The Sources of International Competitive Advantage of Vw Essay

2820 Words Jun 8th, 2013 12 Pages
The Volkswagen Group
What are the main sources of international competitive advantage? Think about a successful product in your country, what are the sources of competitive advantage that explain its success?

Severin Loos

European Business School London
International Business
Mr. Alan Sitkin

12.04.2013

Word Count: 2021 words
Table of Content

1.Introduction: 3 1.2 Company Portray: 3 1. 3 Method of Analysis: 3 2.0 External Sources 4 2.1 Factor Conditions 4 2.2 Demand Conditions 5 2.3 Related and Supporting Industries 6 2.4 Firm Strategy, Structure and Rivalry 7 2.5. VW ‘Diamond’ System 7 3. 0. Internal Sources 8 3. 1. Decentralized Structure 9 3. 2. Interconnectedness of Resources and Capabilities 9
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If these conditions are given a company will be pushed to generate the most advanced products or services prior to demand spreading elsewhere in the world (Porter, 1990)
The German consumer is probably the most demanding and sophisticated automobile consumer in the world. German consumers have traditionally set high standards in terms of engineering, design and safety, but due to rising fuel prices and environmental concerns in Germany, the spectrum of demands has grown even wider (The Economist, 2007). These high standards have enticed innovations in the past resulting in developments such as the four-wheel-drive system and continue to push VW ahead of its international competitors (Taylor, 2012). In an effort to tackle environmental concerns the VW Group recently committed to reducing the average emissions of its Volkswagen fleet to just 95 grams of carbon dioxide per kilometre by 2020 (Volkswagen Group, 2013). It has also launched an ambitious project to produce the world’s most fuel-efficient car; the XL1, underlining the impact the German consumer has on Volkswagen’s goals and innovative spirit (Taylor, 2012).

2.3 Related and Supporting Industries

A close relationship with related and supporting industries, which are internationally competitive themselves, can reap rich rewards for firms (Porter, 1990). Through the formation of ‘clusters’, which are interconnected businesses and institutions working in close proximity

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