After a recent shareholders meeting, a company CEO released a memo to all of its factory workers, numbering more than around the world, that they will be receiving a 5.7% bump in their salaries over the next 20 months. The meeting also solidified the goal of spending $ 80 billion dollars over the next two years to expand their distribution facilities by 10% around the globe, and in 5 years, they aim to be the undeniable leaders of their entire industry. They are already well on their way towards that long-term goal, set back in 2009. The shareholders of this company see some of the highest returns on investment of any other company in the industry; they even saw record profits climb throughout the recession that devastated their competitors.
A few years ago, the company enjoyed a skyrocketing day on the market and for a time, they sat as the highest traded stock in the world, owing to some corporate maneuverings that the financial analysts of the world completely missed. In short, the CEO is feeling confident that his shareholders, employees, and consumers will continue to be some of the happiest in the industry, and even those people in the world that aren’t his customers yet are grateful for the inspiring position the company has taken in terms of increasing global health and protecting the environment.
Yes, life in Wolfsburg, Germany, which should probably be renamed Volkswagen City, seems to revolve around the massive German automaker, commonly shortened to VW. The corporation contains twelve different brands of cars, including Porsche, Lamborghini, Audi, VW, Bugatti, and Ducati, and has 280 different models throughout the world. It also has 100 factories scattered around the globe, making it easy to attract and supply foreign markets with their high-quality vehicles. While the auto industry was floundering from 2008 to 2010, and again in 2012 with the European recession, VW remained profitable and continued to expand. Auto industry analysts were shocked by the company’s ability to remain steadfast among its struggling competitors and stock market wizards were baffled by their consistency. The question arises – how were they able to do it? What secret did they know that everyone else seemed to have missed?
Well, first of all, VW has followed in the infrastructural footsteps of General Motors (GM), which was the dominant name in the auto industry for more than 5 decades, from the ‘20s to the ‘70s, and one of the most powerful brands in the world. They believed in an inclusive approach to business and eliminated their dependence on other companies for parts and services. Outsourcing elements of business has been a popular trend for larger multinational corporations in recent decades and it is often successful. However, by building every part and providing every service within their own factories, VW was able to keep all of their own profits and rely only on them-selves to maximize profit margins and guarantee efficiency.
A great deal of focus is placed on boosting the satisfaction of consumers, employees, and shareholders through means other than profit and oddly enough, the idea of “profit” has become negatively associated with the inherent failings of big business, corporate greed, and decadence. The reputation of large companies has taken a major beating in recent years as the transparency of business dealings and investigative reporting has shifted focus from politics to industry. There are a few fundamental purposes of business and industry; one is to provide a necessary or desired service or product for consumers, but the second, from the standpoint of the company, is to make money in the process to stimulate the economy and to promote personal and corporate wealth.
Unfortunately, modern business has tended to focus on profits and personal gain, at the expense of the consumer happiness and satisfaction. This is not a sustainable way of doing business, because your reputation will eventually catch up with your behavior, and consumers will begin looking for other options. The solution is not to completely switch from profit to consumer satisfaction; a balance needs to be struck. Furthermore, the stigma against making profits needs to be eliminated, because that is an essential part of creating a happy company; there is no denying that fact.