Volkswagen Case Study Summary

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enhancer unsuited for the bad times the company was going through, many wondered what VW was trying
to achieve by still backing the brand.37
VW had been carrying underperforming brands as liabilities on its balance sheet (see Exhibit 2) for a long
time. Now, the emissions scandal, which led to one of the most expensive recalls in the company’s history,
made it imperative to prioritize and overhaul the VW portfolio. Müller was busy drafting Strategy 2025 to
focus on reviewing the current portfolio. He said the company intended to make an in-depth review of its
current portfolio of over 300 models and assess how much each contributed to earnings. The immediate
focus was on “cross-brand strategies, leveraging synergies and ensuring that group resources are used
effectively.” He also said that management would be decentralized and brands and regions would be
empowered with more responsibility and independence.38
This new strategic plan was a departure from Strategy 2018, which sought to make VW the world’s biggest
carmaker by sales volume, ahead of Toyota. Müller noted that, across the board, VW had misunderstood
Strategy 2018 to be all about boosting unit sales, which meant that “a lot of things were subordinated to the
desire to be ‘faster, higher, and larger,’ especially return on sales.” He said the key was qualitative growth,
not selling a few thousand more cars than the competitor.39
The public explosion of the scandal had a ripple effect, which caused a major curve in VW’s future direction.
It would take time for Müller’s leadership and a reformed plan to help VW reconcile with consumers,
suppliers, and the giants of the auto industry. Considering VW’s vast portfolio, what corrective measures,
from an operational context, could be recommended in the new strategic plan to prevent product recalls?