SWOT Analysis of Volkswagen
Volkswagen SWOT analysis covers the strengths, weaknesses, opportunities and threats. The strengths and weaknesses are internal whereas opportunities are threats are external to company.
Strengths
• Volkswagen has a strong global presence i.e. currently operating in 153 countries worldwide and it was known to be the third biggest auto manufacturer industry in 2012.
• The company has a strong diversified portfolio. The brand owns and sells about 13 automotive brands like Audi, Bentley etc. By providing a wide portfolio the brand has catered the needs of all types of customers.
• Volkswagen is one of the oldest car manufacturers and still has a strong rapid growth in the market.
• The company has a strong R & D and engineering and possesses the efficient automation and production capabilities to keep itself on the growing pace in the global market.
• Volkswagen has the strongest market share in China, where the company has captured nearly 20% of the market share through its Audi and other Volkswagen brands.
• Audi has proved to be the well performing brand for the Volkswagen group which is currently valued at $7 billion.
• The brand has 350,000 employees all across the globe.
Weaknesses
• Volkswagen has a limited presence in the emerging market while its competitors have already established themselves.
• The brand has a weak positioning in the US passenger car market. In 2012, the brand had only 5% of market share. The United States is considered to be the second largest automotive industry in the world and due to Volkswagen’s weak market position in the country this has consequently lowered the company‘s sales in the US market.
• The most products of Volkswagen are not environmental friendly. The three sports cars of the company i.e. Porsche, Lamborghini and Bugatti emits high amount of C02 and are also fuel inefficient.
• The company has not been able to make a strong brand presence like GM and Toyota.
Opportunities
• The company can also implement various innovative cars in order to differentiate itself from the competitors.
• Entry into the emerging markets by offering attractive product features can help to engage the right market segment.
• The increase in purchasing power of the people can also be an advantage for the company.
• The company can produce cars that emit less CO2 and therefore can become environmental friendly.
• In order to continue its growth in the market and get a vital access in the US, the company should consider acquiring the competitors in the future.
Threats
• Due to fluctuation in fuel prices, the company’s investment in hybrid and electric cars could become huge losses, whereas when the fuel prices increase the Volkswagen models can be less attractive to the cost conscious customers who demand smaller cars that consume less amount of fuel.
• The rise in raw material prices can lift the costs of auto manufacturers resulting in lower profits for the company.
• Volkswagen earns 70% of its business outside the euro zone and a certain fluctuation in the exchange rate can reduce the company’s profit if the euro value appreciates against the other currencies.
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