Volkswagen do Brasil Driving Strategy with the Balanced Scorecard Case Solution

1. How could the new management team of Volkswagen do Brasil resolve the problem of losses caused by the Great Depression?

The Great Depression impacted businesses and economies worldwide and similarly also negatively affected the financial position of Volkswagen do Brasil as revealed by the fourth quarter results of 2008. Purchasing power of customers worldwide was drastically reduced due to the depression which lowered demand for Volkswagen’s products leading to a fall in revenues and profitability for the company Volkswagen do Brasil had to respond by cutting down on production and reducing its spending to keep expenses in control. This was impacting Volkswagen do Brasil’s objectives of increasing market share and development of new products. The new management at Volkswagen does Brasil was faced with the dilemma of whether to restore funding or increase production levels and resume discretionary spending for the various initiatives of the company.

The market share of traditional market leaders which included Ford, Fiat, General Motors and Volkswagen do Brasil, was declining as French automotive manufacturers were expanding their presence from Asian Countries into the Brazilian market. In order to retain its market share and recover from losses brought about by the Great Depression, the new CEO Thomas Schmall was faced with a major challenge. An approach was needed that could communicate the objectives of the top management down to production workers to allow for effective execution of strategies and objectives decided by top management. The new management team deploys a strategy map and Balanced Scorecard to accomplish a turnaround of the losses faced by the Volkswagen do Brasil for eight consecutive years. The strategy map aims to align the resources and activities to the objectives of the company to motivate its 22,000 employees and appropriately communicate strategy to them. The culture of the company had become stagnant which made it difficult to improve company performance and hence to resolve the problems faced by Volkswagen do Brasil top management had to focus on developing new and improved relationships with key stakeholders of the company, primarily employees, dealers, and suppliers. The CEO is committed to re-branding the company with highly motivated employees that would work towards innovating and launching high performance and light vehicles. An executive is assigned to each objective who is responsible for ensuring that the particular objective is achieved efficiently and effectively.