Overview of Volkswagen Group

The primary motive of this task is to outline and discuss the leadership style, and corporate culture of Volkswagen group. It is well reputed German company that provides ample of automotive vehicles to the customers across the world. In 2015, the company had to face various issues and challenges due to emission scandal. Besides this, role and significance of leadership and management of change also have been explained in the task. The paper also discusses the pros and cons of VW’s leadership. More detail of the task has been discussed below.

Volkswagen AG is known as the Volkswagen group, it is a German multinational automotive manufacturing company having headquarter is located in Wolfsbung, Lower Saxony Germany. The company was incorporated in 1937 in Germany. The company is designing  and manufacturing various types of vehicles for the customers in all over the world to increase profitability and revenue. It is one of the biggest automakers measured by sales in the market. Volkswagen group sells passenger cars under the Bentley, Bugatti, Audi, Seat, Volkswagen marques and Lamborghini. It is one of the oldest and leading automobile manufacturers with worth more than $75billion as of 2017.

The firm operates and manages its business activities and operations in around 150 countries. The main aim of the company is to sell automotive vehicles to the customers in the international market. Along with this, the firm wants to become a global leader automotive industry. It has been identified that the organization wants to be the no.1 car seller in volumes overtaking Toyota by 2018. The company is well known auto importer of the United States. Since 1993, Ferinand Piech was the chief executive officer of the company with an authoritative perspective. As the CEO, Ferinand Piech maintained enormous power in the organization. He followed transactional leadership in the organization. The German government has analyzed that Volkswagen group is responsible for a new attempt to hid harmful emissions of nitrogen oxides, this time on Audi luxury models. The company recalled and modifies around 24,000 A7 and A8 models built between 2009 and 2013. VW group has factories at more than 119 locations worldwide and employs around 600,000 employees in 20 European countries plus 11 countries in Asia, Africa and the America. The first factory of Volkswagen was opened at Wolfsburg in 1938. VW group was one of the first and biggest western companies to invest in China as its economic transformation began in the mid 1980. The company opened a new engine factory in the China in 2013. It has been identified that the company is focusing on the diversification strategy to improve and enhance the quality as well as performance. The company also has manufacturing facilities in the US, China, India, Mexico, Slovakia, Russia, Indonesia, Brazil, Argentina, Spain, Poland, Brazil, Kenya and South Africa.

Leadership Style at Volkswagen Group

VW group presents group award 2017 to 19excellent suppliers for innovative and unique strength and entrepreneurial reliability. The brands of the company include Audi, Bentley, Skoda, Porsche, Volkswagen and Lamborghini. The company is awarded in 2015 to its best suppliers. It is the 13^th time in this year that Volkswagen group has pleased the entrepreneurial performance of its best suppliers with the Volkswagen group award.

It has been identified that the company maintains a good position in the competitive market. The firm develops and improves vehicles and components for its brand. The organization also produces passengers cars and light commercial vehicles for the Volkswagen passenger cars and Volkswagen commercial vehicles brands. The firm has divided its division in two parts that include the financial services division and automotive division. The motive of the company is to become the number one leader in electronic mobility across the world by 2025. The company comprises twelve brands from the seven European countries. Along with this, the company provides ample of financial services such as customer and dealing financing, banking and insurance activities, leasing and fleet management. Group is paying the path for the largest change process in its history: the realignment of one of the biggest and excellent automakers to become a leader of sustainable mobility. To achieve that goal, the company will be transforming its automotive core functions and business and will among other things be introducing a further 30 plus completely electric cars by 2025 and exploring battery technology and autonomous driving as new core competences.

Leadership is ability of a company’s management to set and attain the challenging and effective goals by influencing the other people within the organization. It is a process of directing and controlling the other people in order to attain desired goals and objectives. No company can survive and grow its business without using effective leadership styles in the workplace. As the same way, Volkswagen group also uses unique and dynamic leadership styles at the workplace for gaining competitive benefits in the global market. Currently, Martin Winterkorn is the CEO and managing director of the company who delegate the roles and responsibilities towards the employees and top management. After the various researchers, it has been identified that workers at Volkswagen group have previously stepped out to explain the culture of the company as a fearful one where there is no liberty to speak out about the organizational processes and ample of pressures to deliver. It has been found that Martin Winterkorn was a highly demanding boss who did not want to failure in the life and success. But the facts say that the pressure on the leaders at VW group was unusual and ineffective that may go some way to explaining the automotive crisis.

Volkswagen Emission Scandal

Volkswagen emission scandal started in September 2015 when the United States environmental protection agency issues a notice of violation of the clear act to German automaker Volkswagen group. In 2015, the company sold at least 600,000 cars in the United States that were fitted with defeat devices. This hampered the financial image of the company adversely. This scandal also affected the revenue and profitability of the company adversely. The emission scandal was the major concern for the company. Initial charges of €6.7 billion in the third quarter of 2015 have led the firm to post of a loss of €1.7 billion related to the recalls. This loss does include penalties, fines, and compensation. The analytics have been estimated that total cost for the emission scandal was tens of billions of Euros.  In the first two months after the scandal broke, Volkswagen group market capitalization dropped approx 40%. Martin Winterkorn agreed to plan of action that included continuing to hide the existence of defeat devices. It has been found that CEO faced ample of issues at that time. Martin Winterkorn is under investigation by the authorities in Brunkswick of suspicion of market manipulation and fraud. Dr. Winterkorn was unaware of this issue until shortly before it became public. It is noted that Martin Winterkorn who is the CEO of the company very demanding boss who abhorred failure. It is analyzed that Martin Winterkorn is a authoritarian leader who make their decision ownself. He decides goals and objectives for success and growth of the company without involvement of the subordinates. He guides and controls all the activities of the business without any participation by the employees. Such leader has full control of the team leaving low autonomy within the group.

The leadership style at Volkswagen was not good because it influenced the profitability and revenue of the company negatively in 2015. Due to poor leadership, the firm had to face ample of issues and challenges in 2015. The emission scandal was one of the biggest major concerns in front of Martin Winterkorn who is the CEO of VW’s group. On 23^rd September 2015, due to emission scandal Volkswagen CEO Martin Winterkorn resigned from his post. It also affected the roles and responsibilities of the paid executive. It is noted that consequences and grievances for Volkswagen continue to evolve therefore investors punishing its stock. After the various studies, it has been identified that Martin was not aware about this scandal and manufacturing issue. He is autocratic leaders who control on the entire team members. It is stated that CEO Martin Winterkorn was seriously not aware of the fraud committed by VW under his supervision. According to various researchers, it is noted that leader is responsible for setting an effective and unique culture for the employees in order to perform tasks and duties successfully. Along with this, effective leader explains the desired results to be pursued and the balance to be maintained between competing goals and objectives. Everyone knows that Volkswagen admitted to installing software in more than 11 million of their diesel engine automobile cars that was created and designed to cheat emission tests. At that time, some commentators have recommended that VW’s group is accountable for the premature death of people. It is noted that leadership style that used by CEO at Volkswagen group was not effective. Therefore, it affects the sustainability of the firm. Due to failure of leadership, the company was unable to overcome this issue at that time. All these things would have direct impacted on the long term profitability and productivity of the firm.

Impact of Poor Leadership on Volkswagen

The auto manufacturer Volkswagen group was in the midst of a historically impressive run of increased revenue and market share. Many investigators have analyzed that culture of Volkswagen Company under Martin Winterkorn’s care in the light of the scandal. The high successful and effective period of the company was midst. Martin Winterkorn was well known for his exacting standards and perfectionism. The internal weather and climate in the company was demanding high. It is noted that Mr. Winterkorn successor used the diesel scandal to stimulate internal reform. Herbert Diess who is appointed as the new CEO of the company declared that VW needed to become a more open, more truthful and more honest. It has been noted that interdependeny leadership, practices and culture are broadly characterized by the assumption that leadership is a collective activity that requires mutual learning and inquiry. It is revealed that old centralistic leadership approach was followed by Martin Winterkorn. The five former VW executives interviewed by industry observers and analyzes the management style that fostered a climate of fear and unhappy, an authoritarianism that went unchecked due to a organization structure effective and attractive in the German motor industry.

Volkswagen’s top executive said that some managers are resisting the company due to emission fraud. It is suggesting that the company could still take several years to set a new corporate culture within the organization. It has been found that managers, top management and workers are discussing and generating a modern and effective corporate culture at the workplace. This is focusing on the more responsibility, creativity and roles. It is noted that Martin Winterkorn had to go because there was no option available at that time. It affected the corporate culture and values of the firm adversely. In today’s era, the firm is conducting cultural education sessions and programs to understand and know the power of art and encouraging them to act creatively and effectively. It has been identified that corporate culture of the company was not good and effective due to emission scandal. It also influenced the financial position and goodwill of the company adversely. The employees at Volkswagen need a culture in which it is permissible and possible to argue with superior about the best ways to go. It helps in overcoming the competitors in the international market. Apart from this, it will also helps in uplifting and improving the desired goals and outcomes. It is noted that organizational structure and culture of Volkswagen are not good as compared to other companies. It is analyzed that corporate culture of the company differs from the other automotive companies.

Succession and Internal Reform

It has been analyzed that various management changes have been done by the new CEO due to emission scandal. Sweeping changes have been done to its senior management team to reduce the cost and prevent the adverse impact of the scandal. The management change plays a significant and effective role in reducing complexity and increasing effectiveness of the company and employees as well. The management of change at Volkswagen Company includes Ulrich Eichhorn becoming head of the research and development. The other changes include Fred Kappler who was the head of the group services, has become the head of the sales. New lean structure has been built by the firm to develop and improve remarkable potential of the firm. Volkswagen group plans to start work on the repairing the 8.5m cars in Europe influenced by the diesel scandal in January. Besides this, green light has been provided by the German federal motor transport authority to install software within the organization. It is analyzed that VW starts the process of the repairing vehicles by sending letters to motorist. The customers would be rendered with a free hire care while their vehicle is being repaired. All these management changes have been done by Volkswagen to tackle the emission scandal.

It has been noted that leadership styles play a vital role Volkswagen group to manage the business activities and operations globally. Along with this, it also helps in striving with competitors in the global market. Martin Winterkorn who was the CEO of the company used autocratic leadership while functioning in the workplace. The autocratic leader is also known as authoritarian leader. Such type of leaders does not exercise power and authorities towards the employees. All the decisions are taken by them. They do not include employees in the decision making process therefore it affects the performance and productivity of the workers. The autocratic leaders do not take advice from subordinates within the organization. The autocratic leadership can be applied to the wrong situations and groups. However, such type of leadership can be beneficial in some circumstances such as when decision need to be taken by the company quickly without consulting with employees at the workplace. Effective leadership can be used by the company to stand out against the competitors in the global market. The leadership practices helps in measuring and analyzing the competitiveness and relationship. These practices also encourage workers to get new and innovative opportunities at the workplace. besides this, an effective and unique leader needs to search talented and skilled employees for conducting the business operations and activities worldwide.

Conclusion

Authoritarian leadership was used by CEO of the company. The strengths and limitations of Volkswagen group leadership have been detailed below.

Strengths

• By using autocratic leadership style, the company has been able to make speedy decision within the organization. The autocratic leaders are very strong and unique.
• The complete control is made by the leaders over the employees therefore the chance of inefficiency is far less under this type of leadership.

Limitations

• This type of leadership at Volkswagen could affect the efficiency and effectiveness of the workers adversely just because all decisions are taken by the senior management.
• The autocratic leader in the company becomes dictator. The autocratic leader such as Martin Winterkorn does not like to work with as talented and young people in the organization.

The cost fit leadership strategy also plays an empirical role in each and every organization. A firm that follows this strategy does not necessarily charge the lowest prices in the industry. The cost leadership strategy can be used Volkswagen Group to reduce the cost of vehicles in the competitive market. This strategy helps the company to cope with rivalries in the global market.

It has been analyzed that Volkwagen is still trying again to turn the page after its emission scandal. Due to lack of effective and unique leadership, various challenges were faced by Martin Winterkorn. Emission scandal was affected the goodwill of the company adversely. This is done due to lack of unique leadership. Due to emission scandal and poor leadership, the company has failed to develop and built trust and loyalty again the customers. Thus, it was affecting the sales volume of the company adversely. Besides this, it also affected the market share of the company in Germany negatively. The corporate culture was also influenced by this scandal. Due to emission scandal, the employees at Volkswagen are unable to focus on the company’s effectiveness and outcomes positively.  All these issues are being encountered by the top management at Volkswagen due to poor leadership.

Due to emission scandal, CEO Martin Winterkorn resigned from his post. In his statement of resignation, Mr. Martin Winterkorn said that I am shocked by the scandal of the past few days and all, I am astonished that misdemeanors on such scale was possible in the Volkswagen group. He accepted and admitted responsibilities for irregularities.

The recommendations for improving and enhancing the VW’s leadership have been detailed below.

• The company should change the leadership style to boost and augment the moral and confidence level of the workers.
• The firm should dedicate all the efforts, technology and resources into reestablishing credibility with the firm.
• It should focus on the management of change issues to reduce the absenteeism and high employee turnover rate at the workplace.
• Along with this, the leaders should include employees for making unique and effective decisions within the organization.
• The causes of emission scandal shall be find out by the leaders to attain competitive benefits.

Conclusion 

On the above mentioned analysis, it has been concluded that leadership plays a fundamental role in Volkswagen Group. The above mentioned analysis shows that how Martin Winterkorn handle emission scandal in the global market that had direct impacted on the image of the firm. The above mentioned analysis shows that how Martin Winterkorn uses leadership styles within the organization to reduce the adverse impact of the emission scandal. The paper also explains the advantages and disadvantages of Volkswagen Company’s leadership. The leadership is an important part of the each and every company. Leadership helps in maintaining favorable corporate culture as it also boost the level of confidence of the workers.

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