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Essay text:

• Hide financial results through German accounting principles Weaknesses • VW still trails Toyota, Mercedes, Nissan, and Honda in overall quality • VW is suffering from a bad image of its management department eventhough they have done an incredible work; Piech has no relational skills, especially with the press • They have the same problem inside the company, due to the fact that Piech has put his own team in place when he arrived, firing all potential enemies • Piech blurs the line between his family interests and those of VW • Bad publicity due to the sue from GM • VW's cost of capital is relatively higher than Daimler's • VW bungled its communications with investors Opportunities •Take advantage of the attractiveness of the new Beetle to get customers into point of sales • Growth potential in the American market, last year American sales rose to their highest level in 17 years, with a 59% increase for VW and a 39% increase for Audi • Due to its very good results on the stock exchange, VW may expect to attract numerous new investors • Potential cost decrease with their production strategy - five platforms only Threats • A softening in auto sales in Europe and South America in projected for 1999 • Risk of self-cannibalization between VW's brands, like top of the line VW's models and bottom of the line Audi's • Risk of brand dilution, confusion between the VW Passat and the Audi A4