Troubled Alliance between Suzuki and Volkswagen - Case Study Example

TROUBLED ALLIANCE BETWEEN SUZUKI AND VOLKSWAGEN By Student’s Name Code+ course name Instructor’s Name University Name City, State 1. Since the year 2009 the sales of vehicles and their parts have gone down due to the crisis in the world economy. Therefore, both companies have experienced a reduction in their sales just like other competing companies. The two companies, Volkswagen and Suzuki, are interested in improving the lifestyle of people in the motor world. The major advantage, that they share, is that most governments in the world also in interested in promoting the same and hence advertises their product unwillingly. There are no restrictions in the country on any style and a vehicle. In this case, there can be very close types of vehicles and other auto machines improving competition among them from the competitor's companies. Economically, the economy is in a recession and hence both companies need to come up with attractive prices. Both companies use quality parts to make up their vehicles, and they use mobile advertising to reach their target group. They also give a good reason for the customers to buy their products. Volkswagen, for example, has collaboration with virgin media and O2 to keep the database of their clients. On the other hand, Suzuki lies in their system to keep the same database. Technologically both companies are up to date and hence their attractiveness to the customer is easier. The partnership of both companies has also helped them to attract new clients and also maintain the already customers in their database. Economies of scale are also another strategy that the companies use to beat off their competitors from the market. Economies of scale help to reduce the cost of production and hence this helps the companies to reduce the prices. Volkswagen has an advantage over the other motor products providers in that it enjoys the first mover advantage. This is the advantage of being the first one in the market in different locations. It is expensive, but it worth venturing into a new market. It also has state of the art products, has a very strong brand name among its competitors. It is one of the names that has a range of offers and has an active management. 2. Both companies use different theories of marketing. However, both companies use the porters five model as their primary model. This a simple to understand tool but very effective when put into operation. It is especially very powerful so that one follows where in the situation of a business the power lie. It is considered very influential as explains the competitive position of the company at present and the predictable, competitive position which the business considers moving into. On the hand, Suzuki uses promotion as their highest point. The company has very vibrant development techniques. The company has explored the use of major advertising sites like the Alibaba.com. It must also be noted that the corporation also advertises in major financial and economic newspapers. It must be noted due to vibrant promotion techniques used by this company, and the company has received very high ratings. These ratings have been in terms of positive customer satisfaction. It is vivid to note that the business has used vibrant advertising to promote the products. The company has used different types of media to assist in advertising. For example, the company has used the internet to promote its products. Advertisement on the internet is a very fundamental technique since it allows many people to the global environment to view the products. It also allows people to register membership online making it very easy for anyone to access them. Their brand name Suzuki is also a leading name in the industry and hence attracts many customers and especially in India where it is considered a market. 3. Geert Hofstede’s theory of different cultures of countries is used and mostly to explain the differences between Volkswagen and Suzuki. Germany and Japan have cultural differences that have primarily affected the sales of the companies. Ontology or positivistic in social science is well related to the culture of Germans. This refers to the way to observable knowledge for individual that base on human experience because human are likely to have difference version of reality base on the different perception, this can defined as “the social phenomena” Moreover, the social phenomena can create or build the social construction such as culture, attitude, norm and value thus, because of people where came from the same social development tend to perceive things in similar way, on the other hand, indifference societies are likely to see things in difference way. This will relevant to customer’s perception, customer's satisfaction and customer's expectation (Hofstede 2001). Customer's satisfaction refers to customer judgment about product or service base on the emotional by prior experience, when customer outcome matches with the expectation; the confirmation occurred, what is more, when consumer outcome is lower than expectation the negative disconfirmation occurred thus, the positive disconfirmation will took place when the customer result is higher than the expectation. This can conclude that the positive disconfirmation can mean to the client's satisfaction and the negative disconfirmation mean to the customer's dissatisfaction. Furthermore, after this model was generated to public the several researcher such as Tam (2004) were argue that the disconfirmation theory was only consider just the after customer purchase product or service but not consider in purchasing process which are post-purchase, purchasing and after purchase moreover, a new concept of theory was considering how the expectation of customer's change during the service delivery process. The main cultural differences that led to problem in the relationship between Suzuki and Volkswagen were many, but the main ones were communication, awareness of customer needs, body language and conduct of market research. 4. Communication being a key factor in business is very essential. When there is a language barrier between the Germans and Japanese, the sale of Suzuki and Volkswagen becomes difficult. Customer needs very important to the manufacturer of every product. However, it is also crucial to note that customers from different countries have different needs on the products they use. This was a major problem that affected the relationship between Suzuki and Volkswagen. Hofstede’s work was highly criticized and termed controversially by some great economists in the world. The main criticism of the theory is relevancy. It is deemed that conducting a survey no matter how thorough it is can give a good behavior of a society. The values of the society, that are mainly measured, depends, and some may be very sensitive and hence the society and it people may not be free to be investigated on. There are different methods to learn about the culture of a society needs to be used to gain different aspects of the society. The customer loyalty is the attitude toward of customers to firm when purchasing or after purchasing product or service, the loyalty is an important factor to increase profitability to firm; this is can defined as the customer’s satisfaction and perception, customer’s belief that the quality of firm is better than other firms. Customer’s satisfaction is the key to drive the successful business but customers satisfaction cannot determine the customer's loyalty, on the other hand, for customer who not satisfy with service will return to service less frequency, in contrast, with the customers who satisfy in service will return to service on the same scale or more moreover, customer, who satisfy in service, will create and spread the word of mouth to other customers. The after sale service is the source of revenue, the effective sale service is advantage to company profit and it competitors Furthermore, the obvious advantage of quality sale service is return customers, good relationship between customers and company. The quality of after-sale service was accepted to be an effective tool to introduce the new product. Poor sale service is bad experiences that occur with customers during a period, this may destroy a good relationship between customers and firm so, when the poor service occurred the organization should take some responsibilities to keep and enhance customer’s satisfaction in order to keep the loyalty and current customers. The most popular criticism of this theory is the cultural homogeneity. This theory assumes that all the cultures are homogenous. This is not deemed to be the case. Based on recent studied the varieties of firm and industry today customers will switching to others firm or industry if it lack a good service and when poor service occurred, the reasons that may lead to the service recovery failure for instance some behavioral of service provider wasting customers time, dishonest, ineffective, terrify including some unexpected situations like inconvenience and some ethnic problem. For example of service recovery failure like when customer demand to book an airline ticket or reserve table for restaurant but there are no space for customer and customer being feel unsatisfied with service provider so, the service provider should take some responsibilities to make customers feel good for next time purchasing. Therefore, from these criticisms, the model is not perfect enough to analyze the differences in the relationship between Suzuki and Volkswagen. The differences are well outlined but cannot be well explained or solved by the use of Hofstede’s model (Hofstede 1980). References Hofstede, G. H. (2001). Culture's consequences: comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, Calif, Sage Publications. Hofstede, G. H. (1980). Culture's consequences: international differences in work-related values. Beverly Hills, Calif, Sage Publications. Read More