German Carmaker Vw in the European Business Environment

Topics: European Union, European Coal and Steel Community, Treaty of Lisbon Pages: 9 (3164 words) Published: August 7, 2013
Table of contents

Introduction: Volkswagen – Das Auto2
1. Report on the effects of the Single European Market on VW2
2.1 The Treaty of Rome3
2.2 The Single European Act – SEA4
3. Volkswagen’s performance within the competition policy of the EU5
3.1. Illegal discouragement of Volkswagen’s own car dealers5
3.2. Porsche’s attempt to take over Volkswagen6
4. Future prospects7
5. Conclusion7
6. Bibliography8

Introduction: Volkswagen – Das Auto

The German car manufacturer Volkswagen is with 7.31 million manufactured vehicles in 2010 (making every fifth car a VW car) (Anon., 2011), a tremendous annual sales revenue of €159.3 billion (Winterkorn, 2012) and three VW-cars in the list of the ten top-selling cars of all time one of the most famous carmakers all over the world (Siu, 2013). Volkswagen nowadays employs 100.000 workers (Kayser & Schröder, 2011) and the headquarters are located in Wolfsburg, Lower Saxony, Germany. VW was founded in Berlin in 1937 by the Deutsche Arbeitsfront (German Labour Front) with the original purpose of manufacturing “peoples’ cars” - amongst war machinery - since cars back then were still considered luxury items and only one in 50 Germans was able to afford such a commodity (“people’s car” being the English translation for Volkswagen). The largest Volkswagen factory in Wolfsburg survived the Second World War reparations with the help of the British, who were not interested in dismantling the factory and rather let it manufacture cars for their army instead (Clausager, 2000), becoming part of the German economic recovery. This circumstance marked the beginning of Volkswagen’s success story, with the export of its flagship the VW Beetle to the US and Canada and other parts all over the world as well as intensive marketing and the creation of a diverse range of vehicles, the German car manufacturer was able to maximize its sales and to create a strong brand awareness all over the world, making it the successful company which it is today.

1. Report on the effects of the Single European Market on VW

As stated above, this report is written on the evaluation of the effects of the Single European Market on the company VW. To fully understand the effects of the Single European Market, it is essential to analyse its origin, which is rooted in the Treaty of Rome and the Single European Act. It will furthermore analyse in what ways the competition policy passed by the European Commission has affected the company and what future prospects for Volkswagen might lay ahead. There will be a conclusion of the facts gathered at the end of the report.

2.1 The Treaty of Rome

The need for a common market and economic cooperation as well as the careful reconstruction of the European continent after the Second World War called for a comprehensive contract, which is constituted by the Treaty of Rome. The treaty, signed in 1957 by France, Belgium, Luxembourg, West Germany, the Netherlands and Italy, compiled many important points still valid today and led back then to the establishment of the European Economic Community (EEC), which itself was preceded by the European Coal and Steel Community (ECSC). Not only did it found four crucial institutions – the European Commission, the Council of Ministers, the European Parliament and the European Court of Justice - but for the first time it also promoted the four economic freedoms: free movement of goods, free movement to provide services, free movement of capital and free movement of people, intending to break down the barriers and borders between its members (McCormick, 2011). More precisely, the Treaty of Rome implemented several changes: For example the elimination of customs duties between member states (Articles 12 – 17), the setting up of a common customs tariff (Articles 18 – 29), the freedom of movement for workers as well as their right of establishment within the community (Articles 48 – 58), the freedom to...

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