strategic-management

includes such models such as Passat (trade wind), Jetta
(jet stream), Rabbit, and Fox. VW also owns several
luxury carmakers, including AUDI, Lamborghini, Bentley,
and Bugatti. Other VW makes include SEAT (family cars,
Spain) and SKODA (family cars, the Czech Republic).
VW operates plants in Africa, the Americas, Asia/Pacific,
and Europe. VW holds 68 percent of the voting rights in
Swedish truck maker Scania and about 30 percent of
MAN AG. VW also offers consumer financing.
VW is acquiring Porsche Automobil Holding SE and
merging their auto brands into VW. Based in Stuttgart,
Germany, Porsche already owns 51 percent of VW but
has weakened in 2009 after taking on $12 billion in
new debt.
VW is in talks with China’s BYD Co. to build hybrid
and electric vehicles powered by lithium batteries.
Based in Shenzhen, BYD will supply VW with the battery
Long-Term Objectives
Long-term objectives represent the results expected from pursuing certain strategies.
Strategies represent the actions to be taken to accomplish long-term objectives.
The time frame for objectives and strategies should be consistent, usually from two to
five years.
The Nature of Long-Term Objectives
Objectives should be quantitative, measurable, realistic, understandable, challenging, hierarchical,
obtainable, and congruent among organizational units. Each objective should also
be associated with a timeline. Objectives are commonly stated in terms such as growth in
assets, growth in sales, profitability, market share, degree and nature of diversification,
degree and nature of vertical integration, earnings per share, and social responsibility.
Clearly established objectives offer many benefits. They provide direction, allow synergy,
aid in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate
exertion, and aid in both the allocation of resources and the design of jobs. Objectives provide
a basis for consistent decision making by managers whose values and attitudes differ.
Objectives serve as standards by which individuals, groups, departments, divisions, and
entire organizations can be evaluated.
Long-term objectives are needed at the corporate, divisional, and functional levels of
an organization. They are an important measure of managerial performance. Many practitioners
and academicians attribute a significant part of U.S. industry’s competitive decline
to the short-term, rather than long-term, strategy orientation of managers in the United
States. Arthur D. Little argues that bonuses or merit pay for managers today must be based
to a greater extent on long-term objectives and strategies. A general framework for relating
objectives to performance evaluation is provided in Table 5-1. A particular organization
could tailor these guidelines to meet its own needs, but incentives should be attached to
both long-term and annual objectives.
Without long-term objectives, an organization would drift aimlessly toward
some unknown end. It is hard to imagine an organization or individual being successful
without clear objectives (see Tables 5-2 and 5-3). Success only rarely occurs by
accident; rather, it is the result of hard work directed toward achieving certain
objectives.
CHAPTER 5 • STRATEGIES IN ACTION 133
technology. This will be the first automotive partner for
BYD, which is one of the world’s largest suppliers of cell
phone batteries.
VW is building a new assembly plant in Indonesia
for $47 million about 1 hour east of Jakarta, the capital.
This plant will assemble the Touran and employ about
3,000 persons. Toyota already has a manufacturing
plant in Indonesia and dominates that market. Currently
many VW vehicles are imported into Indonesia, thus
being subject to a 200 percent tariff.
VW reported 2nd quarter 2009 earnings of $397
million; the Audi division was the biggest contributor to
the gains.
Source: Based on Christoph Rauwald, “VW Earnings Buck Auto-
Industry Trend,” Wall Street Journal (October 31, 2008): B3;
Christoph Rauwald, “Volkswagen to Raise Output by 2018,” Wall
Street Journal (April 28, 2009): B3.