VW Do Brasil
Report by Khaled Akida – BU671
Word Count: 1749
For Case Discussion
1. What challenges does Thomas Schmall face upon becoming CEO of Volkswagen do Brasil in 2007 (VWB)?
Since 1999 till 1007, VWB faced market share decline and ﬁnancial losses. Schmall and his management team started introducing balanced scorecard
to monitor and analyzed the root cause of those problems: that was a big challenge as Schmall wanted the tool to be VWB primary management tool,
and this needed to restructure part of the organization chart to accommodate new leads and task force for this project. The task force main focus was to
come up with a strategy map based on ﬁnance, internal process, ...view middle of the document...
By late 60’s, its strategic reliable production and low cost car made it earn 61% of Brazil car production market
share. In the 70’s, VWB launched medium size cars and exported 40% of its cars to Europe and North America by late 70’s. The mid 80’s was
somehow tough time due to macroeconomic situation in Brazil where car production declined by 20%. Fluctuation in sales and growth was the
keyword within 90’s and early 2000’s. In 2003, VWB introduced two key indicators: Things Gone Wrong and Customer Satisfaction Index. When
Schmall came on board, he wanted to change VWB strategy based on cost reduction, employees’ layoffs, and capacity downsizing. His vision was to
build great team that strives to drive VWB to be the best in quality, innovation, proﬁtability and sales on a well-founded basis. He moved managers
inside the manufacturing units so they can plan and set target and align objectives with all teams, monitors all metrics and take action to mitigate
problems. He also introduced new procedures in way managers can interact with production lines. Further, compensation system was related to
3. How do the strategy map [Exhibit 4] and Balanced Scorecoard [Exhibit 5] help Schmall and Serun implement the new strategy? What are the
strengths and weaknesses of the scorecard and its implementation?
Schmall and Senn worked before with BSC and were convinced its introduction to VWB would boost the new strategy and culture adoption. The
Strategic map was based on four milestones: ﬁnance, customer, internal processes, and potential and growth. Some of the strategic map objectives
were to satisfy customers’ expectations, improve company’s image, develop service-oriented culture among leaders, reduce cost, improve efﬁciency,
develop sustainable and attractive innovative products, and achieve high-performance culture. Strategic map could convert intangible asset (employees)
into ﬁnancial results. It also translated the company strategy into a language that anyone within VWB can grasp. The strategic map and BSC could
decode objectives into operational terms that enable employees to monitor their results. Schmall and Senn used it to identify the priority objectives,
developed the right metrics, and set achievable targets for each metric in order to motivate people. Each objective has its owner who sets strategic
initiatives, monitor metrics and achieve the best performance. Ofﬁce of Strategy Management was established to roll strategy execution program
throughout the company. Communicating BSC was the key success of the transformation program: training sessions, internal competition among
workforces to generate new ideas that translate strategic concepts into shop ﬂoor actions. The aforementioned discussion showed the strengths of
strategy map and BSC, but it still have weaknesses such as long time to train people on the tools and its applications, extra cost on restructuring the
organization, training people and...