Profitability and Efficiency of Volkswagen and Peugeot



Profitability and efficiency of Volkswagen and Peugeot






When it comes to production, partnership is essential. Volkswagen`s business partners include, Microsoft, Symantec, Facebook and IBM, all made to be technological services (Preston, 2012). On the other hand, Peugeot has several partners who are focused mostly on advertisement and transaction. For instance, PayPal facilitates transactions on behave of Peugeot benefiting by 0.05% of the sales of their services (Büschken, 2007). Both companies work as online retailers using internet as the platform. They also use warehouses globally to which they pay rent fee at their period of operation. These two giant companies are great competitors. Volkswagen covers more than ten states and dominates over 20 countries (Preston, 2012).
Distribution in company can be in many ways. It depends on the demand for the goods for example, both Volkswagen and Peugeot; prefer online marketing as many of their customers buy goods from where they are (Carnoy, 1993). Most goods are transported as cargo by vehicles and ships. When it comes to the product market, it is used to exchange the final good or service. Both of them usually ship their products to specific companies after which they sell. The graphical takeout of the two companies is inelastic. This is where a product has a large change in price accompanied by a small change in the demand for the same product.
The government intervention is actions taken by the government to erect the economic fabric of the country. Both companies use the United States cargo services to deliver products to their respective customers (Carnoy, 1993). The law of the states prohibits the companies from entering the shipping areas and decreasing their opportunity for more profits. The government can play a very big role in the maintenance of an economy by either failure or success. Volkswagen and Peugeot being multinational corporations, play an important role the economy of the United States ( Büschken, 2007). Shipment of goods within the country or out of the country earns the country revenue through custom first when being cleared, while the recipient country earns import duty on the same goods.
The firms come out very efficiently in management of their premises. Both parties are seen use the internet as a line of marketing of goods making it easy for global access to their business. Free delivery of goods to customers through shipping drew more customers to their purchasing power bearing in mind that payments will be made only once (Carnoy, 1993). This action minimized the market failure of the two bodies. Through earning the government some revenue, then the companies had full support from the law makers.
In the struggle to uphold the firms, development programs came in leading to expansion of the very industries. Volkswagen has expanded its premises throughout the world, unlike Peugeot that has maintained its development on the key point of their capital (Preston, 2012). Volkswagen in the year of 2014 reported a net profit of 12.7billion euros compared to Peugeot that reported a relative net loss of 0.555billion euros. Nevertheless, Peugeot is profitable than Volkswagen since in the same year, Volkswagen`s gross profit ranged 9.25% while that of Peugeot ranged 18.50% (Büschken, 2007). Volkswagen associated to the company, to now Bentley, Audi, Porsche, Bugatti and Lamborghini; it has really captured the youth market. AS Volkswagen produces it’s on spare parts, Peugeot markets its products mostly to the European nations since they can easily source for spare parts. Both companies use monopolistic competition where they trade similar products or services where barriers are minimal and the decisions from one part does not directly affect the other. These companies being multinational, they should have at least one facility in a different country other than their mother land (Carnoy, 1993).

Preston, F. (2012). A global redesign? shaping the circular economy. Energy, Environment and Resource Governance, 2, 1-20.
Büschken, J. (2007). Determinants of brand advertising efficiency: evidence from the German car market. Journal of Advertising, 36(3), 51-73.
Carnoy, M. (1993). Multinationals in a changing world economy: whither the nation-state? (pp. 45-96). Macmillan Education UK.

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