Manufacturing Strategy Analysis of Giants: Volkswagen and DHL

The Discussion is aimed at studying and analyzing case studies of two giants in their respective fields. One being Volkswagen which is a manufacturing company and other being DHL one of the biggest companies involved in courier and package delivery. Both the manufacturing and service company will be discussed and their competitive advantage stated. The discussion is also aimed at providing suitable recommendation and implementation of recommended techniques and methods.

Volkswagen is a German based automobile manufacturing company which has spread its roots all across the world. The Volkswagen Group has set some goals for the company which is planned to be completely initiated in the future. Currently, the global giant company is focusing on environment protection. For this purpose, the organization has created a new mission statement which is goTOzero. The goal is to improve the entire automobile development process by developing the production and operations of the organization keeping the effect of the same on environment in their mind. In this process the organization also aims to recycle and reuse spare parts, body parts and other materials used in the scraped car models of the company. Three primary strategies of Volkswagen for establishing a competitive advantage:

1. Cost Leadership – Here the objective of the organization is to be the lowest cost creator. This strategy can be initiated by large scale manufacturing company such as Volkswagen. The strategy enables the organization to exploit the economy as it is a large-scale production hub of automobiles.
2. Differentiation – The differentiation strategy generally the organization’s products are differentiated from the competitor’s products. The organization needs to produce and deliver high quality products.
3. Focus – Through focus strategy the organization can focus on the narrow target market segmentation with their high quality products. The strategy is said to be successful when the company is able to respond to different needs and wants of the customers.

DHL (Dalsey, Hillblom and Lynn) is one of the most successful service companies, providing parcel, courier and express mail services. It is an American-German company, which has its current operations spread in 220 nations and territories delivering more than 1.3 billion parcels a year. The mission statement of DHL consists of four elements. These have been highlighted below:

• We make our customers, employees and investors even more successful.
• We always pay respect to our associates and perform well at the same time.
• We facilitate and simplify the life of our customers.
• We contribute to making world a better place.

It is imperative to any company in service sector and DHL in particular to understand the competition from others in the industry and formulate strategies accordingly. The strategies utilized by DHL to increase its competitive advantage are as follows:

• Cost leadership - this is one of the best practices that any company can adopt as it would attract customers due to low cost services being provided the companies involved in healthcare, technology, energy, manufacturing etc.
• Focus - this criterion is of significance and can be broadly classified into two areas of focus namely- Cost focus and Differentiation focus. In this specific strategy, the company needs to focus on a narrow section of population or market segment and customers with varied needs and requirements.
• Differentiation - DHL maintains an excellent service and adheres to the commitments made. This can be enabled by maintaining good standards of delivery, for instance by making sure that the goods in transit are undamaged. This gives an edge over its competitors.

Volkswagen has initiated the Strategy 2025, which emphasizes on the production growth and the use of electric cars. According to their mission statement goTOzero, which focuses on the environmental concerns arising around the world, Volkswagen Group tends to work on their production front to develop efficient electric cars which will reduce the use of fuel based cars. This is the brief of the Strategy 2025 developed by Volkswagen. The company aims to produce 30+ electric cars and launch them in the global market. Following the latest trend on the use of electric cars, it is estimated that the compound annual growth rate of the electric vehicles will expand up to 23% by 2025. This is a good growth rate which enables the organization to develop more units of their electric vehicles so that it can replace the use fuel based vehicles. It is also forecasted that the global automobile economy will experience a major shift from fuel based cars to electric cars by the year 2030.

Numerous cases can be cited to establish how advantageous DHL is compared to other companies in the industry. Recent developments might pose a serious threat to DHL’s goal to develop a sustainable development strategy. FedEx, one of the biggest competitors of DHL and a leading company in the industry, plans to take over TNT express, in order to expand its business in the European markets. If FedEx successfully cracks this deal, it would necessitate DHL to formulate a different sustainable competitive strategy. Being a logistics giant, DHL employs more than 500000 employees the world over.

Discussion on Success Strategies

For Volkswagen

• Sustainability Strategy – The introduction and development of electric cars will confirm the sustainability of the organization. Volkswagen shifted to the production of electric cars at a time when the automobile industry was planning to work on electric vehicles. By now Volkswagen has created a great market structure globally and confirmed its sustainability for future.
• Environment Protection Strategy – The mission statement of the organization reflects the need and importance of this strategy. The organization shifted to the production of electric vehicles due to the fact that fuel based vehicles is causing damage to the environment.
• Marketing Strategy – Electric vehicles itself are so innovative and efficient on their own that the organization does not require additional marketing strategy. The only strategy initiated by the organization for the market is to promote the use of electric vehicles.
• Employment Management Strategy – The employment management strategy is based on the efficiency and the skills of the employees hired by the organization. The organization focuses on the employees so that they can implement their personal skills and innovative ideas for better performance of the organization.

Competitive advantage strategies of DHL

• Sustainable competitive strategy - The competitive strategies to deal with the diverse market demands and stay ahead of the competitors need to be sustainable.
• Marketing strategies - It must be recognized there are numerous companies across the globe that offers similar services as DHL. Hence, it necessitates DHL to formulate its marketing policies accordingly. Better marketing and strategies has always had a part to play in the success and development of any company. DHL must aim to align themselves with the market needs and at the same time market their services in a comprehensible way. The marketing strategies of DHL are currently well endowed to tackle the competitions from others in the industry.
• Employee management strategy - It is of essence to have an effective management within the organization to guide the employees towards the desired company goals. A faulty management often leads to a company’s downfall, as the employees are not able to work to their complete potential . The need for effective management is extreme for a company of this stature as, slightest errors in management can lead to loss of millions, and degrade the company’s market reputation.
• Environmental sustainability strategy - Every company has a social responsibility and must uphold its standards of environmental protection. Since, DHL is a logistics company; most of its operations cause carbon dioxide emission. This can be detrimental to the environment, and DHL must take special care to adhere to the environmental norms. This plays a big role in developing the company’s reputation as it portrays the company as a socially responsible one.

Conclusion and Recommendation

To conclude it can be said that the competitive strategies used by both the companies, one a manufacturing company and the other a service company have been discussed. Relevant cases have been mentioned along with the company’s mission statements. Basic strategies adopted are similar in both the companies, however there are minor differences. These similarities and differences have been highlighted and discussed.

Both the companies have suitable competitive strategies to be able to thrive in a competitive market. However, Volkswagen and DHL can secure an even more competitive position in the market by increasing the quality of the staff and their workforce. Often neglected, many companies fail to realize that the workforce is the backbone of any company. The companies must make sure to hire quality employees and also invest in training and development of these employees.

The prospect of strengthening the workforce is often challenging keeping in mind that both the companies discussed above have a global presence. This essentially means that there is huge diversity in the workforce. Management in both the companies can easily implement the recommendations by providing proper HR trainings throughout the company. In addition they can set a basic hiring criteria.

References

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