e) 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

Arguments for Developing a New Range of Self-Driving Cars

1. Market Demand: The self-driving car market is anticipated to grow, with VW capitalizing on this by partnering with Gett. This could meet consumer demand for convenience and innovation in transportation.

2. Brand Revitalization: Launching a new range of self-driving cars could rejuvenate VW’s brand image, which has been damaged by past scandals, thereby attracting new customers.

3. Competitive Advantage: By entering the self-driving sector, VW may gain a competitive edge over traditional manufacturers who are slower to adapt to market changes.

Arguments for Improving Productivity

1. Cost Reduction: Enhancing productivity can significantly lower unit costs, allowing VW to offer more competitive prices on existing and future models. This is vital as production costs can directly affect profitability.

2. Investment in Technology: By improving operational efficiency through technological advancements, VW could optimize its production processes, which would help meet the increased demand for self-driving cars effectively.

3. Short-Term Focus: In the short term, improving efficiency can lead to quick financial recovery, particularly after recent job cuts and operational challenges. This could stabilize the company before it ventures into new product development.

Recommendation

In conclusion, VW should focus initially on improving productivity as it is essential for financial stability amid its current challenges. Once stability is achieved, the company can invest in developing a new range of self-driving cars to secure long-term growth. This dual approach would ensure that VW not only remains viable in the short term but also positioned for future success.