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Volkswagen Organizational Structure

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Submitted By Lemmon22
Words 668
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Abstract

A company’s organizational structure determines how job tasks are coordinated, grouped, and divided (Robbins & Judge, 2013). The type of structure chosen can have a huge impact on a company’s productivity, efficiency, and lifespan (Robbins & Judge, 2013). The following essay will discuss why the company Volkswagen needs to trade in its current bureaucratic organizational structure for the more flexible and innovative matrix organizational structure if they want to stay in business in the U.S. (Robbins & Judge, 2013).

Volkswagen Summary

Volkswagen’s performance over the last two years in the United States has been less than favorable. This German run company saw sales in America for 2014 drop by 13.4%, supporting the idea that Volkswagen is in a “new product drought” and needs to start looking for new ways to meet consumer demands (Levin, 2014). Even though Volkswagen’s luxury franchise Audi has kept the company on the map, their lack of innovation and flexibility to predict and keep up with ever changing consumer desires could sink the company (Levin, 2014). The only way for Volkswagen to stay afloat in the U.S. would be to change the way the company functions internally.

Current Organizational Structure

Volkswagen has a bureaucratic organizational structure. Its use of centralized authority makes the company’s chain of command very linear (Volkswagen, 2013). All of the company’s decisions and design ideas are made at the top and flow down to each of its twelve brand managers (Volkswagen, 2013). The different brands function independently of each other and are bound by strict rules and regulations (Volkswagen, 2013). Even though Volkswagen’s high level of formalization results in consistent and uniform output, its centralization of authority leaves all of its decision making and innovation to a select few (Robbins & Judge, 2013). Bureaucracy is efficient only as long as everything stays the same (Robbins & Judge, 2013). The goods and services market is in constant flux, thus if Volkswagen wishes to stay competitive they will need to embrace a more flexible organizational structure and allow decision making and idea formation to occur in more places than one (Robbins & Judge, 2013).

New Organizational Structure

Volkswagen would benefit from a matrix organizational structure. Because Volkswagen is the “leading multibrand group in the automotive industry” it would do well with a structure that unifies its many brands under dual authority (Robbins & Judge, 2013). The functional authority would help unit the brands under the company’s main goals and visions while the production authority would help keep the various brands focused on their own specific projects (Robbins & Judge, 2013). Currently Volkswagen has one or two main people making blanket decisions about a very diverse product line and independent brands (Volkswagen, 2013). Breaking the chain of command into two parts that have direct and frequent contact will help ideas, information, and resources get the people who need it more quickly (Robbins & Judge, 2013). Unless the brands can be linked and start to work with one another it is likely that they will fracture and the company as a whole will designate once Volkswagen’s seventy-seven year old chairman of two decades steps down (Hetzner, 2014). Conclusion

If Volkswagen wants to be a company that withstands the tests of time they will need to adopt an organizational structure that allows for unity and flexibility. Their current bureaucratic structure is too rigid and must be replaced with the more innovative and cohesive matrix structure (Robbins & Judge, 2013). Breaking up Volkswagen’s centralized authority into two functioning and interdependent parts is the only way the company will survive.

References Hetzner, C. (2014). Volkswagen’s soaring growth under Piech masks troubles. http://www.autonews.com/article/20140714/OEM/307149924/volkswagens-soaring-growth-under-piech-masks-troubles

Levin, D. (2014). Can Volkswagen turn it around in the U.S.? http://fortune.com/2014/07/03/vw-us-sales/

Robbins, S., & Judge, T. (2013). Organizational behavior. (15th ed.). Upper Saddle River, NJ: Pearson Prentice Hall Publishing.

Volkswagen. (2013). Structure and Business Activities. http://annualreport2013.volkswagenag.com/group-management-report/structure-and-business-activities.html

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