GLOBAL BUSINESS PLAN

Brian Bozzo, Stephanie Cooper, Sean Cully, Marc Rizzolo & Jessica Woloszyn

Final Report

E

Company Background

• Volkswagen Group• Public Company• CEO: Matthias Muller• 12 Brands from 7 Different

Countries• Founded in Berlin, Germany on

May 28th, 1937• 119 production plants spanning

20 European countries and 11 countries across America

Global Business Vision

To establish Volkswagen as the world’s leading automaker for both average and eco-friendly vehicles by reinforcing a stable brand that exceeds expectations.

Potential Market

•Largely Unaffected by VW Controversy •Natural Resources: Cotton, Rubber, Iron Ore•Growing economy and increased income•Existing Volkswagen plant•Trade barriers not restrictive

India

Situational Analysis

Geography

Social

Culture

Population: 1.3 billionGrowth in Middle Class and Skilled WorkersOver 50% under 25Holds 18% of the working age population

Hinduism major religion Hierarchical system Highly diversified

7th largest country with total area of about 33 kmTakes up 24% of the total land surface10.7% Mountains 18.6% Hills 27% Plateau 43% Plains

Situational Analysis

Economy/Infrastructure• The economy of India is also the 12th

largest and contains very impactful purchasing power parity adjusted exchange rates.

• The manufacturing sector makes up about 28 percent of the GDP for the country and additionally provides work for 17 percent of workers

• The government of India has called for $1 trillion in infrastructure spending through 2017.

Competition

Maruti Suzuki: • Maruti Suzuki India is one of

the top carmakers in the country

• Maruti Suzuki’s Ciaz SHVS: integrated, starter generator, larger capacity battery, and has start-stop technology which helps recharge the battery

Mahindra & Mahindra:

• Mahindra introduced the first all-electric car in India 2013

• Mahindra’s e20: powered by a 48v lithium-ion battery, offers a top speed of 81km/h, takes about 5 hours to fully charge and can cover a distance of 120km

Competition

Toyota:• First to introduce hybrid cars in

India• Toyota Prius: runs on both petrol

and electricity and contains a nickel-metal hydride battery which can raise to a total power of 134 bhp. Offers 3 modes: electric, eco, and power.

BMW:• BMW launched their hybrid car in

India in 2015 • BMW i8: contains a 7.1kwh

lithium-ion battery, engine power can reach up to a total of 357 bhp (gasoline power standing at 228 bhp and electric power standing at 129bhp, contains an electric mode that can reach top speed of 120km/h and a sport mode which has a mid-range acceleration from 80-120 km/h in about 2.6 seconds

Strategic Focus• Market Opportunity: Introduce Eco-friendly vehicles

into India, where initiatives for eliminating diesel cars are high and consumers are looking for something new with the same luxury look and feel

• Support from Government: India supports the National Electric Mobility Mission Plan that makes it easier for automobile manufacturers to develop electric vehicles locally, and at costs that are viewed as competitive

• Ideal Market: By 2030, the majority of India’s population will be not only of working age, but have little shares of children or elder relatives to care for.

Strategic Goals Redeem the brand association by offering an alternative vehicle segment

Offer a growing economy the luxury & eco-friendly car they desire

Reduce cost of production through natural resources and less imported goods

Establish a relationship within country that has a steady income level and consumers in the key demographic range

1.3.

2.4.

Entry ModesVolkswagen exists in India now, with 5,000 employees working throughout the largest plant in Pune, all the way to the Aurangabad plant and the National Group Sales Office in Mumbai.

India is the next big hub for manufacturing which means cost-efficient production of these vehicles specifically because of the government’s plans to bring resources within the country as opposed to importing from outside of India. India's gas supply is at an all-time low and is a major factor in money spent. We want to aim this product at individuals who need reliable transportation at a reasonable price,

Financing SourcesTheir inflation rate has gone down tremendously since

2014. It was at 6.7% in 2014 and as of 2015 the inflation rate was 4.9%.

Since it is predicted that the middle class of India will reach 200 million, five years from now, there will not be a problem

with the demand side.

With the government investing in new airports, ports, and elevated rail-corridor in Mumbai, and miles of new roads, the infrastructure will improve, making it possible for Volkswagen

to start selling their hybrid and electric cars in India.

Managing International Risks• India’s currency has experienced worrisome

inflation in the past • Infrastructure has been described as “third

world” and is difficult to accommodate cars

Economic

• Automobiles have typically not had a large role in the da to day life of Indians

• Rural India may not respond as favorably to the idea of Hybrid or Electric vehicles

Social• Corruption is present in many aspects of daily

business in India• Barrier to the effective development of the

private sector • Requires pro-active management

Political

Management Information Needs & Systems• General information that’s needed by Volkswagen are daily,

weekly, and monthly sales report, financial statements, and marketing and sales projections.

• Additional information that they would need consists of information on exchange rates, inflation rates, gross net income per capita, and national projections that are specific to India.

• Volkswagen is currently running over 1,500 information technology projects and provides support for departments from the entire group at each stage in the production chain.

• To support technical development, production, and sales, Volkswagen is able to develop applications specifically made to suit user’s needs.

Human Resource NeedsVolkswagen of India has 120 dealerships across the country and the Pune plant which is used for manufacturingClerical Workers

• Computer literacy on international systems

• Global communications skills

Marketing Specialists

• Insight on automotive landscape

• Interpersonal communication

• Analytics• Creative

Skills

Car Mechanics

• Mechanical skills

• Computer skills

• Communication

• Customer Service

• Transparency

• Specialty in electric/hybrid

Finance Professional

• Fluent and certified in Indian economy

Product StrategyProduct/ ServiceVolkswagen e-Golf Jetta Hybrid Passat Hybrid

Target Market

Millennials

Middle Class

“Around the town”

Lifestyle

• Younger segments in India have shown increased interest in luxury goods. High-end sound systems, smartphone integration technology and sportier appearance will attract

• The middle class of India has benefited from increase in household income, and is larger than ever before, projected to double in consumer spending by 2025

• The e-Golf specifically is great for any purpose, but is ideal for smaller commutes in between charging stations for a luxurious and safe travel method

Promotional Strategy

Use above the line media in order to promote eco-friendly vehicles

• Goal: Create awareness of Volkswagen as a eco-friendly brand

Use below the line media

Print Media

Television

Radio

Magazines

Penetrate India’s growing

automobile market and increase

presenceSocial media: used to market products

Promotional GoalsLaunch integrated marketing plan

Continue to sponsor numerous car events

Released first TV Commercial

in 2009

Objectives from launching IMC:

create and drive brand

awareness of VW’s eco-

friendly vehicles

Promote their image and

products to the Indian market

Legal Factors Affecting Promotional Decisions

India’s government policy and procedure are one of the most complex

Trade Mark Act: protects trademarks

Implemented legislations such as trade and product restrictions• Requires a special import license for vehicles that is very restrictive• some domestic importers can import without one if imports are

counterbalanced by exports• Discriminate against foreign suppliers: price preference for local suppliers in

contracts• Equity restrictions and other trade-related measures are in place to give an

unfair advantage to domestic companies.Rules that require internet companies to remove “disparaging” or “blasphemous” content

Social Factors Affecting Promotional Decisions

Social trends

Social trends like

demographic features may

change, affecting

promotion strategies

Social trends that are

concrete like festivals can be

used for promotions

Lack of infrastructur

e

Costly towards Volkswagen

when promoting

Resistance of

technological

modernization

People may lack the technology

Volkswagen uses to promote

Religion

Religious freedom exists but there are still religious extremists

Be extremely wary of not offending

religious groups

Media Plan

More than 150 million television homes and almost 800 licensed satellite TV stations with half of them being news-based outlets

• When promoting through television focus on news programs that outperform entertainment output.

12,000 newspaper currently exist in India

• Continue to advertise on print media since there are a large amount of available titles

By 2014 there were 243 million internet users in India

• Facebook is the leading social network with tens of millions of users, making this VW’s main promotional platform

• Twitter, Google+, and YouTube are also popular in India and can be used as promotional platformAll India Radio’s 237 stations reach more than 99% of the population so

radio is also a great medium for promoting

Pricing Strategy

Volkswagen e-Golf• 25L-26.5L—

36,918.16 to 39,133.25 USD

Jetta Hybrid

• 18L-19L—27,000-28,000 USD

Passat GTE Hybrid• 20L-25L—

29,534.52 to 36,918.16 USD

Cost and Demand Analysis

• Personal Income Biggest

Economic Factor

• Production • Charge Stations

(Maintenance and Supply)

Other Factors

Influencing the Price

Economic Factors

Personal

Income

Target Middle and Upper Class

Average Annual

Income of $14,600-$29,200Financ

ing Option

s

Low Interest

Competitor Analysis

Maruit Suzuki Ciaz

SHVS• 15,286.23

USD

Mahindra & Mahindra

e20• 8,297.11

USD

Toyota Prius

• 56,735.16 USD to 59,248.85 USD

BMW i8

• 418,070.73 USD

Global Distribution Strategy

• Key to our distribution channel

• Body Shop, Paint Shop, Assembly

• Move cars from plant directly to dealerships (urban and rural) by truck or train

• Avoids import fees and intermediaries

Pune Plant

Success Metrics

• Profitability• Inventory Turnover

Financial Success

• Job creation• Improved infrastructure

Economic Benefits

• Environmental• Cultural

Social Costs

Sources of RevenueEstimate

• Increase as time continues and India improve infrastructure

Key Operating Cost Elements• Cost of Sales • Distribution Expenses • Administrative Expenses

Start-Up Cost• Production• Training• Charging Stations

Analysis of Profitability• High Profitability• Non-monetary

Profitability Analysis

Profitability

• Indicates that there is a level of operational efficiency and cost control

• Indicates whether Volkswagen is spending too much money on manufacturing vehicles that aren’t selling or that they need to spend more money in order to manufacture more vehicles to meet demand

• If Volkswagen sells at a good rate, they wont be losing out on money they spent in order manufacture their vehicles

QUESTIONS?