Analysis of Political and Economical Factors of Volkswagen Decision-making Process

The decision-making process of the company is affected by many factors in the macroeconomics of an organization. Similarly, for many automobiles companies, there are many factors which can affect their decision-making process and these factors are Political Factors, Economical Factors, Social Factors, Technological Factors, Environmental Factors and Legal Factors. Study of this factor simultaneously is known as PESTEL analysis. Furthermore, in this report, we will be discussing this factor for Volkswagen.

Political factors:

For Volkswagen Company we find that the organization is facing many political difficulties as the company is not located in four or five places it has been located in 150 countries as it has a huge network for the car production (manufacturing). The company is facing many different political situations in many countries. The political situation amongst the country is not same. The company has to make different strategies to come over it for many different countries. For example, the political situation in Europe is not same as the Asian countries. The organization has to deal with the policies which are made by the government of any country. Many industries like banking and finance sectors also play an important role, as banking sectors are dealing with the vehicle loans and finance sectors deal with the rate of interest and these are decided according to the government policies. Many countries which are emerging as a good economy are welcoming many automobiles company and Volkswagen is taking advantages of it. The biggest challenge for the Volkswagen Company is to understand the different political issues which are taken by any government. The political policies in China are different as than Brazil.

Economical Factors:

For the development of any country, automobiles industries play an important role as they contribute to the national income of the nation. Similarly, Volkswagen helping the countries in which they are present by contributing in the form of GDP. This is the reason why many countries are welcoming Volkswagen as the company is helping to develop the economy of any country and this is the plus point for the Volkswagen corporation. The company is also helping many sectors like steel company, glass company etc. Such kind of company helps many emerging economies countries like India and China and Volkswagen is taking a great advantage of it.

Apart from that, there are some disadvantages for unpredictability in the economic condition. For example, in Europe, many people don't have enough money to buy a car and this is a main problem for the manufacturing companies. According to the statistic, there is a huge downfall in the sale of Volkswagen in South America in 2011. So to come over with this situation Volkswagen introduced many car brands which are from the higher segment as well as the lower segments. The country which is not good in the economy the company Volkswagen deal with the lower segments car. Another problem with the sales of the car is the increase in the petrol prices which directly affects the sales of the car and this condition is directly related to the economic situation of the country. Hence to deal with this kind of situation volkswagen is now focusing on alternatives of diesel and petrol.