The term global strategic management has emerged from the concept of globalization as well as its implications on the organisational world. Today, with development of technology and rise of globalisation, landscape of corporate business have changed drastically (Roh, Hong and Min, 2014). In order to gain competitive advantages, companies now tend to recruit best talent employees, change operating models and seek to take business on global level. This report is going to compare and contrast two companies on the basis of opportunities for developing CSR initiatives and innovations. For this process, Volkswagen and General Motors is chosen that deal in automotive industry sector. Both companies are served auto-mobile and commercial vehicles as well as giving a tough competition to each other. In this regard, present assignment highlights current CSR initiatives and global strategies of both organisations for enhancing success of business.
Comparison of two organisations on the basis of external business environment and dynamic capabilities
Global strategy can be defined as process by which a company can take its business on international market. This concept guide organisations for introducing globalisation within business and allow to sell products on global level (Berry, 2014) . In other terms, corporations employ such strategic management to reap opportunities of trading in other countries. For this process, it assists companies to operate business in a mixed set of economies and design effective strategies which encompasses all of them. It shows that goals of business are needed to reflect the market potential and growth rates as well as aligned the same with overall vision also. In context with Volkswagen, it is an automaker company of UK which has established in 1937. It is considered as the largest organisation in auto-mobile industry in terms of sales that serve vans, trucks and buses etc. in many countries. Currently, it has near about 120,000 employees who are higly skilled and experienced in giving out best production output. This corporation is known for its highly innovative commercial and auto-mobile products which give high satisfaction to customers.
But due to high competition in automaker industries where many companies dealing in same marketplace with same products, sales performance of Volkswagen also decreases. It has various competitors in this field who have launched amazing vehicles in same marketplace to avail profitability. It includes BMW, General Motors Ltd., Audi and more, which are considered as largest organisations of UK in auto-mobile manufacturing sector. Among these companies, General Motors Ltd refers to one of the biggest competitor of Volkswagen. This corporation has found its business in 1908 and serve products in more than 37 countries. In terms of sales, in 2017 it has sell near about 10 million vehicles through which high profitability has gained by this company. Along with this, approximate 180,000 number of employees are currently working in its near about 396 locations. Therefore, it shows that this corporation gives a tough competition to Volkswagen which adversely its sales performance.
For introducing globalisation within business, it is required by organisations to develop effective strategies. They should design proper business plan which include policies, resources and procedures to take company in international marketplace (Peng and et. al., 2017). Both companies viz. Volkswagen and General Motors Ltd. operate their businesses in many countries and gain high profitability. There are many factors present in business environment which impact on operational activities of international organisations. It includes political stability, economical fluctuations, environmental laws, social concern and more. Thus, a comparison is made below that describes dynamic capabilities of Volkswagen and General Motors Ltd to deal with such situations:-
PEST analysis: It helps in analysing the factors of external environment of a particular company which impact on operational activities. Generally, there are four key factors that affect business organisations – Political, Economical, Social and Technologies.
Basis of comparison
General Motors Ltd.
In today's 21st century, political factors have played an important role in expansion of business. As Volkswagen operate business in many countries therefore, it gets various opportunities in manufacturing in best competitive manner and on less cost. For example: In Canada, there is a political stability which give chance to Volkswagen to make its brand more competitive.
GM conduct its business mainly in developing countries where political factors like trading policies, taxation and more, are seemed to be unstable (Cerdin and Brewster, 2014). This would impact on its business strategies in high manner. For example: At present business of GM's products like Chevrolet has came to a diminish level in India.
This factor shows per capita income and purchasing power of people. Since economy of Germany is quite stable where people are always awaiting to get luxurious and innovative cars (Volkswagen PEST Analysis, 2018). So, it gives advantage to this company in increasing its sales performance by manufacturing innovative cars. For example:
Average GDP per capita income of UK marketplace as compared to other nations is stable which increases demand of luxury cars at marketplace. But due to fluctuation in taxation policy of provincial government, business of GM has adversely affected.
Today people concern more on getting fuel efficiency car which produce less smoke and pollution (Young and et. al., 2014). For this process, Volkswagen has launched fuel-efficient vehicles such as VW's XLI to gain attention of people. This car has 1litre twin cylinder diesel engine which consumes 2.0l/100km. This would aid to increase its sales performance.
Similarly, to gain competitive advantages, GM has also launched an affordable electric car like Chevrolet Bolt EV. It has given commitment to manufacture at least 20 new electronic and innovative cars by 2023.
In order to response of globalisation and market, this factor give advantage to Volkswagen to develop creativity in its commercial and luxury vehicles. By introducing high technological features in cars like sophisticated 3D scanning camera in conjunctions with a GPS system, fuel-efficiency, twin cylinder and more, Volkswagen has given a tough fight to its competitors. For responding towards globalisation, this company has made partnership with approx. 30 other manufacturing companies to arrange resources and reduce cost of production.
In context with GM, its manufacturing process has shown the lowest carbon footprint in production. It introduces latest technologies in business to reduce energy, water, carbon and waste intensity. It concerns more on realizing the better, safer and sustainable development in production. In order to respond towards globalisation and market of technology, GM has developed effective relationship with its stakeholders and investors to get their support in creating innovation in vehicles.
Critically analyse the current CSR initiatives, social and environmental innovations
According to Collings (2014), Corporate social responsibilities refers to an business model that makes an organisation socially responsible toward its stakeholders and its public (Wang and et. al., 2016). It can also be defined as a name given to a corporate initiative taken by corporate firms or companies to evaluate the effects of an organisation's working on environment and role company can undertake for welfare and protection of environment.'' A few examples of CSR activities include eradication of hunger, poverty and malnutrition, providing proper healthcare and sanitation facilities. Volkswagen Group is committed to fair and responsible corporate governance which is implemented at almost all levels. It has a group of members in board of management known as sustainability board for effective CSR working and activities.
Principles followed while initiating CSR projects include:
- Projects should always address a specific important issue.
- Diversity of social environment and its implementation in CSR activities.
The Volkswagen group supports arts and culture, education, health and sports in numerous projects. It works on principles humanity, public spirit of welfare and development and responsibility. It aims at providing sound, balanced and social development of employees as well as environment. Its main motive is to help German red cross society in its rescuing services. Volkswagen works on the principle of helping together and providing food and shelter services to refugees who come to Europe and Germany. In this context, the CSR initiatives taken by Volkswagen are:
In this context, the chosen organisation Volkswagen donate its cars to various universities and educational institutions to educate and empower youth. It will helps students of auto-mobile in understanding technicalities required to manufacture a car. It is great initiative of Volkswagen as it makes them socially responsible which leads to improve their brand image in a business environment. It will also helps students in improving their skills and practical knowledge regarding their particular subject.
(b) Mobile health clinic
Volkswagen also takes an health care initiative towards its citizens in which they provides free health check up facilities to their citizens. They also provides free medical consultation for orthopaedic patients. It helps an organisation in building a strong relation of trust and affection towards its citizens which leads them in improving their productivity. It also helps an organisation in achieving loyalty from their potential citizens.
In this context, Volkswagen makes environment friendly products like electric cars instead of fuel cars (Cavusgil and Knight, 2015). From this, it creates awareness among its customers about the advantages of using E- cars rather than fuel cars which will helps in achieving a sustainable environment. It helps an organisation in restricting the use of natural resources as much as possible.
(d) Road safety training
The chosen organisation also provide adequate road safety training to its citizens which will helps in creating awareness in a society about the importance of helmets and seatbelts in driving a vehicle. It is essential for citizens to be aware of road rules and regulation which will helps them in creating a safe environment.
(e) Supportive towards government policies
They also act as a supporting pillar for government policies and initiatives and helps government in creating awareness about new policies for water conservation, regarding pollution etc. It helps them in creating a strong bond to government which will helps them at the time of uncertain events.
General motors corporate social responsibilities
(a) Growing the EV market
In this context, general motors is creating awareness among general public to use electric vehicles more for daily use to create an sustainable environment. They are making many efforts from past few years to increase electric vehicle market in a business environment. They are also advising government to make charging stations for electric vehicles as many as possible. Their policies includes, public policy enablers for electric vehicles, utility engagement, sustainable infrastructures etc. These policies will help in informing citizens about the advantages of electric vehicles as compared to fuel vehicles.
(b) Autonomous future
The rise of autonomous vehicles has many benefits towards society like it will help in increasing road safety (Stead and Stead, 2014). These vehicles also helps in reducing traffic related issues arises in most of the areas through technologies like platooning and adaptive cruise control. Through this, the chosen organisation General Motors will bring a enormous change towards environment as they are limiting their use of natural resources.
(c) Going green
In this context, the chosen organisation General Motors has taken an green initiative which will prove to be very beneficial for their organisation, it generally means company is not using any type of natural oils in their manufacturing process. Its main motive is to retain natural environment for a longer run. It will helps an organisation in fulfilment of corporate responsibilities which leads in building a effective brand image.
(d) Waste reduction
In this context, General Motors recycles the most waste arises from manufacturing as compared to other auto-maker industries. Its employees always works with a motive of recycling waste into useful products. It is essential for an organisation as it ensures optimum use of natural resources. It helps an organisation in cutting their total waste almost by 40% which will make them more competitive in a business environment.
(e) Rooftop Solar panels
General Motors has biggest rooftop solar panel station at a global level. It will help them in generating more amount of electricity as compared to their competitors. It will easily meets the amount of electricity required in their manufacturing process. It will save its costing also because most of the operations in auto-mobile companies involves huge amount of electricity. So the company has already taken a step ahead in fulfilling their corporate responsibilities in an effective manner.
According to Collings, (2014), it has been analysed that both Volkswagen and General Motors are taking crucial efforts in introducing various environment friendly activities which leads them in fulfilling corporate social responsibilities. It will surely helps them in gaining an competitive advantage in a dynamic business environment. As discussed above various initiatives like use of electric vehicles, autonomous vehicles, waste reduction, charity campaign will helps them in improving their brand image at a global level. The various education related activities to improve skills and knowledge of auto-mobile employees will helps them in creating a strong relationship between its potential customers and an organisation. These activities will also create awareness towards its competitors about benefits arises in manufacturing process by recycling the waste material. Furthermore, it has analysed that to General Motors has given more contribution towards CSR activities. It is considered as first company to receive energy star certificate from the environment protection agency. These type of certificate indicates that the company is improving there operations. GM also engage in preserving and enhancing the natural resources and natural habitats which surrounds all facilities. In middle of year 2005 and 2010, around 35 percent of reduction in consumption of water done at all the units of Toyota worldwide. General motors is the only manufacturers from north America which acquires the maximum no. of certificates from wild life habitat council. Therefore, Volkswagen are needed to make contribution in other sectors of welfare so that it gain attention of people towards its business. In order to respond towards globalisation, Volkswagen has made partnership with various manufacturing companies i.e. near about 30. This would help in arranging resources to conduct CSR activities in more appropriate manner.
Assess the current potential CSR strategies which enhance organisational success
Today, free international trade has given opportunities to organisations to sell their products at global level (Rugman and Verbeke, 2017). It also leads to growth of global economies. Corporations and government have explored as well as defined effective global strategies in order to ensure that they can develop and sustain a high competitive advantage which works for them. The territorial boundaries have broaden up and challenges also have increased multi-fold. It highlights concept of global strategic management that how it actually emerged in today's marketplace. With increasing demand of innovative and creative products, corporations are adapting to changes in fast manner. It will enhance chance of getting greatest possibilities for survival in marketplace. In this regard, innovation is considered as a key factor for their success, that is critical for sustaining satisfied customers, decreasing costs as well as enhancing competitiveness for long term profitability. Innovation with this assistance, can be defined as adding such features in products and services that prevent ecosystem from harmful effects. Therefore, CSR i.e. Corporate Social Responsibility can be considered itself as an innovation for corporations. CSR practices assist automotive industries to produce innovative vehicles which create less smoke and fuel efficiencies also. Hence, Volkswagen need to adopt formalized CSR practices as well as establish tools and procedures which are aligned with corporate strategy. Corporate social responsibility refers to a idea where companies incorporate environmental and social concern in their business operations in consideration with there shareholders.
According to Goetsch and Davis (2014), it has analysed that CSR significantly contribute to competitiveness in organisation. It brings various advantages to companies in terms of customer relationships, risk management, access to capital, cost savings, human resource management and more. With this assistance, for enhancing organisational success in long profitable manner, there are some potential ways by which Volkswagen can encourage innovation:
Environmental Sustainability Initiatives: These kinds of initiatives are adopted by corporations by concerning on two main sectors- reducing greenhouse gases and limiting pollution. Due to increasing awareness about environmental issues in public, organisations now focus more on taking steps for reducing air, land and water pollution. For this process, they reduce usage of high chemicals or introduce technologies by which toxicants can be destroyed properly. For example, Volkswagen a multinational technology company, has taken a variety of steps to reduce its carbon footprint and recycle wastage into useful products.
Direct Philanthropic Initiatives: These incentives mainly include money of resources, donation of time to various organisation and charities at international, national and local levels. These valuable donations can be used in variety of causes that includes national disaster relief, human rights, education and clean water programs in some major underdeveloped countries (Al Ariss, Cascio and Paauwe, 2014). For example Volkswagen supports donations and charities events and they have their own charity foundation, which support million of cause like education, agricultural development and eradication of dengue and malaria. In 2015, Volkswagen was largest single giver worldwide, donating more than 1.6 billion Euro to their charity foundation.
Ethical Business Practices: The main motive of ethical business practise is to helps an organisation in providing fair labour practises. It includes compensate its employees in accordance with their work and many other allowances. In supplier context, ethical labour practises includes use of certified products which helps in meeting fair trade standards. For instance Volkswagen organises various training and development programmes for its employees and suppliers in order bring efficiency and effectiveness.
Focus on Economic Responsibilities: The economic responsibility is a vital factor that helps an organisation in facilitating long term growth. It enables an organisation in balancing economic decisions which leads to improve its overall performance. For instance Volkswagen recycles their waste material to use them in its manufacturing process.
A) long-term profitability
In order to gain long term profitability, some potential CSR initiatives for Volkswagen are mentioned as below:
Fuel efficient vehicles- Volkswagen are needed to concern more on manufacturing greener vehicles which fulfils the needs of their end users and without harming the environment. In context with General Motors, it has created 12 vehicles which gives a mileage of 30 miles pre gallon on highways (Lasserre, 2017). Engineers of GM are also working very hard to create advancement in the technologies so that the vehicles can be fuel efficient resulted in less dependence on petroleum. This company is also considered as largest producers of flex fuel in the world. Thus, in order to win competition from General Motors, management of Volkswagen are required to concern on launching more fuel-efficiency vehicles.
Targeting zero landfills waste- the main objective of this activity is to prevent landfills from manufacturing waste. Nearly 50 percent of the company's manufacturing units are landfills free. At these units 97 percent of the waste obtaining from the regular production process are recycled and reused where as rest 3 percent are directly converted into energy. Volkswagen is required to give employment to more engineers. By giving a chance to freshers, they can help in creating advanced vehicles which gives advantage in lowering the impact on overall environment by reducing emission and fuel consumption.
B) Strategic partnering with society and governments in growth markets
As the main mission of Volkswagen is to serve diverse needs of customers with a portfolio of strong brands. Therefore, it focuses more on tailor-made mobility solutions. In relation to environment, society and safety, this company pay attention to use of resources as well as on emission of product portfolio, with a goal of reducing pollutant emission and carbon footprint. Through innovation, it offers maximum product safety by covering the compliance with governmental rules and regulations.
As per the above mentioned report, it has bee concluded that it is important for every organisation to develop their businesses at global level by formulating some effective strategies. It has been identified that for automotive industry corporate social responsibility are best suitable way through which they can attain their targeted goals and objective. Along with this, it can be said that waste reduction and going green is best suitable CSR activity that helps organisation in developing their positive image among customers as well as enhances its sustainability at market place.
- Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
- Goetsch, D. L. and Davis, S. B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
- Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
- Collings, D.G., 2014. Integrating global mobility and global talent management: Exploring the challenges and strategic opportunities. Journal of World Business. 49(2). pp.253-261.
- Stead, J. G. and Stead, W. E., 2014. Sustainable strategic management. Routledge.
- Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities perspective on early and rapid internationalization. Journal of International Business Studies. 46(1). pp.3-16.
- Cerdin, J. L. and Brewster, C., 2014. Talent management and expatriation: Bridging two streams of research and practice. Journal of World Business. 49(2). pp.245-252.
- Al Ariss, A., Cascio, W. F. and Paauwe, J., 2014. Talent management: Current theories and future research directions. Journal of World Business. 49(2). pp.173-179.
- Roh, J., Hong, P. and Min, H., 2014. Implementation of a responsive supply chain strategy in global complexity: The case of manufacturing firms. International Journal of Production Economics. 147. pp.198-210.
- Berry, H., 2014. Global integration and innovation: Multicountry knowledge generation within MNC s. Strategic Management Journal. 35(6). pp.869-890.
- Peng, M. W. and et. al., 2017. An institution-based view of global IPR History. Journal of International Business Studies. 48(7). pp.893-907.
- Young, M.N. and et. al., 2014. Strategy in emerging economies and the theory of the firm. Asia Pacific Journal of Management. 31(2). pp.331-354.