Volkswagen - The Key to Its Success

Volkswagen just seems to go from strength totown of Braunschweig, which enabled VW to recruit a
strength. In recent times it has quietly risen through theskilled local workforce. Once the production aspect
ranks of the motor industry to appear as the thirdwas completed, Ferdinand Porsche facilitated the
largest car manufacturer in the world today. It hasmanufacturing process and introduced flow production.
done this by a combination of sheer business acumen,He based this on the same principles of flow
some clever acquisitions and a certain amount of goodproduction at Henry Ford's production lines in Detroit
fortune. Volkswagen Group, or VW AG, as it is nowUSA. The disadvantage of flow production was the
known from its previously ill-advised acronym VAG islimited variety and flexibility within the production line,
Europe's biggest car manufacturer, with itswhich was overcome through the production of just
headquarters located in Wolfsburg in central Germany.one model - the Beetle. Through continuous
VW AG not only owns the brand VW, but also ownsre-investment of profits into research and
Audi, Bentley, Bugatti, Lamborghini, Seat and Skodadevelopment, VW grew in importance through the 70s,
which is an enviable portfolio by anyone's reckoning.80s and 90s. However, in the early 90s, VW was
To give a brief history lesson, it was in the year 1933facing a dilemma regarding their position in the market.
that Adolf Hitler decided that the German publicIt seemed that the luxury car market was growing
deserved a "people's car"; in essence it should haveextensively, leaving VW exposed with their medium
four seats to accommodate the average Germanrange vehicles. VW's CEO was keen to be involved
family, be able to drive up to 60mph but mostwith high-class brands like Bentley, who had serious
importantly to be purchased by means of a savingfinancial problems at the time and were in need of
scheme whereby people saved five German marks abacking. VW embarked on a number of high profile
week in order to purchase a car. Many paid into theacquisitions and with each one introduced the same
savings scheme but the outbreak of war ultimatelybusiness philosophies that had worked for them. By
meant that few actually received their car with thethe late 90s all of the brands were competing
notable exception of Hitler who although couldn't drivesuccessfully in their markets, improving VW's overall
received a Beetle for his 49th Birthday! The laterposition. By 2000 VW was operating in nearly every
success of the Beetle and ultimately the success ofsector of the market including Trucks, leaving them
Volkswagen arose from these humble beginnings. Theless exposed to risk should one particular market
manufacture of the Beetle was a key factor to itsencounter difficulties. VW's move to production in
success. The main aim was to keep the productionEastern Europe was criticised as it led to job cuts in
cost per unit as low as possible. Since this was theGermany. However, this was deemed necessary to
most challenging part of the equation, an entire city,keep VW competitive as cheaper labour contributed
Wolfsburg, was built in central Germany to host theto reducing costs. The ongoing success of
production site. Wolfsburg's infrastructure was basedVolkswagen is still largely dependent on their well
on the specific needs of Volkswagen. The productionorganised infrastructure, not only in Germany but also
facility benefited from its location in relation to otherthrough their supply channels around the world, which
industrial areas of Germany. In addition the railwaykeeps production costs low whilst still maintaining
connection to the Ruhr-Valley, Germany's largestquality, something which has backfired for other car
industrial area, was vital as VW was dependent on themakers.
steel supply from there. Wolfsburg was built near the