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1 Operations management

Case Study
Bachelor of Commerce Honours in Supply Chain Management
Operations Management
ONE (1)
January 2022
[100 Marks]
Volkswagen Operations Strategy
Product Design
In 1945, a rare and curious Volkswagen car was shipped from its bomb-damaged German factory to England. Here, a
commission of leading British motor manufacturers inspected the small car. It would be “quite unattractive to the average
motorcar buyer”, the commission reported. “It is too ugly and noisy”, while “to build the car commercially would be a
completely uneconomic enterprise.” The commission was mistake, however, and the Volkswagen Beetle, with its friendly
styling by the Austrian designer Erwin Komenda, and innovative engineering by Ferdinand Porsche, became the bestselling
car of all time.
Production of the Beetle outstripped that of Henry Ford’s Model-T when the 15,007,034th car rolled off the line at Wolfsburg
in 1972. As its name made clear, the Volkswagen was truly a ‘People’s Car’. Ultimately, the sheer quality, along with the
affordability, reliability, economy and distinct look and feel of the Beetle, ensured its success. Sold to the United States in a
brilliant ‘Think Small’ advertising campaign launched in 1959 and devised by the New York agency Doyle Dane Bernbach,
the Beetle became the biggest selling foreign-made car in America throughout the ’60s.
Now days VW Beetles incorporated many new features such as:
Heated power side mirrors: Even the side mirrors on a Beetle can bring the heat. If the fog start, it will help the driver to have
a clear view.
LED taillights: The available LED taillights have been styled with precise contours that perfectly flow with its design lines.
The bright illumination can also help cars behind you know that the driver is applying the brakes.
Iconic design: Taken its iconic look to the next level. The Beetle unites classic styling and modern technologies.
Panoramic sunroof: See the brighter side of life while driving, opening the sunroof lets the driver enjoy the sunshine.
Bi-Xenon headlights: Available Bi-Xenon headlights with sleek LED Daytime Running Lights boost a longer life and use less
energy. It’s a really bright side to this headlight story
17- and 18-inch alloy wheels A Beetle this distinctive needs wheels to match. The available designs are perfectly matched
to this time machine. (https://www.vw.com, 2017)
Operations Strategy
VW have introduced a new strategy that facing ever challenging industry, strategy 2025 focused on many important aspect
of any car makers challenges such as:
- Flatter hierarchies or horizontal organization to establish a communication channel between staff and executives..
- A fundamental change, which means a change on the basic level of Volkswagen..
- More autarchy of Volkswagen’s 12 core brands..
- Lower cost cars, to compete against the Japanese and Korean car makers..
- Lower costs and higher profits, lowering the cost of operation to generate more profit..
- Electrification, more electric car to produce, and to develop the technology needed to support the expansion of Hybrid and.
Full Electrical Cars.
- Digitalization and connectivity, by eliminating the old fashion way of paper documentation, and to improve the.
communication by using latest technology in this field.
- Volkswagen as a mobility company. (Schmitt, 2016)..
VW have categorized the main Initiatives for Strategy 2025 as follow:
Source: https://www.ukessays.com/essays/management/volkswagen-operations-strategy-4076.php
Answer ALL the questions in this section.
Question 1
(30 Marks)
Once an organisation’s mission has been established, it can begin to identify its strategy and implement it. Strategy is an
organisation’s action plan to achieve its mission. Heizer and Render (2017) suggest that firms can achieve their missions in
three conceptual ways. This means that operations managers are required to deliver goods and services that are better or
at least different, cheaper and more responsive. Define and then justify an appropriate mission statement for VW by
applying any one or combined conceptual ways.
Question 2
(15 Marks)
With reference to the case study the following is presented to Sales of Volkswagen’s popular Beetle have grown steadily at
auto dealerships in Nevada during the past 5 years (see the table). The sales manager had predicted before the new model
was introduced that first year sales would be 410 VWs. Using exponential smoothing with a weight of a 5 .30, develop forecasts for years 2 through 6.
Question 3
(25 Marks)
Global firms know that the basis for an organisation’s existence is the goods or services it provides to society. Great
products are the keys to great success. To maximise the potential for success, top companies tend to focus on a few key
products and spend enormous amounts of time and resources in improving them. Because most products have limited or
even predictable life cycles, companies must be constantly on the lookout for new products to design, develop and
introduce to the market. Given this backdrop, criticise the main Initiatives for Strategy 2025 of VW.
Question 4
(30 Marks)
From the case study, VW Beetle sales have been recorded for the past 9 years. To project future demand, VW management
would like to determine the mathematical trend of guest registration. This estimate will help the management to determine
whether future expansion will be needed in its manufacturing. Given the following timeseries data, develop a regression
equation relating registrations to time (e.g., a trend equation). Then forecast year 11 registrations. Values are in the
Year 1: 17 Year 2: 16 Year 3: 16 Year 4: 21 Year 5: 20
Year 6: 20 Year 7: 23 Year 8: 25 Year 9: 24