Volkswagen Do Brasil: Driving Strategy with the Balanced Scorecard
MGMT 561-01 FA2012
“Volkswagen do Brasil: Driving Strategy with the Balanced Scorecard”
I. Key Problem
Volkswagen entered the Brazilian auto manufacturing market in 1953 and by 1969 held a 61% share. Through some tough economic times in the late ‘80s and early ‘90s, the overall auto market in Brazil declined 20%. In 1991, Volkswagen, Ford, General Motors and Fiat dominated the Brazilian market with a combined 97% share. However, by 2008, other companies from France, Japan, Korea and China entered the Brazilian market. At this point, the top 4 only made up 77% of the auto manufacturing market; the 20% decline coming mainly from Volkswagen. Looking at the time period from 1994 – 2008, Exhibit 2A shows …show more content…
Continue down the existing path with the hope of growing their market share despite what is seen in capacity and the global market, but walking around with blinders on does not seem like the best option. One metric of the balanced scorecard calculated how fast car inventories were building up compared to consumer sales. Ignoring this metric would lead to questioning the strategy map.
Schmall and team could possibly re-vamp the existing strategy of VWB, but this would appear to be at a significant cost. There were great efforts spent establishing the strategy map and communicating it to every employee of the company. Changing it based a few months of sales declines would not seem logical. There were two key elements to the balanced scorecard, market share growth and sustainable profitability. Management might want to continue to focus more on profitability for the long term. Market share growth is essential, however in a slower economy it might make more sense to concentrate on profitability. VWB should look at their competition as well, how much had the total market declined in the second half of 2008? If the entire market was in decline it would make sense that competitors would be scaling back production as well, this may provide some relief from a