Restructuring / Turnaround Strategies Case Study

Volkswagen: The Restructuring Strategies

Abstract:
Volkswagen, the leading German carmaker, produced better financial results for 2005 compared to the year before. The company attributed this success to its restructuring programme, "Formotion" which was started in 2004 and continued through 2005, for the reduction of costs in the manufacturing processes. Despite the good results, the company planned to continue with its restructuring plans, as the company officials felt that in the long run its cost structure was still not justifiable. Being the largest carmaker in Europe, Volkswagen was also targeting the North American market where it has been facing severe competition from major carmakers like GM, Ford and Toyota.

Pedagogical Objectives:

• To understand the "Formotion" programme initiated at Volkswagen to reduce the costs associated with the company's manufacturing process
• To discuss the reasons behind Volkswagen's continuation of its restructuring process
• To discuss the strategies being contemplated by Volkswagen for its US operations
• To debate whether Volkswagen would be able to continue its success in the future also.

Keywords : Restructuring strategies; Dr Bernd Pischetsrieder; Cost cutting; Platform sharing; Cannibalisation; US automobile market; Legacy costs; Restructuring / Turnaround Strategies Case Study; Volkswagen; Ferdinand Piech; Formotion programme; Comparative labour costs