The paper 'Suzuki versus Volkswagen' is a great example of a Management Assignment. The primary objective of this paper is to explain the troubled alliance between Suzuki and Volkswagen. The paper explains the international strategy that was pursued by Volkswagen and Suzuki. The paper also explains the advantages and disadvantages of a partnership form of internationalization for Suzuki and Volkswagen. The paper explains the cultural differences and similarities between Suzuki and Volkswagen. This paper also explains how Hofstede’ s model of national cultural differences attracted much criticism. The paper provides a brief summary of criticism of Hofstede's model. 1.
Based on the information provided in the case, what type of international strategy is being pursued by Volkswagen and Suzuki? Suzuki and Volkswagen pursued the partnership strategy. In this type of strategy, the two firms share technologies available. 2. What are the main advantages and disadvantages of this form of internationalization for Volkswagen and Suzuki? Volkswagen could have tapped the strength of Suzuki in small cars as well as its domination in the ever-growing Indian market (Ussery, 2011). It would also give it a chance to pool management resources, the two companies could have shared auto parts this would help in cutting down the cost of production and aid each other by jointly developing the next generation of cars that are cost-effective and have low fuel consumption.
By the two firms combining it was expected that VW-Suzuki combined vehicle sales would be more than Toyota’ s (Piepenburg, 2011). When the two firms partner they will maximize chances for growth. When Volkswagen partners with Suzuki they can make big steps in the compact car segment, especially in the developing markets in the Asian continent (Silverthorne, 2005).
Suzuki, on the other hand, can gain from Volkswagen environmentally friendly and efficient vehicles. When Suzuki and Volkswagen partner eight years from now will see them become No. 1 globally. When Suzuki and Volkswagen partner Volkswagen would have a wide presence in the Indian market since VW did not manufacture small cars and UP, VW’ s mini-vehicle was still being developed (Luger, 2009). Suzuki had minicars models that were mainly sold in India, Japan as well as Southeast Asia (Hamilton & Webster, 2012). This would be advantageous to VW since it would be in a position to get a share of Suzuki’ s market by producing minicars and selling them to the wider market in India, Japan, and Southeast Asia.
Suzuki was the leading company in the production of minicars this implies that VW would benefit from its market leadership. On the other hand, Suzuki would increase its sales since it will be in a position to get some of the VW market (Mente, 2012). Suzuki had about 50% share in the fast-growing Indian market as well as a gigantic network of dealers in various continents (Needle, 2010).
Nonetheless, Suzuki did not have electric vehicles, gas-electric hybrid as well as other fuel-efficient cars. The partnership would help Suzuki to get some of this feature that was missing from its company (Peng, 2012). The partnership between Suzuki and VW would enable the two firms to have better economies of scale so that they can be abreast with the stiff competition as well as massive sales played an instrumental role in regulating costs (Burrow, 2011). The partnership between the two auto companies would result in managerial issues, for instance, the management of Suzuki did not want to have a German CEO of their firm since it would lead to its leadership being undervalued and they would take orders from VW.
Cross-border deals would be instrumental to Suzuki, therefore, catapulting the firm into a global small-car hub that would supply the cars through a Volkswagen strong network (Gilligan & Hird, 2012).
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