Case Study: Volkswagen's Motivation Of Global Expansion
2.0 Overseas Expansion
2.1 Motivations of Global Expansion
2.1.1 Traditional Motivation of Market Seeking One of the main reasons for a company to expand abroad is to find a new market to serve. After the Second World War, high inflation hit Germany and the domestic market shrink quickly making high surplus of production for VW. This led them to export abroad to cut losses and start to seek more market to reach economies of scale in production. From neighboring European countries, Volkswagen starts to sell and produce in United States and Brazil. Going for a multinational company, Volkswagen does not only start market seeking at that time but also resource seeking in North America, creating Volkswagen Canada Ltd. Once they had expanded widely, Volkswagen starts going into Asian market in order to answer to the dynamic capitalism of the automobile industry (Rana and Mowla, 2005).
2.1.2 Emergent Motivation of Global Scanning To stay in competition in the automobile industry, Volkswagen needs to look for any upcoming trends about the industry. According to Rana and Mowla (2015), before Volkswagen
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Organizations are complex in nature in terms of culture. The differences between the company's organizational culture can result in different ways in handling operations, management and decision making. Hence, VW should communicate such differences with its alliance partners so that mutual understanding can be achieved. Also, agreement on risks and benefits by both parties should be taken into consideration. Often, companies focus too much on the benefits and leave the potential risks of an alliance project unstated. Consequently when things go wrong, both parties will be pointing fingers at each other. To avoid this, VW should explain both benefits and risks that will be involved in an alliance collaboration so that the other parties are aware of the risks of an alliance
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