In Jake Black’s blog post, he explains how recently the German automobile company, Volkswagen, decided to stop the production of its renowned van, the Kombi. Even though this model was success for around half a century, it recently lost popularity. This model was still being sold for historic purposes, but Volkswagen decided that this operation was not profitable for the business.
Furthermore, he analyzes how the accounting costs for maintaining the production of the Kombi outweighed the benefits obtained from it. This is the main reason why Volkswagen ended the production of this ubiquitous van. The opportunity cost from keeping the production was too high, since with the money spent in this product, the company could invest in an innovative automobile. By doing this, the German automaker would likely attract a wider audience than the one that the Kombi has currently.
Ultimately, Volkswagen’s decision to discontinue the Kombi is forward-looking since it may allow the company to spend the money in innovation. Moreover, by doing this the company would be able to keep competing with the rest of the firms in the industry.
