Volkswagen in China Research Paper Example | Topics and Well Written Essays - 4000 words

Volkswagen in chinaware - Research Paper ExampleIn order for MNCs to operate effectively and gain a militant advantage it is important to assess the competitive position and the relationship between success and strategies. In a highly competitive marketplace it is very important for companies to gain a competitive advantage oer its competitors. This can be achieved by either cost advantage or offering differentiated product. Hills stool suggests that the differentiation strategies in the automobile sector in mainland China can be beneficial because of many another(prenominal) reasons comparable Chinese automobile is an expanding market and is the worlds second largest automobile industry, therefore has a lot of potential for business. Automobile industry in general has a lot of potential for differentiation strategies and gaining market through it which is evident by the lavish expenditure done on the promotion of these railcars. (Chen, J., & Yao, S. 2006 Barrow, C. 2009)This wallpaper will focus and discuss Volkswagens globalization strategies for internalization, how it formed strategic alliances globally and how it positioned itself for global battle through its formulated strategies and built strategic ventures and alliances.VOLKSWAGEN INTERNATIONALVolkswagen dates back to 1937, was founded by Ferdinand Porsche who started it as an automobile informatory company. Being unsuccessful in selling his proposed model he collaborated with Nazi Government to setup a factory and produce the cars of his proposed model. In the post World war period, VW made the most selling car of the 1950s the Beetles. It was then that VW gained recognition throughout the world. In 1960s it opened a plant in Mexico which produced cars on new lines and technology and with time strengthens its position all around the world. (Rana et al.2005) Volkswagen started off with its two go ventures in China. Its first project was a 50% venture with local leading brand print Automotiv e Industry Corporation (SAIC). The other venture was another 50% give voice venture with premier Auto Works (FAW) in 1991. Initially the company struggled to gain market but later in 1990s its brand Santana ruled the market. These joint ventures together occupy almost half of the market component part in Chinese market and have a 70% annual growth rate. China is Volkswagens second largest market in the world after German market. (Chen, J., & Yao, S. 2006 Barrow, C. 2009) Volkswagen since its start in its Shanghai joint venture in 1985 was considered to be one of the leading the carmaker in China and occupied an majestic position in the market. The emerging Chinese automotive market was a threat for Volkswagen dominant market and soon it faced severe competition with companies like Toyota, Suzuki and General Motors in Chinese markets. One of the item of VW China commented in 2005 that suddenly China has become the toughest market. (Thun, E. 2006) Not even foreign, local market p layers like Cherry and Geely also competed and tried to win the market by aggressive pricing strategies. In a research of 2002 Volkswagen occupied the largest market parcel of land in China, the details of top 5 market share holders are given below Manufacturer Sales (units) Market Share Shanghai Volkswagen 301,095 23.8 FAW-Volkswagen 207,858 16.4 Shanghai GM 110,763 8.8 FAW Toyota 95,433 7.5 Dongfeng Citroen 85,088 6.7 The table shows Volkswagen in combination with both its ventures SVW and FAW-VW have been the leading automobile company in China with largest market share in 2002. (Chen, J., & Yao, S. 2006 Barrow, C. 2009) SVW initially competed with minimal investment in China, it was able to capture high market share in the early days but soon it faced competition by the modern foreign and