Volkswagen Adjusts Global Strategy

Issue 116

Volkswagen has always thrived in the global economy by manufacturing and selling its vehicles around the world, however, recent geopolitical conflicts and worldwide pandemics that have resulted in stalled supply chains and closed off markets have caused Volkswagen to rethink its strategy and move away from the global market.

Part of this strategy will involve the company obtaining more reliable access to materials as well as shortening supply chains making the company more independent. Volkswagen has never had a strong domestic market that many U.S. competitors have and as a result has focused primarily on the global market. Volkswagen has had a great reliance on China, however, even that market is now causing worries for the VW directors.

Various supply chain interruptions have caused the company to shift away from the strategy of obtaining the most goods at the cheapest cost but rather to ensure that there are various avenues of receiving materials to better maintain desired output despite the cost.

Volkswagen has also received criticism for its use of a manufacturing facility in Xinjiang, China. Critics are concerned about the re-education practices for the local Muslim population; however, VW has stated that they undertake no such practices.

Despite the U.S. having numerous competitors to VW the company has decided to invest roughly $7 billion into the U.S. in hopes to gain access to a less volatile market.

Source: Bloomberg