On 2007, Volkswagen AG financial performances hit its record sales and earnings, selling more than 6 million car in a year and accumulating approximately €113,808,000 sales revenue (Volkswagen Annual Report, 2008). Martin Winterkorn, Volkswagen's Chairman of the Board Management realised that Volkswagen secret of success is thanks to the continuous effort towards new knowledge creation and innovation process. Gurteen (1998) stated that collaboration enabling firms to initiate faster knowledge creation and innovation. Drawing from Gurteen's statement, Volkswagen AG's new knowledge creation and innovation process (via strategic alliances and acquisition) allowing them to gain a new knowledge of automobile industry faster and meet different needs of customers. It saved them from the brink of bankruptcy and also makes them one of the biggest automobile manufacturers in this world (Koplin et al., 2006).
Volkswagen AG is one of the world's leading automobile manufacturers. It currently has wide varieties of brand like Volkswagen Passenger Cars, Audi, Skoda, Seat, Bentley, Bugatti, Lamborghini, Porsche, Scania, and Man. All brands have individual characteristics from sports cars, high-end car, commercial vehicles, SUV and family car. This is part of company strategy to fight global competition, where each brand contributes as an independent brand under one umbrella of Volkswagen Groups (Hood and Vahlne, 1998). The origin of words from 'Volkswagen' is people's car, born from Ferdinand Porsche's idea who wanted to built a car that available for everyone with a loan program (Aviel, 1980). He then succeeds in creating the new type of car codename Beetles, one of most prestigious vehicles ever created in the history of automobile.
In the 1950s, the success of a people's car made Volkswagen recognised as a Fordist mass automobile manufacturer with high standard process equipment as their emphasis (Roobeek, 1987). He also stated that 25% of yearly production was exported overseas, with USA became the biggest buyer of Volkswagen's car. This success also made Volkswagen major employer in unskilled worker for factory's assembly area.
At the end of 1960s, Volkswagen AG was hit by a big crisis. There was a huge disturbance in top management, resulted in repeated changes on top management level. There was also an issue about strategic failure and inability to create successful new products for the market (Jurgens et al., 1993). He added that this signal as the end of Fordism era. Thanks to the close collaboration between central and top management, Volkswagen AG was able to avert the crisis and able to dominate the automobile market once again with their new car, code named The Golf.
During the early 1990s, Volkswagen AG financial performances were in a declining stage with estimated 85 percentages fall on profit (Guyon, 2003). On 1993, Ferdinand Piёch, grandson of Ferdinand Porsche and a former engineer and executive of Audi, took over as CEO...