Volvo Cars
1) Why had Volvo lost its way in the years leading up to the takeover?
Volvo started to manufacture and export cars to foreign countries since the mid-1950s. The company set up plants in Torslanda, Sweden, in 1964, followed by plants in Belgium and the Netherlands. Before Volvo was sold to Ford Motor Company in 1999, they had a joint-venture partnership with Pininfarina SpA of Italy. (Volvo Car: 2007 company profile edition 2, 2007, pp. 9-11)
Volvo is a premium brand; with market shares of 1.5% and 0.6% in the EU and US respectively (Wang 2011). Volvo faces competition and threat from Premium brands like Mercedes Benz, BMW and Audi, who have increased product offerings. While the competing premium brands increase their product offering, Volvo markets 10 models under Brand categories S, XC, C and V. This gives the competing premium brand an advantage over Volvo, therefore enabling them to grasp a bigger market share then compared to Volvo. The company’s market shares are further threatened by the growing invasion of the Asian car manufacturers. (Volvo Car: 2007 company profile edition 3: SWOT analysis, 2007, pp. 12-13). During the recent years, a rise in cars manufactured by the Asian market has been affecting the automobile industry. Asian car manufacturers have the advantage of producing cars at the cheaper cost compared to cars from the US and EU regions. This enable them to export cars to foreign market at a cheaper rate. Thus, apart from competing premium brands, Volvo faces increasing competition from emerging Asian car manufacturers.
One of Volvo’s major competitor, Daimler’s Mercedes-Benz car division have implemented a strategic initiatives to run the cost down and revenues up by reduction in costs of materials, fixed cost, improved efficiencies and overall improvement (Volvo Car: 2007 company profile edition 3: Competitor analysis, 2007, pp. 6-8). In comparison, Volvo’s high cost of premium cars is a result of cars being made in Sweden and then
Volvo started to manufacture and export cars to foreign countries since the mid-1950s. The company set up plants in Torslanda, Sweden, in 1964, followed by plants in Belgium and the Netherlands. Before Volvo was sold to Ford Motor Company in 1999, they had a joint-venture partnership with Pininfarina SpA of Italy. (Volvo Car: 2007 company profile edition 2, 2007, pp. 9-11)
Volvo is a premium brand; with market shares of 1.5% and 0.6% in the EU and US respectively (Wang 2011). Volvo faces competition and threat from Premium brands like Mercedes Benz, BMW and Audi, who have increased product offerings. While the competing premium brands increase their product offering, Volvo markets 10 models under Brand categories S, XC, C and V. This gives the competing premium brand an advantage over Volvo, therefore enabling them to grasp a bigger market share then compared to Volvo. The company’s market shares are further threatened by the growing invasion of the Asian car manufacturers. (Volvo Car: 2007 company profile edition 3: SWOT analysis, 2007, pp. 12-13). During the recent years, a rise in cars manufactured by the Asian market has been affecting the automobile industry. Asian car manufacturers have the advantage of producing cars at the cheaper cost compared to cars from the US and EU regions. This enable them to export cars to foreign market at a cheaper rate. Thus, apart from competing premium brands, Volvo faces increasing competition from emerging Asian car manufacturers.
One of Volvo’s major competitor, Daimler’s Mercedes-Benz car division have implemented a strategic initiatives to run the cost down and revenues up by reduction in costs of materials, fixed cost, improved efficiencies and overall improvement (Volvo Car: 2007 company profile edition 3: Competitor analysis, 2007, pp. 6-8). In comparison, Volvo’s high cost of premium cars is a result of cars being made in Sweden and then
Bibliography: Devolving Volvo. (2010, March 28). Retrieved from The Economist: http://www.economist.com/node/15804598 Finkelstein, P Huihui, Z. (2012). Case Study of Geely Acquired Volvo. Savonia: Savonia University of Applied Sciences. Pearson. (2013). Why Acquisitions Fail - the five main factors. Retrieved from Pearson: http://www.pearsoned.co.uk/bookshop/article.asp?item=440 Rechtin, M Shirouzu, N. (2010, 27 August). Geely 's Volvo Plans Take Shape . Retrieved from The Wall Street Journal: http://online.wsj.com/article/SB10001424052748704913704575453303089978416.html (2006) (2007). Volvo Car: 2007 company profile edition 2. Bromsgrove: Aroq Limited. (2007). Volvo Car: 2007 company profile edition 3: Competitor analysis. Bromsgrove: Aroq Limited. (2007). Volvo Car: 2007 company profile edition 3: SWOT analysis. Bromsgrove: Aroq Limited. Wang, L. (2011). A Case Study of the Acquisition of Swedish Volvo by Chinese Geely. Sweden: Blekinge Institute of Technology.