The purpose of this paper is to analyze Volkswagens American operations, examine the effects of globalization on Volkswagen, and to describe the strategies that Volkswagen has developed in order to improve its position in the US. The paper is divided into three sections. The first section provides brief literature review on globalization within the context of the automotive industry wherein VW operates. This will be followed by background information on Volkswagen’s global operations, with a particular emphasis on its operations in America. The second section discusses globalization and the issues affecting Volkswagen with respect to its promotion and distribution strategies. The final section explores the international structure most appropriate for VW based on its current position in the world market.
At its most fundamental, globalisation refers to the world as one big market and source of information. It is characterised by a free flow of goods, people and information around the world, an internationalization of economic processes and the emergence of world markets (Lemoine, W. and Dagnaes, L., 2002). Consequently globalization has given rise to new concepts such as global industries, organizations and strategies used to market and sell global products, brands and services. A global industry has been defined as ‘an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall operations’ (Porter, 1980, p.275). The automotive industry has been recognized as a global industry in the sense that business activities or transactions made by a multinational automotive enterprise would not likely follow the business model from its host country. Shimokawa (1999) pointed out that these activities would include:
On the one hand, an organization may generally be considered as global when it ‘operates in more than one country and captures R&D, production,