Volkswagen do
Brasil - Driving
Strategy with BSC
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Problems and challenges faced
1. Falling exports
2. No proper functioning of the manufacturing units.
3. Instability and low employee commitment.
4. No proper funding and finance which led to unprofitable profits.
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Brazil Brief
Automotive Landscape in Brazil
▰Fifth largest land area and population in the
world.
▰Strong in automotive sector
▰Stands as world’s fifth in consumer market.
▰85% of the 53 million lived in urban areas.
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Volkswagen do Brasil
2008- Global Share VWAG 10.3%
3 largest automotive company
151 Countries
Generated employment for 370 thousand people and Generated revenues of 113
pounds
Sales of 3.6 million units across 10 Brands
Vision 2018 : Sell 6.6 million/unit
3 largest in VWAG behind CHina and Germany
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Volkswagen - Timeline
1939- Production of vehicles began
1953 - 1 production plant outside Germany
1956- more than 50% manufactured in Brazil
1969- 61% Brazil Car Production
1970’s - Launch of Medium Size Cars
1986 - Volatile Industry ; Decline in market
1997 - Highest sales (1.6 million)
2003- Domestic Sales Drop ( Increase in Labour and R/M)
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CEO - Thomas Schmall
2007 - Made CEO
Introduced New Procedures - Managers inside Manufacturing Units
Goal - Not to be reliant on cost reduction,employee layoffs and downsizing but use
high german tech to be a quality innovator,sales and profitability
Aggressively Rebrand
2006 - Josef-Fidelies Senn - Global HR Coordination ; Economist
Introduced BSC
2007- Carsteen Isensee - CFO
They lead a team to implement VWB Transformation
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Communication of Initiatives
Giga - Interactive communication , asks
questions about strategy
Customized Learning Map
BSC - Tool for Cultural Change - Top down even
discussed and implementing strategies in shop
floors
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Ideologies of Thomas for BSC
Approx 80% data was Hard Data
75% from internal systems
25% from external systems
20% from surveys
Data -
45% - Customers
33%-Employees
22%- Market Assessments
Management by Objective
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Compensation and Recognition
Multiple command training messages by linking compensation
system
Projects can be presented by anyone
Best employee should be rewarded
Mgmt Development Review - High performing Individuals , Job
Promotions , rotations and training
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Engaging Suppliers and Dealers
VWB - 550 suppliers
15800 different components
600 independent dealers
2008 - Supplier day Event - Recognize best annual performance
Dealer Academy - Sales, post sales service
Color coded performance analysis (Green , Yellow and Red)
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Questions
What challenges does Thomas Schmall face upon
becoming CEO of Volkswagen do Brazil
•Decreasing Market Share ( Japanese and French manufactures)
•Struggling to minimize production due to appreciation of Brazilian currency
•Due to stiff competition( Ford, Fiat etc) ,prices could not be increased
•Inefficient processes in the company
•Employee Dedication
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Describe VWBs new Strategy
•New work culture for employees to workout the problems, for improved
decisions , and for high motivation
•Introduction of balanced scorecard and strategy map
•Build a performance team to drive the company to success
•Faster adoption of these new culture and strategy
•Better Relationship with employees, suppliers and dealers
•Rebranding to be seen as high innovators of cars
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How does the strategy map and Balanced Scorecard help Schmall and
Senn implement the new strategy? What are the strengths and
weaknesses of the scorecard and its implementation?
Strategy map – helped in the analyzing the challenges in each section(Financial ,
customer, Internal ,potential and Growth)
–Gave them idea on how to overcome challenges
•Balanced Scorecard : used to monitor the outcome of goals specified in the
strategy map.
–Gave current status of how much the problem has been solved.
Problems can be solved much more faster rate if any
Weakness of Balanced Scorecard: Takes time to understand,Development and
Cost of Training
Strength of Balanced Scorecard:Efficiency,Transparency
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How can Schmall and his team use the scorecard to deal with the
challenges faced by the company in January 2009?
•Set the objectives
•Communicated through all levels of management
•Transparency was attained
•Every employee was clear with its own Responsibilities
•What all steps should be taken to overcome the challenges
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Strategic Map - Primary Strategic Goals pursued by
the Organisation
Translating vision - Achieve Market Share growth and sustainable growth by getting
the desired financials
Communicating Linking - Projects , Games , Awards and Engagement programs
Business Planning- Increase market share , improve stakeholders relationship and
financials of the company
Feedback and learning - Annual Contest , Job rotations and promotion
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Strategy Map - Objectives
Finance
Customer- Satisfy Customer's experience
Process- Service oriented , cost efficient ,flexible
production and workforce
Potential and Growth Challenge - High
performance , sustainable growth
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THANKS!
Any questions?
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