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    Aleena Amir EM Quiz 8

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    Aleena Amir
    Volkswagen entered the Chinese market early and made wise decisions around partnerships that helped its automobiles gain popularity. It cooperated with the city of Shanghai to establish a taxi company using its Santana model, and as competition increased Volkswagen added new models and lowered prices. Originally another company handled Volkswagen's marketing, but it has since developed its own sales network and dealer incentive programs. While Volkswagen's sales continue rising, its market share is declining as other automakers increase investment in China.

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    Aleena Amir EM Quiz 8

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    Aleena Amir
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    Volkswagen entered the Chinese market early and made wise decisions around partnerships that helped its automobiles gain popularity. It cooperated with the city of Shanghai to establish a taxi company using its Santana model, and as competition increased Volkswagen added new models and lowered prices. Originally another company handled Volkswagen's marketing, but it has since developed its own sales network and dealer incentive programs. While Volkswagen's sales continue rising, its market share is declining as other automakers increase investment in China.

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    Volkswagen entered the Chinese market early and made wise decisions around partnerships that helped its automobiles gain popularity. It cooperated with the city of Shanghai to establish a taxi company using its Santana model, and as competition increased Volkswagen added new models and lowered prices. Originally another company handled Volkswagen's marketing, but it has since developed its own sales network and dealer incentive programs. While Volkswagen's sales continue rising, its market share is declining as other automakers increase investment in China.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    118 views3 pages

    Aleena Amir EM Quiz 8

    Uploaded by

    Aleena Amir
    Volkswagen entered the Chinese market early and made wise decisions around partnerships that helped its automobiles gain popularity. It cooperated with the city of Shanghai to establish a taxi company using its Santana model, and as competition increased Volkswagen added new models and lowered prices. Originally another company handled Volkswagen's marketing, but it has since developed its own sales network and dealer incentive programs. While Volkswagen's sales continue rising, its market share is declining as other automakers increase investment in China.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Export Marketing Quiz 8

    Aleena Amir Section G

    1. Evaluate Volkswagen’s strategies with regard to marketing. (8)

    Volkswagen’s marketing decisions were limited by government regulations, involved


    considerations of the long-term potential of the market, and were directly tied to its changing
    entry strategies. Volkswagen’s early entry into the Chinese market, and its entry decisions,
    enabled it to become the nation’s market leader in automobile sales. It made wise decisions in
    selection of partners that could provide political and economic support and could directly
    increase the market for its automobiles.

    Its cooperation with city of Shanghai resulted in the city setting up a taxi company using VW’s
    Santanas. As the market in China expanded, and competition increased, Volkswagen added
    additional models to its line. It has also lowered prices as other companies have expanded
    manufacturing in China and competition has increased. With China’s entry into the WTO and
    attendant lowering of tariffs, the company is also increasing imports of specialized models that
    cannot be sold in sufficient numbers to justify local manufacturing.

    These models add to its prestige. Originally, a partner had the responsibility for marketing the
    cars produced in its initial joint venture. VW has now developed its own sales network, an
    incentive system for dealers, and is moving into financing of car purchases. The marketing
    policies, and directly related manufacturing policies, have been very successful to date.
    Increasing investment by other automobile manufacturers is resulting in a decline in market
    share even while VW’s sales are increasing

    2. What choices did Volkswagen have in market entry strategy, and did it make a wise
    decision? (8)

    Volkswagen originally entered the Chinese market through exporting, and its success made it
    confident that it could sell enough cars in China to justify entering into assembly and eventually
    manufacturing there. Government regulations required that it have a Chinese partner or partners.
    The first step in the process of investing was to develop relationships with government officials
    at the national, regional, and local levels.
    As the location for its first assembly plant, it chose Shanghai, the industrial and business center
    of the country. Its first partner, under the control of the municipal government, had an excellent
    industrial network for supplying parts. The Bank of China became a third partner (valuable in
    facilitating payments, etc.), and a firm controlled by the national government became a fourth
    partner. Its second joint venture was with a firm directly under the control of the central
    government.

    Volkswagen has carried out policies of increasing the use of locally made parts, establishing
    joint ventures, developing licensing agreements, and undertaking other forms of cooperation. It
    has modernized its production lines and provided employee-training programs to improve quality
    and productivity. Its strategies have been very successful, providing stronger growth than
    enjoyed by other entrants into the market.

    3. Should Volkswagen make a strong effort to maintain market share? (6)

    Volkswagen cannot maintain market share. The market is growing rapidly, but the amount of
    FDI flowing into China from other European, American, and Japanese automobile manufacturers
    is growing even more rapidly.

    Meeting overall market demand would require investments of an amount beyond the capacity of
    VW. Oversupply is already emerging as a problem and prices are falling. Volkswagen needs to
    concentrate on improving productivity and lowering prices to remain competitive, hopefully
    continuing to increase sales while market share will inevitably be eroded.

    Therefore, yes, they should make a strong effort to maintain market share because it can make
    the business less volatile to changes.

    4. Could selling the super luxury Phantom in China be useful for Volkswagen even if it
    does not make money there? (4)

    Having a super luxury car in the Volkswagen lineup should contribute to the company’s image
    and prestige. This may be helpful in getting increased sales across the whole line of VW-
    produced automobiles.

    Moreover, as China is one of the fastest growing economies in the world, luxurious cars would
    definitely be an attractive market for Chinese buyers.
    5. What benefits can Volkswagen expect from its promotional activities? (4)

    Its promotional activities keep Volkswagen’s name in front of the public in the increasingly
    competitive Chinese market. It also should give the company an even better image with the
    people and government.

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