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Volkswagen Company: Applying Organizational Structure Essay

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Updated: Jul 22nd, 2021

Introduction

Volkswagen has remained one of the most respected and trusted automobile brands in the world. The corporation produces superior cars despite the existence of an ineffective culture that has led to numerous challenges (Elson, Ferrere, & Goossen, 2015). This discussion describes the major misfortunes and fortunes recorded by Volkswagen within the past few years. The bottlenecks emerging from its top-down corporate structure are analyzed. The paper concludes by proposing an effective structure that can make a difference for the company and increase profitability.

Fortunes and Misfortunes

Volkswagen has faced a number of misfortunes as well as fortunes within the past two years. The strained relationship between the CEO, Martin Winterkorn, and the chairman of the board revealed the managerial challenges affecting the corporation. It is evident that more workers are facing similar hurdles in their places of work (Elson et al., 2015). Volkswagen was associated with various scandals and Clean Air Act violations that forced its CEO to quit his job.

The major fortunes include increased sales and profits due to the ability to innovate and produce high-quality products. After Martin Winterkorn left his position, the company’s stock prices have been increasing slowly. The company’s acquisition of various companies within the past few years has supported its objectives (Elson et al., 2015). These successes explain why new changes in management can promote performance and make Volkswagen successful.

Current Organizational Structure

Volkswagen is a multinational corporation characterized by a top-down organizational structure. This kind of corporate structure is implemented in such a way that decision-making is made by topmost leaders whose insights are acquired from a small number of competent advisers (Elson et al., 2015). Experts believe strongly that the utilization of this structure has disoriented the manner in which information is shared by different stakeholders. The level of control associated with the structure disorients various organizational functions.

Elson et al. (2015) acknowledge that the executive structure has discouraged many employees from pursuing their personal objectives and those of the corporation. Workers who are not empowered find it hard to engage in innovative practices and promote initiatives that can drive performance. The workers do not present their complaints or suggestions to their respective supervisors, thereby affecting the efficiency of different teams. This scenario explains why it has become hard for different workers to prioritize the organization’s needs.

Suggesting a New Organizational Structure

Volkswagen’s corporate structure has catalyzed an ineffective working environment. This issue has led to numerous misfortunes. The workers lack motivation, support, guidance, and empowerment. This information should be utilized to develop a new corporate structure that is less formal and leaner (Robbins & Judge, 2013). A fluid leadership hierarchy will ensure every employee is empowered to focus on emerging challenges, offer evidence-based ideas, and become innovative.

The ineffectiveness of the structure explains why open communication, decision-making, and innovation are not embraced by most of the employees. After implementing this new model, a new organizational culture supported by motivated employees and positive behaviors will make Volkswagen successful. The main assumption is that a fluid hierarchical approach will streamline decision-making processes, empower more individuals, and ensure innovation becomes a reality (Robbins & Judge, 2013).

Summation

Volkswagen’s journey has been defined by numerous challenges, opportunities, and misfortunes (Elson et al., 2015). The current organizational structure has been observed to affect effectiveness and communication. This has led to numerous misfortunes, such as the diesel scandal and loss of brand equity. A less formal arrangement will make a difference for the company by promoting superior practices that can ensure challenges are addressed in a timely manner.

References

Elson, C. M., Ferrere, C. K., & Goossen, N. J. (2015). The bug at Volkswagen: Lessons in co-determination, ownership, and board structure. Journal Applied Corporate Finance, 27(4), 36-43. Web.

Robbins, S. P., & Judge, T. A. (2013). Organizational behavior (15th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

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