...1. What is your assessment of the new process for managing IT priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process? The new process is clearly an improvement over the old process. The following are the three strengths of the new process: 1. Matulovic created a new internal IT Department – Business Process, Technology and Organization (BPTO), which would serve as a centralized point of contact for all IT activities and governance issues. This resulted in much improved and effective IT governance, one in which IT supports business goals and that IT-related risks, benefits, and opportunities can be identified in a much clearer and faster fashion. Also, by having an internal IT Department within VWoA, this would mean that VWoA now has dedicated IT employees and internal expertise required in order to keep up with the dramatic growth in the use of IT within VWoA and to remain competitive among the competitors. 2. The design and flow of the new process for funding projects are now much more organized and involve various stakeholders in the decision-making process. By including everyone in the process, the VWoA is able to account for all possible small details and draw a big picture of the project structure from these parts. This process helps the organization streamline projects with similar functions and fund projects with higher priority in order to save money and time and to achieve the best synergy and utilization for...
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...1. What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process? The new process is much more structured and organized so it is definitely a substantial improvement over the old process. In the new process IT projects are prioritized to determine funding in a very efficient way, ensuring that the projects that are very important to business strategy meet their financial requirements, enabling business unit managers to work together so they would make decisions focused on the overall strategy of the company. With the new process IT resources would be aligned to corporate and business unit goals, keeping expenses under control, as well as schedule and cost overruns. I think that the criticisms by the Executive Leadership Team members were not justified at all. 2. Who controls the budgets from which IT projects are funded at Volkswagen of America? Who should control this budgets? Should the IT department have its own budget? VWAG (the parent company of VWoA) controlled the budget from which IT projects are funded at VWoA which in this case was $60 million. However this budget was controlled through a process that involved several organizational entities. There are four specific teams involved in this process: 1) the ELT (Executive Leadership Team) which had primary responsibility for executing the NRG program, the ITSC (IT Steering Committee) that would guide...
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...Volkswagen of America: Managing IT priorities Volkswagen, as the name suggests means “people’s car” and defines its objectives to design and manufacture cars which are fuel efficient and affordable. With continuous improvement, Volkswagen has not only subjugated the automotive market with respect to its low priced cars, but also earned industry acknowledgement. The core competency of Volkswagen is structured to build customer loyalty. Although, Volkswagen suffered from erratic sales pattern when the company introduced a new model commonly called as the “Himalayas chart” due to its rise and falls (Austin, 2007).This was because of the management not dealing with situations proactively. This problem was mitigated soon through its competencies in strategizing and manufacturing potentials as well as the expansion of its product diversification, i.e. the establishment of new brands which were the “classic” and the Audi brand group so that the focus is not just on the traditional mid-sized vehicles of a particular segment. Moreover, given the high quality of cars they manufacture, good service, focussed marketing and well-organized stock rotation gives Volkswagen a competitive edge over the other automobile manufactures. The highlight of this case study is to analyse Volkswagen’s business and IT strategies and the importance of process prioritization in executing and aligning these strategies with enterprise goals. With more in-depth analysis of the case, the major challenge faced by...
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...9-606-003 REV: JUNE 14, 2007 ROBERT D. AUSTIN Volkswagen of America: Managing IT Priorities Dr. Uwe Matulovic, chief information officer (CIO) of Volkswagen of America (VWoA), placed the telephone in its cradle and leaned back in his chair, replaying the just-completed conversation with one of his peers from the Executive Leadership Team (ELT). The call, Matulovic mused, had been similar to three others he had participated in that week, each with a different ELT member. The results of a new prioritization process—a list of IT projects that would be funded in 2004—had been unveiled only a few days earlier. But already a storm was gathering. The phone calls from other executives had common themes. All the callers had expressed concern that high priorities for their areas of the company had not been funded. Some had repeated views expressed during the prioritization process by people who worked for them about supposed categorization mistakes that penalized their business units. And each of the calls had concluded with an informal request to insert an unfunded project (or two) into the IT department’s work plans. “We don’t have to reopen the process,” the most recent caller had said, “but perhaps spare capacity might be applied to make some progress on this project in 2004—we’ve done this before, and it would mean a lot to our area and to the company’s growth plans.” The 10 business units that made up VWoA had proposed more than 40 projects, with funding requirements totaling...
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...9-606-003 REV: JUNE 14, 2007 ROBERT D. AUSTIN Volkswagen of America: Managing IT Priorities Dr. Uwe Matulovic, chief information officer (CIO) of Volkswagen of America (VWoA), placed the telephone in its cradle and leaned back in his chair, replaying the just-completed conversation with one of his peers from the Executive Leadership Team (ELT). The call, Matulovic mused, had been similar to three others he had participated in that week, each with a different ELT member. The results of a new prioritization process—a list of IT projects that would be funded in 2004—had been unveiled only a few days earlier. But already a storm was gathering. The phone calls from other executives had common themes. All the callers had expressed concern that high priorities for their areas of the company had not been funded. Some had repeated views expressed during the prioritization process by people who worked for them about supposed categorization mistakes that penalized their business units. And each of the calls had concluded with an informal request to insert an unfunded project (or two) into the IT department’s work plans. “We don’t have to reopen the process,” the most recent caller had said, “but perhaps spare capacity might be applied to make some progress on this project in 2004—we’ve done this before, and it would mean a lot to our area and to the company’s growth plans.” The 10 business units that made up VWoA had proposed more than 40 projects, with funding requirements...
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...1. What is your assessment of the new process for managing priorities at Volkswagen of America? The new process for managing priorities at Volkswagen of America provides more transparency and reduces duplicity in projects compared with their old method. Volkswagen established a Project Management Office (PMO) and required business units to prepare the list of proposed projects at the beginning of the year. This was a great first step in highlighting the similarities amongst the projects prior to budgets being set and work being done. It also identified the dependencies of projects on one another and allowed some to be de-scoped for subsequent years. In turn, this reduced the estimated cost from $210 million to $170 million. In phase 2, business units prepared a more formal proposal with information such costs, benefits and how the project links to a business/enterprise goal. While not embraced entirely by some of the groups, this was a good method for aligning IT projects with business strategy. By documenting a more formal proposal, Volkswagen was able to use this detailed information to help narrow down and prioritize projects. During phase 3, executives were asked to indicate the top three projects for the year. These would most likely be applied to the majority of the budget and any other projects would have to figure out a way to get funding or place projects on hold for a year. This more organized structure of prioritizing projects is substantially better than throwing...
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...Volkswagen in America : Managing IT Priorities Introduction: Volkswagen in America is a case which deals with the major issue of projects prioritization and the other issues are budgeting and funding requirements. A change for good in an organisation is necessary to keep it going but sometimes it leads to disappointment. In this case, Volkswagen has recovered by introduction on new models and changes in the organisation and then they recovered by introducing the product diversification and it was successful then it as there was insufficient IT knowledge it started e-Business but IT functions weren’t performing optimally. To overcome this new IT department was established. Dr. Uwe Matulovic, the chief information officer had to face the challenge of creating the IT environment in VWoA and introduced the Process of Prioritization and ‘Business Process, Technology and Organisation’(BPTO). The process of prioritisation was introduced which was logical and managed all the sectors of the organisation. This process is based on the goals of the enterprise. This led to the problems: a) Business units to create a project associating with enterprise goals. b) The business units were trying to influence the project as they wanted their unit to be funded. c) Most of the business units were not considered. d) The projects which were globally important were not funded. e) Most of the employees were self centered they were only thinking about their own business units instead of...
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...Volkswagen of America Case Questions & Answers: 1. What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process? To manage priorities at Volkswagen of America, a new process was implemented. It was the most efficient way of implementing a project in terms of selection and precedence,for the type of projects whose main aim was to meet the financial requirements in respect to the NRG goals. Although, there were some drawbacks in the system due to the way they evaluated all the projects using a type of ranking system.For example,if VWoA used a ranking system to select a project, their corporate did not fund for projects at the lower levels as they did not meet the company goals, even if the project would have a potential to gain success or a positive impact on the business. According to me, the criticisms are not justified, as the company derides IT as the main reason for increasing costs.This aspect of the company about IT is not completely true. The costs involved in IT projects should be considered as a long term investment which yields higher return. Therefore, the best way of selecting a project is through the ranking system which will not only help the project team choose the project easily on the basis of priority but helps in problem solving too. The new process however has helped in improving the business units in a big way because these business units...
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...Matulovic’s biggest hurdle is in regards to the capped funding that has been determined by the parent company (Volkswagon Audi Group). VWAG allotted VWoA only $60 million, out of the requested $210 million, for IT projects. Given the scope of VWoA initiatives, the amount is far from adequate. However, at the time, there were no additional funds available. The procedure for deciding which projects will receive funding is streamlined by a new prioritization process. This process for managing IT priorities is part of a new business architecture designed to align organizational activity with corporate goals and strategy. During the first few years of any new policy or procedure there are bound to be unforeseen complications. The largest glitch was how the new process did not account for “behind the curtain” programs such as the intercontinental Supply Flow Project. The Supply Flow Project should absolutely receive funding. The cost should not come entirely from VWoA, but allocated amongst the global Volkswagen group of companies. This project is critical to Volkswagen’s global supply chain management and their goals. Successful global integration not only promises company wide savings, but plays an underlying role in customer satisfaction and loyalty, the number one corporate goal. This Supply Flow Project is already underway and needs additional funding for a timely completion. The new funding prioritization process...
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...Sona Patel Volkswagen of America Managing IT Priorities The new process at Volkswagen to select, manage, schedule and fund projects seems structured and effective. The Transformation: In the 1990s, Volkswagen had a very decentralized IT system. Initially they had outsourced all their IT work to Perot Systems and in doing so they drastically reduced the IT staff within the organization. When that didn’t work well, they created Volkswagen AG company gedasUSA Inc. which acted as the point of contact with Perot Systems. Soon, they also created eBusiness teams within each Business unit which in turn developed relationships with their own third party IT providers. This highly segmented design led to high costs and poor timeline adherences. To correct this, Volkswagen created a new business unit within the organization that would be the single point of governance for IT related issues. This unit worked in conjunction with the eBusiness teams and the gedasUSA team but was solely responsible in the management, scheduling, budgeting and execution of the IT projects. This was the first step in the right direction. The New Process: There are a lot of factors that govern which projects are the most ideal to be funded and the new system seemed to understand that. The three step process was very structured and first identified the dependencies between various projects. It also classified similar projects and grouped them together for execution. This immensely helped to narrow down...
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...Case Study 1: Volkswagen in America – Managing IT Priorities INTRODUCTION This report identifies problems and recommends effective solution to CIO of VWoA Dr. Matulovic regarding the new priority management system for approving important IT project and also making right decision in spending IT project budget. IMPACTS OF INSUFFICIENT FUNDS * Estimated project budget was $170 Million but the parent organisation allocated only $60 Million. This reduced the efficiency of VWoA’s final result as most other projects were unfunded. Recommendations: CIO Dr. Matulovic could have raised for more IT project Budget from parent corporation VWAG. Board members of VWAG and Dr. matulovic could have discussed about requesting fund from government as government – private partnership or made partnership with any other private organisation for funding or could have applied for Bank loan. * Failure of SAP implementation over supply chain management domain caused a major loss to the organisation. Recommendations: As this was highly important and most costly ERP system implementation process they can guided and funded completely by VWAG parent company. As they are very critical ERP system and their failure cause adverse effect, Dr. Matulovic and IT steering committee could have fully funded the project from the allocated $60 Million budget CORPORATE GOVERNANCE ISSUES * Poor governance of internal structures, internal operations and lack of communication or reporting services lead...
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...OPERATIONS MANAGEMENT REPORT ON 1 INDEX * Introduction ………………………………………………………………………………3 * 2 INTRODUCTION COMPANY PROFILE Volkswagen is a manufacturer of passenger and commercial vehicles. The company markets its cars under the following Brands: Volkswagen, Skoda, Bentley, Bugatti, Audi, Seat and Lamborghini. The company is headquartered in Wolfsburg, Germany and employs about 300,100 people. The Group operates 106 production plants in 19 European countries and a further eight countries in the Americas, Asia and Africa. Every weekday, 572,800 employees contribute to produce cars, to keep continuous relationships with customers, suppliers and partners in 153 countries. Volkswagen is a manufacturer of passenger and commercial vehicles. The company’s key products and services include the following: Products: Passenger cars Vans Light trucks Buses Pick ups Campers Brands: Volkswagen Audi SEAT Lamborghini Skoda Bentley Bugatti Some of the company’s data are given below: (* this data is for Volkswagen AG only) Revenues by Geography: Europe, Volkswagen’s largest geographical market, accounted for 44.1% of the total revenues in the fiscal year 2006. Revenues from Europe reached €46,211 million in 2006, an increase of 9.4% over 2005. Germany accounted for 27.2% of the total revenues in the fiscal year 2006. Revenues from Germany reached €28,544 million in 2006, an increase of 10.5% over 2005. North America accounted for...
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...VW America Case: 1. What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process? Beginning with Pischetsrieder’s arrival in 2001, VWAG initiated an unprecedented product-diversification rebirth, globally as well as in the US. A consequence of this strategy required a comprehensive business realignment within VWoA called the “Next Round of Growth” (NRG). NRG clarified two high-level strategic business goals, “Build Brand Customer Loyalty” (number one) and “Improve Vehicle Value” (number two). Somewhere, during this course, I read “the primary function of IT is to support the business’s strategic goals and objectives.” With the newly defined goals within NRG, we see that Dr. Matulovic is doing just that. He is instituting a long overdue process of prioritizing IT projects which are aligned to the goals and objectives of the company. Today we say that this is a basic business fundamental but we need to keep in mind of the timeframe that this is occurring; the 1990s through the early 2000s. In this study we are seeing a company not only undertaking a major product line transition but a company in transition during the emergence of IT technologies. Through all of this and its history I see that VWoA is finally getting it right; aligning their IT priorities with their business goals. As with any new process, criticism and resistance will always be within an organization...
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...2012 International Business Globalization - Volkswagen Akshayita Saxena Anirudh Kunjal Avinash Unni Nair Nilisha Aggarwal Rahul Raghunathan Raj Jatheendran Santosh Gaurav Volkswagen – Das Auto INTRODUCTION : A BRIEF HISTORY Volkswagen, in English, translates to “people’s car”, and the German Labour Front originally founded this company in 1937, with the sole purpose of manufacturing cars for the common man, in a German car market dominated by luxury cars. The People’s car, available at a mere 990 Mark, was positioned around factors such as better fuel efficiency, reliability, ease-of-use and economy of usage. Its first prototype, the kdF-Wagen, had a distinctive round shape to its design (the Beetle continues with this design even today) and had about 336,000 takers. By 1946, the Wolfsburg factory was producing close to 1000 cars a month, a remarkable feat in those times. Post the 2nd World War, Volkswagen served as an icon for the resurrection of West Germany, and showed signs of international expansion by selling its first model in the United States of America in 1949, and its sales services were standardized there by 1955. The Golf Type-I model, was given the title “Beetle” by the quirky, hugely popular advertisement campaigns run in the U.S. then, and was officially adopted by Volkswagen only in 1998. By 1961, VW expanded its production line to include Type-III and Type-IV models, and in 1964, VW bought over the Auto Union and the NSU, successfully creating a merger...
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...1. USING THE VALUE CHAIN MODEL, DISCUSS THE WAYS IN WHICH VOLKSWAGEN SOUTH AFRICA, CAN ADD FURTHER VALUE TO THE PRODUCTS AS THEY PASS ALONG THE CHAINS. Micheal Porter’s work is the key reference on value chains and value configuration analysis for competitive advantage. Value chains are created by transforming a set of inputs into more refined outputs. The strategic challenges associated with managing a value chain are related to manufacturing products with the right quality at the lowest possible prices. The ways to reduce costs – or increase value – are primarily found through economies of scale, efficient capacity utilisation, learning effects, product and information flows, and quality measures. Critical drivers of value creation in chains also include the interrelationships between primary activities, on one hand and support activities on the other (Hollensen, 2003:43) Micheal Porter has proposed the value chain as a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver and support its product (Kotler & Keller, 2006:38). The value chain is a tool for identifying ways to create more customer value. When customers are satisfied and they believe that they are valued and obtain value from the business, they will be loyal to the organization, i.e. they will continue to support the organization. This will lead to the organization gaining a competitive...
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