Volkswagen S Financial Performance and Culture Essay

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Volkswagen's Performance And Organizational Structure

Volkswagen's growth over the past three decades has been a roller coaster characterized by numerous ups and downs. In 2002, the company hired Bernd Pischetsrieder, the former BMW boss to help fix its problems. While the new boss developed strategies towards promoting Volkswagen's growth, the well established plans usually go astray. The company's poor performance is evident in the fact that is share price has decline with approximately 50% whereas its profits decreased by 36%. In addition, more than 50% of Volkswagen's 100 managers are not used to making decisions on their own. This is an indication of the huge problems at Volkswagen, which also requires changes in its organizational structure.

Volkswagen's Recent Performance

The decline in the company's share price and profits as well as a seemingly ineffective organizational structure at Volkswagen is an indication of the numerous problems it currently faces across all its operations. First, the firm's customers have decided that it would have to add more value to their money if they have to retain loyalty. This is influenced by the fact that Volkswagen has traditionally charged more for its products due to innovation, quality, and an indirect lifetime guarantee. The other factors include loss of competitive advantage to GM, declined sales in China's booming market, ineffective cost-cutting measures, and labor pains.

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In the past few years, Volkswagen has experienced fortunes and misfortunes in its growth and productivity. According to Team (2014), Volkswagen experienced an increase in production by 4.2% i.e. 10.14 million cars though this was still lower than the 10.23 million cars sold by Toyota. The firm's own-branded passenger vehicle also experienced slight growth and accounted for a huge 60% of all volumes sold by Volkswagen during this financial year. This represented 1.6% growth, which slowed down the company's profitability, though demonstrated its recent growth as compared to the previous years. Despite being seemingly unable to gain from the increase in automotive demand in the United States since 2006, the company registered some gains on positive currency translations. These slight gains emerged from the fact that the U.S. dollar was appreciating against the euro. Over the last two to three years, Volkswagen slightly growth has been brought by an increase in sales for its luxury divisions i.e. Bentley, Audi, and Porsche. These divisions have not only accounted for 40% of net revenues but also resulted in nearly 75% of Volkswagen's net operating profits (Team, 2014).

However, the misfortunes during this period include declined growth characterized by declining share price. In the United States,….....

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