The Investigation of Volkswagen's Entry Strategy in China's Car Market

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MA MANAGEMENT DISSERTATION XIAOFENG WEN Chart 4.22-1: The Global Geography of VW Source: SMMT (2001) World Automotive Statistics However, look through the development history of VW, it has passed three phases in its international strategy, they are Distribution oriented multinational company, Production-oriented multinational company, and globally operating transitional company. (See Table 4.22-2) The following part will briefly introduce the organizational changes happened during the three phases under three dimensions, namely, corporate governance and profit strategies, product structure and market strategies, and production systems. - 47 -
MA MANAGEMENT DISSERTATION XIAOFENG WEN Table 4.22-2: Three phases of VW’s International Profile Source: Pries, L (2001). Accelerating from a Multinational to a Transnational Carmaker 1. Distribution oriented multinational company: It can be started from the 1940s to the 1967, the VW Company tried to open a few production facilities out of Germany, which include Canada, the USA and France, the prime strategy was enter these big markets to get the market share and acquire cheaper labor. However, due to the lack link between foreign companies and the headquarters, the foreign factories were still using older methods and producing older models cars compared with the center plant for the national markets and they have relatively high autonomy from the headquarters. 2. Production-oriented multinational company: During the period from 1967 to 1990, the VW group changed their production network, it is a heart-stirring changing in VW’s history, because the company plants were redefined in a transnational division of labor, the periphery plants were increasingly integrated into a global division of production, not only produces the older models than the center plants. Although the product structure and market strategies was still in center-periphery figure, the peripheral plants sill produced and sold older models, the gap of models closed slowly, and they gained an important role in the overall transnational division - 48 -
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The Investigation of Volkswagen's Entry Strategy in China's Car Market

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