Essay about The Sources of International Competitive Advantage of Vw

2821 Words12 Pages
The Volkswagen Group
What are the main sources of international competitive advantage? Think about a successful product in your country, what are the sources of competitive advantage that explain its success?

Severin Loos

European Business School London
International Business
Mr. Alan Sitkin


Word Count: 2021 words
Table of Content

1.Introduction: 3 1.2 Company Portray: 3 1. 3 Method of Analysis: 3 2.0 External Sources 4 2.1 Factor Conditions 4 2.2 Demand Conditions 5 2.3 Related and Supporting Industries 6 2.4 Firm Strategy, Structure and Rivalry 7 2.5. VW ‘Diamond’ System 7 3. 0. Internal Sources 8 3. 1. Decentralized Structure 9 3. 2. Interconnectedness of Resources and Capabilities 9
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Scientists and engineers constitute around 6.7% (Appendix 2) of the countries total workforce and 31% of all university level students are engaged in scientific or engineering studies giving further evidence for the workforce’s high compatibility to the needs of the automotive industry (GTAI, 2013a). Germany also offers an internationally unique dual education system, which combines on-the-job and vocational school training, thus guaranteeing industry relevant and specific training (GTAI, 2013b). Volkswagen has also benefited from stable labour costs and gradually falling unit labour cost of roughly 0.3% a year between 2005 and 2010 (Appendix 3). This trend has led to a considerable competitive cost advantage for all German manufacturers (GTAI, 2013a).
Germany’s infrastructure ranks second in the world in terms of quality behind Hong Kong’s (Appendix 4). This state of the art infrastructure allows Volkswagen to quickly and reliably move its in- and outputs. Additionally Volkswagen benefits from its relative proximity to Bremerhaven, the world’s largest carport for vehicle traffic (GTAI, 2013f).

2.2 Demand Conditions

Domestic demand has the potential to be an effective source of competitive advantage. Highly informed and demanding customers will exercise significant pressure on companies to continuously innovate and upgrade their products and services (Porter, 1990). Furthermore, a

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