Case Study Analysis of Volkswagen DO Brasil.

1. Kushagra Kaushal
M1608
Mohit Kumar
M1609 Volkswagon do Brasil
VOLKSWAGEN DO BRASIL:
DRIVING STRATEGY
WITH
THE
BALANCED
SCORECARD

2. Contents
 Competition scenario in Brazil
 About Volkswagen do Brasil
 Strategy Map And Balanced Scorecard: for cultural & strategic change
 Communicating the Balanced Scorecard
 Gearing up the Balanced Scorecard
 Conclusion
2

3. Competition in Brazil
 Automotive Sector: 19% of Brazilian
Industrial GDP
 Employed 1.5 Million
 More than 200,000 Companies
 Total Revenue: $74 billion
3
97%
3%
Automotive Market Share, 1991
VW, Ford, GM, Fiat
Others
 By 2008:
 Existence of 25 automotive assemblers
 49 Industrial plants
77%
23%
Automotive Market Share, 2008
VW, Ford, GM, Fiat
Foreign
Companies(Japan,
China, Korea) &
Others

4. Volkswagen Do Brasil
 VWAG, 2008: Global Market Share od 10.3%
 Revenue generated: $113 billion - 3.6 million under VW
 VWB: VWAG’s Brazilian subsidiary
 3rd largest in VWAG, after China & Germany
 4 operational plants
 Revenue: $7.04 billion
 Focus: small & midsize vehicles
 Offered 22 different models
4

5. Volkswagen Brand Portfolio
5

6. Volkswagen Do Brasil: Timeline
6
• VWB introduced a van; with 50% Brazil produced parts1956
• Earned 61% share of Brazil’s car production1969
• VWB launched medium sized cars
• Created first Ethanol-fueled vehicleEarly 1970s
• Accounted for 40% of Brazil’s auto exports1980
• Volatile industry, 20% decline in the domestic automotive market1986
• More than 1.1 million vehicles production
• Highest sales: 1.6 million1993;1997
• Back to 1.1 million units, 1999
• Back to its peak sales, 20031999;2003
• Sales dropped from 580000 to 280000 units, 2003
• Eighth consecutive loss, 20062003;2006

7. Volkswagen Do Brasil
 The New VWB Management Team:
 2007: CEO-Thomas Schmall
• To discontinue the VWB’s strategy
 Vision:
 Aggressively “re-brand” VWB
• With enthusiastic and highly motivated employees
7
“Build a high performance team that would drive VWB to become the South
American automotive industry’s leader in quality, innovation, sales, and
profitability on a sustainable basis.”

8. Volkswagen Do Brasil
 The New VWB Management Team:
 2006: Global HR Coordination-Josef Fidelis Senn;
Economist
• Helped to introduce Balanced Scorecard
• Change in the management approach: crucial
 2007: CFO-Carsteen Isensee
 11-person Executive Committee(Exhibit 3)
• Lead to VWB’s transformation
8

9. Strategy Map
 Initial taskforce: Strategy/BSC Committee
 Developed a strategy map
9
Finance
Customer:
“Satisfy the customer’s experience”
“Improve company image”
Internal Process- Service
oriented, cost efficient, flexible production
and workforce
Potential and Growth Challenge-
High performance, sustainable
growth
Dimensions of
Strategy Map
 Refer Exhibit 4

10. Question?
 How can Schmall and his team use the scorecard to deal with the
challenges faced by the company in January 2009?
 Set the objectives
 Communicated through all levels of management
 Transparency was attained
 Every employee was clear with its own responsibilities
 What all steps should be taken to overcome the challenges
10

11. Communicating The Balanced Scorecard
 Established Office of Strategy Management (OSM) : Two
Groups – Strategy Formulation & BSC Management
[Exhibit: 6]
- To roll out strategy across business area & well co-
ordination of initiative
- To communicate the strategy, strategy maps & score
cards to all employees.
11
“Communication is the backbone of Cultural Change- do it by
constantly injecting energy into the system via campaigns
& competitions”

12. Few Successful Initiatives
 Internal contest to choose a Mascot to symbolize &
communicate the New Strategy.
- “Giga” – Interactive Communication, Asks questions about
new strategy.
[Exhibit: 7]
 Board Games – Q&A about Strategy Map
 New Communication tools- Interactive Role-Play game based
on customized learning map [Exhibit: 8]
 Communication through Electronic Display [Exhibit : 9]
12

13. Gearing Up BSC
 Data Matrix – Based on Hard Data (80%) & Surveys (20%)
Hard Data: 75% from Internal Sources
25 % from External Sources
Surveys : 45% from Customers, 33% from Employees, 22%
from market assessment.
 MbO (Manage By Objective) Guidelines
13

14. Compensation & Recognition
 Multiple command training messages by linking
compensation system
 Projects can be presented by anyone (2200 projects
were submitted)
 Best employee should be rewarded
 Mgmt Development Review - High performing
Individuals -Job Promotions, Rotations and Training
14

15. Engaging Supplier & Dealer
 VWB - 550 suppliers -15800 different components
 600 independent dealers
 “Supplier Day Event”
- Improvement action for low performing suppliers
-“Supply Award”- Recognize best annual performance
 Dealer Academy - Sales, post sales service
15

16. Question?
 What challenges does Thomas Schmall face upon
becoming CEO of Volkswagen do Brazil?
 Decreasing Market Share
 Struggling to minimize production due to
appreciation of Brazilian currency
 Due to stiff competition( Ford, Fiat etc) ,prices
could not be increased
 Inefficient processes in the company
 Employee Dedication
16

17. Conclusion
 In two years with the application of different tools to motivate &
restructure the system of the organization, now the market position has
surged forward.
 Problems of employee dedication, Inefficient processes of the company has
been solved.
 Supplier & dealer quality & scores has increased.
 But the sudden impact of “Global Financial Crisis” had hit the sales of last
quarter
 Management was in dilemma to further invest in production or to wait for
sales recovery.
 It would jeopardize the plans for market share expansion & new product
development.
17

18. Conclusion
 Drive as fast as you can“- may not work in current situation.
 BSC financial matrix is lagging indicator, but the current situation is
of global nature & it is wise to go along with it.
 Due to success of BSC company is in best position to cope up the
global crisis with efficient processes & motivated. Company should:
- Focus on further cost cutting.
- Optimize production to match the limited market demand
- Wait for the best favorable time for further market expansion.
18

19. !!!Thank You!!!19