A-Level Edexcel Business Managing Change: Evaluate the two options VW is c

Question

Evaluate the two options VW is considering to develop a new range of self-driving cars.

Extract E
The business failure of MG Rover Group

The MG Rover Group was the last UK-owned mass-production car manufacturer in the British motor industry. The company failed in 2005.

MG Rover Group did not produce new and improved cars and its existing brands, such as ‘Triumph’ and ‘Rover’, competed with each other. The original Mini, which was produced by MG Rover Group, sold in millions of units but never made much profit because of its high production costs. Also, UK consumer tastes were rapidly changing as they preferred new foreign cars.

Extract F
Production and wage cost data for a car manufacturer
Monthly output
20,000 cars
Number of production workers
400
Labour cost per worker per month
£2,000

Extract G
Toyota test drives a new hybrid

Toyota shareholders last week approved the issue of 50 million new shares – and not just any new shares.

The new ‘Model AA’ shares must be held for five years and cannot be sold earlier. Toyota will pay a guaranteed dividend that increases each year through the five-year period. At the end, shareholders can either sell the shares back to the company at the price they paid, or convert them to ordinary shares.

The idea, according to the company, is to raise $4 billion from long-term investors, so that Toyota can invest in the cars of the future. Applications for new shares were about 10 times more than the amount on offer. The firm’s managers see this investment as a response to short-term. Sheltered from some of the pressure to drive the share price up immediately, Toyota’s managers will be able to look further ahead.

Some business analysts have criticised these shares for giving managers too much protection from the demands of shareholders.

Extract H
Changes at Volkswagen (VW)

VW aims to create 9,000 new jobs as it shifts to self-driving cars. The new Chief Executive, Matthias Müller, said it was ‘the biggest modernisation programme in the history of the group’s core brand. The VW brand needs a real shake-up’.

During a presentation at the Paris Motor Show, Matthias Müller said that VW has teamed up with Gett – a rival to Uber - to create a self-driving mobility service for businesses.

In 2016, VW cut 30,000 jobs globally, partly due to the falling popularity of its diesel cars. This was a consequence of VW being fined $15bn for cheating in emissions tests on its diesel cars. The VW brand was struggling given fewer being sold and increasing costs. The VW brand was profitable, with high labour costs and a complex organisational structure.

VW’s new chief executive has been given the aim of increasing the company’s profitability. The two options VW is considering to develop a new range of self-driving cars are:

(a) develop a new range of self-driving cars
(b) improve productivity through modernisation

Evaluate the two options VW is considering to develop a new range of self-driving cars - Edexcel - A-Level Business - Question 2 - 2018 - Paper 2

Worked Solution & Example Answer:Evaluate the two options VW is considering to develop a new range of self-driving cars - Edexcel - A-Level Business - Question 2 - 2018 - Paper 2

Develop a new range of self-driving cars

Improve productivity through modernisation

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