the contrary, BMW has adopted a sustainability management approach. BMW Group (2012) indicates that BMW has taken up leveraging novel business opportunities and overcoming business challenges. Through sustainability management, BMW has managed to deal with the scarcity of resources and climate change. By 2020, the company aims at being the leader of premium products (BMW Group, 2012). Besides the sustainability aspect, BMW has sought to train its workforce so as their capability can be augmented. Through workforce awareness, the occupational ability and training programs will be of quality. 

The stakeholders have also not been left out in the operations strategy of the company. BMW Group (2012) reports that BMW has continually engaged in dialogue with its stakeholders to identify the trends, which will lead to the realization of its current activities and resolutions. Among the stakeholders involve the media, the capital markets, NGOs, amongst others. Through the stakeholder engagement, the company has managed to determine its targets and prioritize its stakeholder investment (BMW Group, 2012). Among the company’s fundamental principles include growth, profitability, influencing its future, and its customers (BMW Group, 2012). These principles are in tandem with those of Volkswagen. 

  • The Operations Strategy and the critical Operational Performance Objectives of Porsche 

Just like BMW and Volkswagen, Porsche’s strategy focuses on its clients. Additionally, Porsche has attempted to adopt growth as one of its fundamental principles. Through this approach, Porsche’s management has invested deeply in the innovative technology that led to the creation of new products and imparting skills in its workforce. From this assessment, BMW and Volkswagen also follow a similar trend. 

Studies conducted by Porsche (2014) indicate that the company aims to expand its infrastructure by focusing on its workforce by the yearv2018. This explains that the Porsche Company is directed at improving its processes and ensuring its returns remain standard. Porsche (2014) argues that the Porsche Company has what is required to exist in the market. Among the strategic goals involve targeting the emerging markets, employing qualified staff and producing fast class vehicles (Porsche, 2014). 

The double-digit expansion has been witnessed in Porsche thanks to the operations strategy in the company. As opposed to the earlier discussed companies, Porsche focused on the design of higher deliveries. With this strategy in place, Porsche has increased its deliveries three times more since 2011 (Porsche, 2014). The higher deliveries approach has also been linked with the production of new models that suit its high clientele base’s needs. The quality of engines and car designs has also led to a boost in the delivery of these vehicles worldwide. For instance, in the US, Porsche has continued to accrue profits from its large market (Porsche, 2012).

In terms of the future’s strategic objectives, Porsche has the aim of designing the best sporty product that will sell throughout this year. If this ensues, it is apparent that the company will have high profits instead of Volkswagen and BMW. The company insists that its production team will be set to deal with the demand for its sporty vehicle (Porsche, 2012).

Based on the strategic operations, the Porsche Company’s expected results are to increase the number of its sales that will lead to an increase in its revenue. Porsche (2012) indicates that the company is burdened by considerable expenses in its production and improving its existing brands. The cost of management is high, but still the company attempts to have huge sales on its operations. The profits that stood at 27% increase from 2012 are likely to increase with the present innovations (Porsche, 2012). 

Sporty Car Sales and Premium Sporty Car Sales in America

The chart indicates that Porsche has a huge liking as the best luxury vehicle in 2011.

Figure 2: Retrieved from: Cain, T., 2011.  Sporty Car Sales and Premium Sporty Car Sales in America – April 2011. Good Car Bad Car 9th May, 2011.

Conclusion

Conclusively, the paper has attempted to focus on Volkswagen, Porsche, and BMW car companies’ strategic operations. From work, it is valid to argue that the three companies operate on three common aspects- profitability, focus on its clients and adopting technology that will steer its operations forward. However, BMW and Porsche adopted a different approach. BMW focused on sustainability management, while Porsche is more detailed on the kind of products they aim at producing and how they will venture into the market. However, it is worth appreciating the place of strategic operations in these companies. It has helped them venture the markets and face the concerns that face them in terms of surviving with the present-day market’s constraints. The three companies indeed have a bright future ahead. 

References;
  • BMW Group, 2012. Adding Value Sustainable Value Report 2012. Munich: Bayerische motoren Werke Aktiengesellschaft.
  • BMW Group. 2012. Company Portrait. Strategy. Retrieved from: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.html
  • Cain, T., 2011.  Sporty Car Sales And Premium Sporty Car Sales In America – April 2011. Good Car Bad Car 9th May, 2011.
  • Marsh, A., 2012.Volkswagen Group next generation platform strategy is complete. Auto Industry Insider, 2nd February, 2012.
  • Porsche. (2012). Annual report 2012. Retrieved from: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2013/03/Porsche_Annual_Report_2012.bin.html/binarystorageitem/file/Porsche-Download_e.pdf Porsche. 2014. Strategy. Retrieved from: http://www.porsche.com/uk/aboutporsche/overview/strategy2018/
  • Schmidt, G., 2008. The Changing Structure of the Automotive Industry and the Post-Lean Paradigm in Europe: Comparisons with Asian Business Practices. Tokyo: Kyushu University Press.
  • Volkswagen. 2013. Key Figures. Retrieved from:http://www.volkswagenag.com/content/vwcorp/content/en/the_group/key_figures.html#field1=maincategory_4_5
  • Volkswagen. 2013. Strategy. Group Strategy 2018. Retrieved from: http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.html

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