1 Submitted on: 11/12/2021 EXECUTIVE SUMMARY Volkswagen is one of the most successful automobile manufacturers in the world. Through global expansion and effective initiatives, they have increased their market share. The case examines Volkswagen's ability to build and maintain a successful business over the course of their careers, as well as a summary critical evaluation of the manufacturing process and its operation management analysis, such as TQM, Volkswagen's goal of sustainability, SCM and how it improves Volkswagen's operations, and how Volkswagen differs from their competitors in terms of business. In this research, we will evaluate Volkswagen's operations management and existing operational strategy weaknesses and give recommendations to address them. To assess Volkswagen's current situation, we'll use data from a variety of sources, including a SWOT analysis and the six service concepts of quality, pricing, flexibility, safety, speed, and innovation. The study will concentrate on Volkswagen's operations management and will analyze it in depth in order to identify recommendations and future strategies for the company's growth in order to sustain its success and capacity to compete successfully with its competitors. 2 TABLE OF CONTENT 3 SNO TITLE PAGE NO. 1 INTRODUCTION TO AUTOMOBILE INDUSTRY 4 2 INTRODUCTION TO VOLKSWAGEN 5 3 COMPETITORS OF VOLKSWAGEN 6 4 DIFFERENTIATION FROM COMPETITORS 7 5 OPERATIONS MANAGEMENT 8 6 ANALYSIS OF INTERNAL AND EXTERNAL FACTORS 11 7 PERFORMANCE OBJECTIVES 16 8 CURRENT STATUS OF VOLKSWAGEN 18 9 CONCLUSION 20 10 REFRENCE 22 1. INTRODUCTION TO AUTOMOBILE INDUSTRY This is a brief overview of the automobile business. Manufacturing activities are on the company's agenda to make a return on invested capital. Companies in this area seek constant improvement and innovation in order to reduce production costs. "Scientific Management" was the precursor of today's aggregate manufacturing. F.W. Taylor developed a framework that included both managerial and labor operations. Sales were low due to high costs, and profit generating was a difficult challenge. Only a few anarchistic concepts would result in profit. Ford was the first to introduce aggregate manufacturing by setting up an assembly line in the factory. As a result, the amount of money spent on staff was reduced. In the year 1970, the Ford model began to have issues due to the fact that Ford customer needs and wants varied by location. As a response, Toyota developed the Toyota Production System. Each employee felt a sense of responsibility as a result of this T.P.S, which helped Toyota become the world's leading vehicle manufacturer. Then came Lean management, which said that setup and run times should be kept to a minimum. As a result of globalization, a new concept known as the "world car" emerged, in which the components were made all over the world. European manufacturers recognized this and developed Modular Manufacturing and Modular Organization. The automotive industry includes a wide range of companies and organizations involved in the design, development, production, marketing, and sale of automobiles. It is one of the most profitable industries in the world in terms of revenue. The term automotive is derived from the Greek autos (self) and Latin motivus (motive) (motion). Elmer Sperry (1860-1930), who invented the word, first used it in 1898 to refer to automobiles. 4 2. INTRODUCTION TO VOLKSWAGEN The Nazi Deutsche Arbeitsfront established Gesellschaft Zur Vorbereitung eines Deutschen Volkswagens mbh, a firm that manufactures automobiles for the German people, on May 28, 1937. The Volkswagen car, previously known as the Porsche type sixty and then the Volkswagen type one, often known as the Volkswagen beetle, was the organization's primary purpose. The concept, which was promoted by Adolf Hitler's government, was created by Ferdinand Porsches, a consulting firm. During World War II, the company began manufacturing military vehicles. After the battle in Europe ended in 1945, the plant was taken over by British army royal electrical and mechanical engineers, who began the manufacturing process. According to the Orders, several industries were required to be demolished, including Volkswagen, which was forced to do so. After that, the company survived solely by producing automobiles for the British troops. The British troops returned power to Germany, which had previously been held by Opel head Heinrich Nordhoff. Slowly, old model production began, and the company expanded in 1950-1960, introducing a slew of new models. Because the German government owned a share in the corporation, the name was changed to Volkswagenwerk in 1960. Volkswagen purchased auto union GMBH from its parent company Dailmer Benz on January 1, 1965. This subsidiary began producing under the Audi brand name. FLAGSHIP BRANDS OF THE VOLKSWAGEN GROUP 5 3. COMPETITORS OF VOLKSWAGEN Volkswagen is a prominent international automaker with a varied brand portfolio that includes luxury brands like Audi. Despite the 2015 diesel scandal, VW has made a strong return in 2016 and 2017. A lot of reasons contribute to the brand's excellent market position, including its strong financial status, brand image, and wide product range. This is a list of Volkswagen Automobiles' main rivals. Ford, Hyundai, Toyota, and others are among VW's major competitors. 1. Ford The company is constantly pursuing its goal of being a market leader in mobility and electric vehicles. The company's two main business sectors are the automobile and finance industries. Ford Motor Company has two more business segments: Ford Smart Mobility LLC and Central Treasury Operations. Ford and Lincoln are two of Ford Motor Company's automotive brands. In 2017, the company sold around 6,607,000 wholesale vehicles. Ford is an innovative firm that is also one of the most well-known in Asia. 2. Toyota The firm is a well-known global car, SUV, and electric vehicle manufacturer. Its current focus is on long-term expansion and the development of ecologically friendly electric vehicles. North America is Toyota's largest market, followed by Japan and Asia. In 2017, North America accounted for 32 percent of Toyota's overall sales, with 8,970,860 units sold. It plans to enhance its investment in electric vehicle production and release new and improved Prius models. 3. Hyundai Hyundai is a well-known worldwide automaker with a massive presence in Asian markets. Hyundai also produces premium vehicles and owns the Kia brand, in addition to passenger cars and SUVs. Its popularity is largely due to its technology and brand image. Hyundai is a serious rival in the global automotive market and a strong competitor of Ford Motors, which is strengthening its position in Asian countries. 6 4. DIFFERENTIATION FROM COMPETITORS Volkswagen, known as the "People's Car," has offered its customers with a wide range of vehicles spanning from passenger to commercial vehicles. Volkswagen is superior to its competitors in the automobile business, such as Toyota, Ford, Hyundai, BMW Group, and others, due to a number of factors. VW has a number of competitive advantages, which include: 1. Great Profits and Revenues VW stated that their goal for 2018 is to be the world's leading manufacturer, however if you look at the company's previous revenues and profits, VW has already achieved this goal. VW's revenue surpassed $200 billion, exceeding that of all other manufacturers, and the company is delivering results that can only be anticipated from Big Oil Companies, not car manufacturers. 2. German Engineering What sets Volkswagen apart from the competition is the use of successful German engineering techniques to create such fantastic automobiles with incredible features. 3. Original parts Certified engineers and technicians create foolproof parts that are installed in Volkswagen vehicles and guarantee seamless performance and a lengthy warranty. 4. Exclusive Enticement and Savings Volkswagen provides its clients with more possibilities to save money than its competitors. Some examples include a lifetime auto loan program, filter and oil changes, inspection, and a variety of other value-added features when purchasing specific models. 7 5. OPERATIONS MANAGEMENT 5.1 Business and Strategy Volkswagen unveiled its corporate strategy this week, stressing software, electric vehicle development, linked services, and mobility as a service (MaaS) as the carmaker repositions itself for the future over the next five years. The main thread of Wolfsburg's plans includes a variety of revenue streams, rather than simply selling automobiles through its dealer networks as in the past, with one focusing on software and autonomous driving technologies, the majority of which is still a long way off. Software and mobility as a service are two additional significant pillars of Volkswagen's New Auto business strategy. By 2030, the manufacturer wants to own and operate autonomous shuttle fleets, with a value chain that includes a completely autonomous driving system, vehicle integration, fleet administration, and providing clients with the mobility platform itself. That's right: VW is talking about self-driving shuttles, some of which will be owned by the company and others by third parties, with VW aiming to supply a comprehensive set of solutions for their operation. Overall, VW's economic plan relies on specific technology and market trends, such as high degrees of autonomy and EV adoption rates by 2025 and 2030, to materialize exactly as projected. Wolfsburg's strategy also relies on linked services and mobility as a service (MaaS) materializing as expected and generating genuine demand, while the company's electric vehicle plans are likewise based on estimates and expectations. VW's business strategy is based on electric vehicles, autonomous vehicles, and mobility as a service. VW's business strategy emphasizes EV market share expansion, as well as software, autonomous technology, and Mobility as a Service (MaaS). VW plans to introduce Level 4 self-driving shuttles in 2025, ahead of a larger rollout of autonomous technology in its vehicles. 8 5.2 Process Volkswagen is seeking defined productivity and efficiency targets to ensure its capacity to compete in the global marketplace. Volkswagen plans targeting a 30 percent increase in productivity at all of its operations by 2025. This is estimated to save €2.6 billion globally, with €186 million saved at the Wolfsburg plant alone. Volkswagen is going to great lengths to achieve this, including everything from production planning to workplace design. o TRANSFORM.TOGETHER With the production strategy "TRANSFORM.TOGETHER," Volkswagen has built the overarching structure. Volkswagen has outlined eight primary action areas comprising tangible strategies to drive the production process at all Volkswagen plants in order to achieve its objectives. "We strive to be among the best in productivity," said “Dr. Andreas Tostmann, a member of the Board of Management responsible for Production and Logistics. We need to create competitive returns from current activities in order to fund crucial future investments and thereby secure today's jobs for the future." o Leaner and uniform processes With 27 production facilities in 12 countries, Volkswagen is aiming for worldwide uniformity. "To make the Volkswagen brand more efficient, Volkswagen aims for leaner, more consistent methods. "Efficiency is especially important since it takes into account indirect processes," Tostmann added. As a result, production networks may learn from one another, and effective solutions can be implemented across the board, saving time and money throughout development. Employees will be trained ahead of time for future ramp-ups to ensure that the process runs as smoothly as possible. In this context, the development of the Modular Transverse Toolkit (MQB) is critical: it allows Volkswagen to transition production to new models without having to make major tool and equipment changes. “Volkswagen's Wolfsburg plant is expected to set a high standard. The Volkswagen plant, which is the world's largest, has set a single goal for itself: in the future, the Volkswagen brand's main plant and heart will set the standard for increasing productivity. At the site symposium 2019, facility management and employees presented the Board of Management and the Works Council with substantial ideas to improve efficiency at the Wolfsburg plant.” Volkswagen is aiming for a 25% improvement in productivity at its Wolfsburg factory between 2016 and 2020, as stipulated in the Pact for the Future. Over the last few months, Volkswagen looked at over 400 workshops and 700 work steps 9 to see where the remaining efficiency reserves are. Volkswagen discovered a total optimization potential of roughly €186 million. By 2020, we want to reduce the number of work phases and create leaner, more standard procedures and best-practice solutions. Dr. Stefan Loth, plant director of Volkswagen Wolfsburg, stated, "It is our ambition to make the Volkswagen brand the benchmark for the international manufacturing network." 10 5.3 Supply Chain Management (SCM) “The notion of supply chain management evolved from the emergence of the value chain network, which consists of a distinctive operational existence bond to accommodate information and resources with the goal of competent supply and parts flow management. In order for a firm to remain competitive in today's market, it must constantly acquire expertise of supply chain management, which has become a requirement for successful operations.” “Innovative supply chains produce positive results by assisting in continuous development and by providing operational solutions for demand and supply requirements.” “A raw material will have traveled through approximately 15,000 stations during its production, treatment, finishing, and transportation before becoming a component installed in a Volkswagen. Volkswagen, in collaboration with its tens of thousands of suppliers, strives to make this long and complex process chain as environmentally friendly as possible.” o The future is renewable Volkswagen has a lot of objectives, one of which is to conserve natural resources. Volkswagen lays a high emphasis on the use of sustainable resources, such as renewable raw materials, in order to achieve this goal. Flax, hemp, cellulose, cotton, and kenaf are among of the materials used to reduce CO2 emissions during the course of a vehicle's life cycle. 11 o Managing the aluminum cycle When it comes to lightweight design, aluminum is a key component of the automotive industry, but it requires more energy to manufacture than steel. Audi is now testing an innovative recycling concept meant to conserve resources to address this issue. o On-site savings The Volkswagen facility in Kassel produces engines, transmissions, and body parts for the Volkswagen Group as a whole. Large volumes of aluminum cuttings are created at the components plant since most of the production processes include metal machining, such as drilling, milling, or grinding. 12 5.4 Marketing and Distribution An extensive portfolio of strong brands contributes to the Volkswagen Group's financial strength and profitability. When it comes to increasing brand value, market placement is crucial. o Customer loyalty and satisfaction “A customer's loyalty rate is a measure of how faithful they are. The proportion of customers who bought another Group model from one of our passenger car brands. Despite a little drop in customer loyalty across these Group brands, Volkswagen Passenger Cars, Audi, Porsche, and KODA have remained in the top rankings in the core European markets for several years, outperforming competitors. In comparison to other manufacturer groups, the Volkswagen Group continues to outperform the competition in terms of customer loyalty in the core European markets.” Customer satisfaction is important. Our customers' satisfaction stems from a customer-focused product line and a service-oriented workforce. These two criteria serve as suitable indications for the critical examination of whether we will accomplish our 90 percent customer satisfaction target in 2025 in the annual review. With a satisfaction rate of 83% in 2019, we were within the expected range. Our goal is to thoroughly satisfy our consumers. To do so, we're working on drafting appropriate policies at the national level. o After Sales and Service In addition to personalized care, prompt delivery of authentic components is critical to ensuring passenger car customer satisfaction in the After Sales department. Genuine parts from our passenger car brands, as well as the knowledge of our service facilities, stand for quality and ensure that our customers' vehicles remain safe and valuable. We guarantee that practically all of our authorized service facilities may be delivered within 24 hours anywhere in the world. We consider ourselves to be a one-stop shop for all items and services related to the after-sales industry. We secure our customers' global mobility in collaboration with our partners. “The partner companies provide the full range of services for all vehicle classes. We are constantly increasing our variety of customized services in order to provide greater convenience and satisfaction to our customers.” 13 5.5 Critical Success Factors “In 2020, Volkswagen spent EUR 2.7 billion on future technologies, which was overshadowed by Covid-19. As a result, the brand is laying the framework for the success of its new ACCELERATE strategy”. The first milestones will be reached this year. In 2021, “Volkswagen predicts a big push in e-mobility, with over 450,000 electric vehicles sold to consumers, more than double the amount delivered in 2020. Volkswagen is testing subscription plans and optional on-demand additional capabilities in six German cities in order to reach the first clients with its business model 2.0 by the summer. The brand wants to generate hundreds of millions of euros in revenue over the next few years. Online vehicle purchases will commence in the summer.” o Scania, for example, distributes one lakh sixty thousand networked trucks to customers. These vehicles transmit real-time information about their present position, gasoline consumption, fuel availability, and driving frequency at regular intervals. The majority of customers are fuel-centric, which means they want to save money on gas as well as try out new driving systems. o Natural gas is used by Man & Scania because it is a clean fuel that does not emit hazardous elements into the environment. Volkswagen is also testing E-Caddy in light commercial vehicles, with the goal of achieving a larger environmental picture. 14 5.6 Sustainability For Volkswagen, sustainability entails pursuing economic, social, and environmental goals at the same time and with equal zeal. Volkswagen's mission is to produce long-term value, provide good working conditions, and conserve natural resources and the environment. Volkswagen has adopted a new group strategy for the period 2025 in order to become the world's leading provider of sustainable mobility. Go to zero: Throughout the lifecycle of all of our goods and mobility solutions, we strive to minimize environmental consequences. Environmental legislation and standards, as well as voluntary commitments, are a necessary precondition for our efforts. Resources: We want to get the most out of our resources. In comparison to 2010, we aim to minimize production-related environmental externalities (CO2, energy, water, waste, and volatile organic compounds) by 45 percent per car by 2025. Fuel: Every vehicle we produce illustrates our commitment to long-term sustainability. Our goal is to reduce our carbon footprint as much as possible, which means focusing on energy consumption per vehicle and improving energy efficiency, as well as water usage, trash disposal, and CO2 emissions. Air quality: We are committed to improving our air quality not just through the introduction of fuel-efficient, low-emission combustion engines, but also through the adoption of e-mobility as a long-term transportation choice. o A major electrification project is being planned, which will help grow annual unit sales from two to three million by 2025 by introducing more than 30 new electric car models. o The new group competences will include digitalization, autonomous driving, and battery technology. o Components of the business will be repositioned. o The expected investment will reach the double digit billion range as a result of group-wide improvements in efficiency and portfolio optimization. o The new mobility solution business will expand quickly. o By 2025, the automobile division's return on capital deployed will be 15%, with an operating return on sales of 7 to 8%. 15 6. ANALYSIS OF INTERNAL AND EXTERNAL FACTORS Swot Analysis Strengths of Volkswagen o In comparison to its competitors, it has a large portfolio of brands. o Assortment strategy. o To become the global leader in the automobile industry, the business has chosen the "Together-2025 strategy." o The company has adopted the "Together-2025 plan" to become the worldwide leader in the vehicle sector. o The brand's combined efforts that result in brand retention in the consumer's mind. Weakness o o o o Abrogating publicity has cast doubt on the Volkswagen brand. The number of autos recalled in the United States was extremely high. Market capture is quite low in the United States. Manufacturing cars that rely on batteries has limited capability and inadequacy. Opportunities o o o o o Acquire new skills and competencies. Fuel prices are expected to rise soon. Autonomous vehicles have a lot of attraction. The value of the euro is decreasing day by day. Because of the damages, the company is focusing on brand building. Threats o There is a high level of competition. o There are a lot of government regulations. o Penalties from the government. 16 Pestle Analysis o Political: The “US has indicated that it is willing to impose tariffs on goods imported from the European Union. The car industry has been exempt from these levies until recently. As a result of the United Kingdom's decision to exit the EU, extra tariffs on Volkswagen Group automobiles imported into the United States may be imposed”. o Economic: This means that “people are more ready to buy consumer items like gadgets and, to a lesser extent, automobiles than they have ever been”. In poorer nations, increased consumer spending is especially important for car brands. o Sociocultural: Consumer spending is increasing, but the “urge to drive” is not. Many people are opting to travel by bicycle, scooter, bus, train, or ride-sharing apps rather than owning a car. This might result in a significant drop in sales for both Volkswagen and the industry as a whole. o Legal: During testing, millions of automobiles were manufactured with software that decreased emissions briefly, but failed to fulfill regulatory criteria in normal operation. Several legal lawsuits arose as a result of “the scandal, resulting in tens of billions of dollars in fines and damages.” o Environmental: Electric motors, batteries, and hydrogen fuel cells are examples of green technologies that are not just technological but also environmentally friendly. “Automobiles have been a major source of pollution in the past, but this appears to be changing in the near future.” 17 7. PERFORMANCE OBJECTIVE 1. Cost o The TCO program has resulted in a significant reduction in Volkswagen car servicing expenses since its implementation in 2019. o Car prices have been drastically decreased as a result of heavy localisation. o b. Maintenance parts have an average price savings of 11%. o The MQB-A0-IN platform offers benefits such as standardization of components, measurements, and production processes, as well as increased availability of child parts, with up to 95 percent localization. o As a result of these measures, buying a Volkswagen has become a simple process, one that guarantees genuine thrills while avoiding costly service expenses. 2. Quality o Customer happiness is mostly determined by the quality of our products and services. o Customer perceptions of quality are determined by appeal, reliability, and service across the entire product experience. o Volkswagen delights its consumers with exceptional quality by determining what they consider to be quality and incorporating it into our products. o By embodying and designing high quality standards in products and processes, we contribute to sustainability, security, and integrity. 3. Reliability o Volkswagen's Reliability Rating is 3.5 out of 5.0, putting it in 12th place out of 32 automobile brands. o A Volkswagen's average yearly repair cost is $676, indicating that it has higherthan-average ownership expenditures. o The Volkswagen Golf is known to be one of the most reliable VW models, as well as an excellent all-around car for drivers seeking comfort, convenience, and long-term reliability. 18 4. Speed o Each Golf or Tiguan is manufactured in Wolfsburg, Volkswagen's main plant, for more than 20 hours. o In 2020, the Volkswagen Group manufactured around 8.9 million vehicles, with deliveries exceeding 9.3 million. 5. Flexibility o In order to streamline production planning, Volkswagen and Ford have constructed computerized clones of their factories. Having a digital clone of the factory saves a lot of time since any changes can be tested before any costly and time-consuming work is done on the original plant. o With the MQB platform, the Volkswagen Group was an early adopter of common architectures. VW has begun to rely increasingly on suppliers to construct larger modules for its MEB-based cars. This standardization necessitates a new strategy with suppliers as well as closer R&D collaboration. 19 8. CURRENT STATUS OF VOLKSWAGEN In 2020, the Volkswagen Group delivered 9,305,400 automobiles to customers around the world. Due to the Covid-19 epidemic, this was a 15.2 percent drop year over year. Electric vehicles now account for 10.5 percent of all vehicle deliveries in Western Europe. Despite the Covid-19 outbreak, the Group managed to supply 9.3 million vehicles around the world. Gains in Europe and South America resulted in a modest increase in worldwide passenger car market share. Customers received 231,600 all-electric vehicles, which is more than three times the number provided in 2019; 190,500 plug-in hybrids (+175 percent) were also delivered. 8.1 Recommendations o Volkswagen should concentrate on effectiveness rather than efficiency. o Volkswagen has said it is aiming to be 30% more marketing efficient by 2020. 8.2 Future strategy Volkswagen aims to produce one million electric cars by 2023, and by the end of 2021, it plans to have eight new all-electric and hybrid vehicles in dealerships around the world. All-electric vehicles are the future of personal mobility, according to the company, which aspires to create an EV for every motorist. o Innovations in Technology VW is also concentrating on charging its ID vehicles. To power the next range of EVs, a new operating system called E3 will connect these vehicles to the cloud for technical updates, while new mobile quick charging stations may be provided everywhere. Each unit has a 360kWh capacity and can charge up to 15 electric vehicles. The charging time is only 17 minutes, allowing for ultra-fast 100kW recharging. These charging pods are now being tested in Germany in conjunction with the debut of VW's new ID electric vehicle lineup later this year. 20 9. CONCLUSION Volkswagen's environmental impact - 8 strategies to repair and become the world's leading automaker o Volkswagen should now concentrate on emerging markets such as China and India, diversifying its infrastructure to meet the needs of these rapidly rising nations. o Volkswagen is prioritizing hybrid and electric powertrains, and it is also seeking for a single battery installation that will provide it a competitive advantage. o Passenger safety has always been a top priority, and it will continue to be so in the future. o Position: “Volkswagen as a leader in sustainable mobility and synthetic fuels” Volkswagen has progressed in the development of synthetic fuels that are “interchangeable with fossil fuels” and do not release harmful components; these fuels are 100% drop-in. o Connected cars as a basic and significant focal point- Technology connected cars are expanding in both developing and developed economies, but they are still lagging behind their industry competitors in this market. o Prioritize Porsche, Audi, and other brands- While Volkswagen is presently focusing on 'Clean Diesel' dynamics in the United States, the company must now prioritize high-end brands such as Audi and Porsche, as well as low-end brands such as Skoda and Seat. o A stronger focus on commercial vehicles—Volkswagen has two commercial vehicle brands, MAN and SCANIA, that are performing well in Europe but need to be expanded globally. 21 10.References Bush, T. 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Retrieved December 11, 2021, from https://www.automotivemanufacturingsolutions.com/evs/vw-and-ford-investin-flexible-production-for-an-uncertain-future/41871.article [Accessed December 8, 2021]. 25 plag test ORIGINALITY REPORT 12 % SIMILARITY INDEX 9% INTERNET SOURCES 0% PUBLICATIONS 7% STUDENT PAPERS PRIMARY SOURCES 1 www.yahoo.com 3% 2 www.volkswagen.com.au 1% 3 www.volkswagen-newsroom.com 1% 4 www.marketscreener.com 1% 5 Submitted to NCC Education 1% 6 www.volkswagenag.com 1% Submitted to American InterContinental University 1% Submitted to Westford School of Management 1% 7 Internet Source Internet Source Internet Source Internet Source Student Paper Internet Source Student Paper 8 Student Paper 9 Submitted to Canterbury Christ Church University 1% Submitted to Southern New Hampshire University - Continuing Education 1% Submitted to University of Huddersfield 1% Submitted to Emirates Aviation College, Aerospace & Academic Studies 1% Submitted to Westcliff University 1% Submitted to Nelson Mandela Metropolitan University 1% Student Paper 10 Student Paper 11 12 Student Paper Student Paper 13 14 Student Paper Student Paper Exclude quotes On Exclude bibliography On Exclude matches < 1%