3 - Jacobs University

write that ”countries such as India and China face shortages of suitably qualified and skilled employees
for MNCs [multinational corporations] and local enterprises alike” (p. 311). For that
reason it is difficult to recruit locally the necessary managerial force, which has the qualification
to operate in these new environments (Scullion et al., 2007). Scullion et al. (2007) argue that
such deficiencies generate ”a growing demand for expatriate employees” (p. 314) in the emerging
markets. Furthermore, the authors write that it is difficult to persuade experts to transfer to these
regions, and even when this happens, very often due to cultural differences these experts do not
necessarily possess the required skills to manage in the new region (Scullion et al., 2007). At the
same time high growth in emerging economies and the specifics of the market situation offer a lot
of opportunities for career jumps. Very often companies in these markets face exceptionally high
levels of employee turnover, which in turn inhibits the corporate learning process and makes proper
knowledge management difficult to achieve. This leads to the conclusion that during quality audits
in such regions it is especially important to put special emphasis on the personnel qualification and
knowledge management of the suppliers.
All these factors have negative influence on the quality capability of the individual suppliers
which operate in these regions and especially on its sustainability. A number of re-qualification
quality audits conducted by Volkswagen Group in 2010 in regions such as India and China revealed
that the quality capability of their local business partners can drastically change for the
worse just within several months 4 . In many of the cases the principal causes for the rapid decline
in suppliers’ quality capability were related to production volume increases and high personnel
fluctuations. Given the fact that emerging markets are especially important for the growth of automotive
corporations and for sustaining their business, the quality assurance policies and especially
the employment of quality management tools such as supplier quality auditing need to pay special
attention and adequately respond to risks specific to growing markets.
4.2 Rising Development Costs
The next aspect of the automotive business which is relevant for quality auditing are rising development
costs and the production approaches which automotive producers employ to reduce them.
To cope with business challenges specific for the different regions it is essential for automotive
producers to establish a product portfolio, which adequately captures the abundance of customer
requirements. It is no longer sufficient to offer just a few models rather it is important to have a
4 Source: personal communication with Volkswagen AG employees.
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