Case study Car Wars at Wolfsburg


Complete a case analysis of Case 11.2:  Car Wars at Wolfsburg found on pages 341 of your text.  Make sure you open & read the guidelines and rubric that you will find under the Syllabus link of the class. Please note that the rubric follows the criteria outlined in the assignment guide and rubric.  

Case Analysis Guidelines                                                                          

The purpose of a case analysis assignment is to provide you with an opportunity to apply concepts from class to actual situations.  Your group case analysis should be professionally written, concise, and in APA format. Please be sure to incorporate theories or concepts from class, and outside research. Reference them appropriately.
Your case analysis should follow the model described below:
·      Read the case thoroughly in 1-2 readings.
·      Reread the case and begin your written analysis using the following format and/or headings:
·      Synopsis of the Situation:  Write a brief synopsis that describes the background information about the case, an overview of the case.
·      Key Issues:  Definethe key issues/factors and the roles of the Key Players.  You should include only those issues that impact the identified problem.
·      Define the Problem  
·      Alternative Solutions.  Develop two or more alternative solutions to the defined problem.  This should not be a laundry list of actions one could take to address every symptom, but alternative actions that could correct the problem at hand.  Identify the pros and cons of implementing each alternative.
·      Selected Solution to the Problem:  Select one of the alternatives and explain why it would be best.  Most of this work is already done if the alternative solutions clearly point out advantages and disadvantages to each.
·      Implementation/Recommendations:  Identify how to implement the selected solution and what the expected results (positive and negative) might be. Your job is to identify an action, not put off action.
By Steven L. McShane, University of Western Australia
 Over the past 15 years, Volkswagen Group (VW) acquired several fiefdoms—Audi, Lamborghini, Bentley,
Bugatti, Skoda, SEAT—that jealously guarded their brand
and continuously rebelled against sharing knowledge.
One member of VW’s supervisory board (the German
equivalent of a board of directors) commented that
 managing the company is “like trying to ride a chariot
four or five horses, each of which pulls in a different
 Then Porsche AG entered the fray. The luxury sports car
company, which relies on VW for some of its production
work, began acquiring stock in VW and eventually
achieved a controlling interest. Porsche CEO Wendelin
Wiedeking was aware of VW’s internal rivalries. “If you
mix the Porsche guys with the Audi guys and the VW guys
you will have trouble,” says Wiedeking. “Each is proud to
belong to his own company.”
 Yet Wiedeking stirred up a different type of conflict as
Porsche tightened its grip over VW’s supervisory board.
Through an unswerving drive for efficient production and
astute marketing, Wiedeking and his executive team transformed Porsche into the world’s most profitable and prestigious car company. Wiedeking wanted to apply those
practices at VW by closing down inefficient operations and
money-losing car lines.
 “Wiedeking is a Porsche CEO from another corporate
culture,” says German auto analyst Christoph Stuermer.
“He’s out to maximize profits by cutting costs. And
he snubbed
everyone, telling off VW management, interfering with their way of doing business.” Ferdinand
Dudenhoeffer, director of Germany’s Center of Automotive Research (CAR), agrees. “Porsche is very successful in being lean and profitable. It’s not going to be
 Particularly offended by Wiedeking’s plans was VW
chairman Ferdinand Piëch, who had a different vision of
Europe’s largest automaker. Piëch, whose grandfather
 developed the VW Beetle, placed more emphasis on
spectacular engineering than exceptional profits. For
 example, he supported the money-losing Bugatti brand,
which VW acquired several years ago when Piëch was
CEO. More recently, Piëch championed the Phaeton,
VW’s luxury car that broke new ground in innovation (it
boasts 100 patents) but did not achieve commercial
 Wiedeking, on the other hand, believed that VW
could be more profitable if it stopped producing the
 Phaeton and Bugatti. “Piëch sees his vision endangered
by Wiedeking,” says Dudenhoeffer. “Wiedeking said that
there are no holy cows at VW, no more Phaetons, no more
Bugattis.” These ideas made Piëch’s blood boil. “Anyone
who says that VW should pull the Phaeton doesn’t
 understand the world,” grumbled Piëch, explaining that
luxury cars represent the only segment with double-digit
 There is an unusual twist in the conflict involving
Piëch, Wiedeking, and Porsche. Piëch is a member of the
Porsche family. He is a cousin of Porsche chairman
Wolfgang Porsche and owns a 10 percent share of the
Porsche company. Piëch began his career at Porsche
and became its chief engineer before moving to Audi and
later VW. Furthermore, in what many consider a blatant
conflict of interest, Piëch supported Porsche’s initial
 investment in VW. But when Piëch’s and Wiedeking’s
plans ended up on a collision course, that initial friendly
investment in the partnership turned into all-out corporate war. “There was always a cease-fire between Piëch
and the Porsches, but now it’s war,” claims auto analyst
Ferdinand Dudenhoeffer. “This is like Dallas and Dynasty in Wolfsburg [the city where VW has its headquarters]. No company in the world is so self-absorbed with
its problems.”
 Ironically, Porsche CEO Wendelin Wiedeking’s plans backfired. Porsche had borrowed heavily to acquire its controlling interest in VW while maintaining its own business
operations. Some estimate that Porsche had loans of more
than US$14 billion. Furthermore, VW shares increased
substantially during the takeover process, so Porsche owed
massive taxes for the increased “paper profits” of the shares
it owned. The timing couldn’t have been worse. The great
financial crisis hit the world, which cut Porsche sales and
dried up funds, making it difficult for Porsche to pay interest on its loans and to renew loans that were coming due. In
 effect, it was on the brink of bankruptcy. In addition, a
unique law allowed one German state (Lower Saxony),
which had a 20 percent ownership in VW, to veto any important decisions in the company, including Porsche’s control of VW.
 Ultimately, Porsche agreed to give up its controlling
 interest in VW. Instead, it sold some of its business to
VW  and the Qatar government and, ultimately, agreed to
be acquired by VW (rather than vice versa). Wiedeking lost
his job as Porsche CEO, whereas Ferdinand Piëch (as chairman of VW’s supervisory board) would effectively be head
of both automakers. Complicated legal and financial
 matters have delayed the complete acquisition, but VW