Vertical Integration Volkswagen

A way to measure if a firm has high vertical integration is through a value added in sales ratio. If it is high, this means that the firm is vertically integrated. Volkswagen’s sales are one of the highest with respect to its competitors. Volkswagen is known for being a “manufacturer in-house” because of its extensive set of operations, facilitating a high level of vertical integration in most of its plants. Not only include the process of manufacture, it also includes the engine, axle, and steering and suspension production. Volkswagen has a plan to invest in the R&D to continue with many operations in-house.

The main plant for Volkswagen is Wolfsburg where is assembled 45% of vertical integration. The group counts with the joint venture of different business which takes care of different parts of the process of manufacturing a vehicle. For example, Volkswagen Bordnetze, this handles the wiring systems, and ArvinMeritor, which assembles the complete interior of the Golf. The Pune plant is one of the most modern in the Volkswagen Group. It has a high level of vertical integration and a large share of local suppliers.

The facility is the only production plant operated by a German automaker in India that covers the entire production process from press shop through body shop and paint shop to final assembly. Volkswagen is trying to integrate resources and development from external expert to their internal development capacity. To be able to use the know-how from their suppliers and work close to be capable to meet the coming trends on the market. (196) Volkswagen has not entered different markets to consider itself as a diversified firm. The company counts with a bank called Volkswagen Bank to facilitate the financial operations that the service offers.

Also, Volkswagen promotes itself by organizing different types of events as they are the known racing cars by Volkswagen Motorsport. Volkswagen bought a 90% of the design studio Italdesign to improve the designs of the vehicles and in this way enrich their design department. Volkswagen Financial Services (VWFS) offers competitive finance and insurance products within the Volkswagen Group of costumers, to over 700 retailers nationwide. VWFS AG was established to form the basis of an expanding global financial organization. The company shows great confidence and from a consumer point of view offers security when performed.

“The advantage of using Volkswagen Financial Services is that, from a customer point of view, we are a one-stop-shop: you can order finance, as well as insure your vehicle, and have the backing of a reputable company…” Martin Ballard (General Manager, Volkswagen Financial Services).