History  Built a plant in Pennsylvania in 1970’s  Steady union fights  Sales slipped  Planned on expanding to Detroit but obliterated  Pennsylvania plant closed

Improvement  10 year plan to improve sales in the U.S.  Their goal  Increased FDI  “Americanized” Jetta  Marketing strategy of nationalism

Chattanooga Tennessee  1 billion dollar operation  150,000 Sedans per year  2,000 jobs  1,350 acres

Adaption's to the car  Change gearing of it’s transmissions  Rear drum, rather than disc, brakes  European character was lost  The car isn’t as “German”  Thousands below the original price No uncomplimentary exchange rates No shipping charges Lower wages for Tennessee workers

“Americanizing the Jetta”  New standard engine is smaller and much less powerful than previously standard engine  Made the Jetta bigger and closer to the size of competing mid size sedans like the Honda Accord

Globalization  Foreign competitors able to enter the U.S. industry because of globalization

What Drives Globalization  Two macro factors 1. Decline of trade barriers – Primary responsibility of the World Trade Organization and GATT  GATT lowered barriers to the free flow of goods and services  Then completed the Uruguay Round in 1993 which further reduced trades

What Drives Globalization (continued)  Extended GATT by establishing WTO  Created to make sure nation-states follow the rules in the trade treaties signed by its 153 nations  World is a single market place with world trade growing faster than world output

What Drives Globalization (continued) 2. Technological Change  Communication  Information processing  Transportation technology  Microprocessor  Internet  Transportation technology  All of these reduce cost of information processing and communication which makes it possible for firms to go global

VW Taking Full Advantage of These Changes  Using computer- guided robot welding  Lasers that check tolerances within 1 mm  Automated engine control

Will they meet their goal?  Potential top car manufacturer in the World?  If plant continues to grow, they plan on building one for Audi (VW owns)

Questions