Volvo Trucks in Us Market
a. What are the challenges and opportunities in the US market for Volvo?
Challenges
Volvo group in the U.S market faces the challenge of managing acquisition strategy. Since the companies that it has decided to acquire and incorporate them in their systems, most of them suffer from low market share. This presents a challenge to Volvo group to utilize resources and energy in trying to bring the acquired corporation to the required aggressive edge. For instance, GMC whose market share was 3% in US heavy truck market and it posed only a single plant. This prompted Volvo to somehow dr0op some unmanageable big volume of GM’s truck replica, Brigadier and result to lesser-priced model that will satisfy the demand of former GTM’s model. This creates conflict of interests where some clients opt for other models belonging to other corporations, hence losing in market share. In addition, the strategy implementation entails resources that Volvo had to part with and see the company flourish where much of its attention goes in uplifting instead of acquiring market share and profitability.
Presently, there exists an adversarial predicament amid the vehicle manufacturers due to heightened competition where each corporation is busy trying to make and market its name. This has led to diverse corporations that they cannot share common table in making strategies that will modify and improve the industry. There is a challenge-increased rate of urbanization, which has suppressed transport industry yielding to Volvo innovating better ways in the way it has to cater for the demand of populated cities. This is for ease of the transportation of people, goods and refuses in the megacities, which has to be solved with much haste to shun any catastrophe that may emanate from this desperate situation.
Global society currently requires new technologies that will ensure its safety and lead to the wellbeing of people. This situation and requirement presents a challenge to the Volvo group in remolding their vehicles to ensure less emission of environmental risk gases. The Volvo group due to increased new demands it encounters the predicaments of new and refined employees who will be able to carry on with development and evolvement of the model in future.
Opportunities
The global growth of megacities that eagerly requires quick and efficient transport vehicles forms better and stable market for Volvo group. Since the market ranges from people through goods and refuse transportation that is not one-day activity, but daily of which any hesitate yields to numerous activities coming to a standstill. Volvo boasts of the already available market for vehicle diverse models and especially the decent or classic ones, where the market’s expectations are very high. Besides, Volvo having adversarial challenges with other manufacturers it is evident that some usually it has managed to have some significant long-term dealings with other corporations. Significantly, this boosts the good friendship in the market where they can consult with each other and aid in forging essential strategies for forward mobility. The issue of safety and groups model’s design attracts is a potential attraction to great share of the clientele globally due to its insistence into fine details. This makes its products preferred in the market than any other corporations where the clients prefer the models reliability in diverse aspects, which some corporations have not equaled them.
b. Is the company in a position to tackle the challenges and opportunities?
One of the challenges Volvo has faced is the Globalization and a shift towards mega cities. The increase in exchange of commodities, capital, and information between countries will therefore boost Volvo’s turn around. The demand for its products has increased. Volvo in effect has reacted by increasing output volume. The number of units of Volvo trucks manufactured has been increasing every year. The other opportunity is the shift towards mega cities most of which have population of over 10 million. In addition, it is expected that by 2015, about 20% of world population will live in the cities. This is good for Volvo business even as it put in place adequate structures to ensure high levels of production. For example, it expanded its Virginia plant to match the increasing demand for its product in such major cities. The Urbanization trend has created more challenges for commercial transport solutions. Volvo Group has been working on every ways to improve transport solution to the world cities.
Connectivity is another fundamental tool towards achieving the best quality information systems in the contemporary society. The technology and social networks have promoted rapid dissemination of information. Such developments in communication will create more business opportunities for Volvo Group because the demand for flexible public transport is highly anticipated in future. Their strategies involve telematic solutions, which lead to more efficient planning of transport routes, better maintenance work, and greater traffic security. This in effect will facilitate efficient service delivery and help tackle the problems of inefficient communication systems.
When the transport levels increase, traffic security will be a very important priority to tackle. Many governments have put the traffic security on top of their agenda list. This is mainly to avoid sufferings and insecurity costs to the society. Lately, there has been increase in awareness and demand for safe products. Security is on top of Volvo’s priorities list as they strive to maintain their position as a leader in safety by meeting customer’s need for security. They worked closely with respective authorities and academia to find reliable solutions locally and internationally. Volvo is focused in tackling the insecurity menace particularly crime, terror attacks, natural disasters and military conflicts. However, the industry must ensure flexible organization to secure economic aspect of business without compromising the safety of work place.
Moreover, the increased expectations on Companies are another challenge that should be tackled. Different stakeholders usually have varying expectations and these expectations do change with time. Volvo has employed CSR strategies in the business operations to deal with their expanded customer base. There is much progress on the part of its employees’ willingness in the CSR work. Volvo upholds transparency, responsibility, and listening to stakeholders expectations towards accomplishing its success.
Volvo Group’s long-term relationship with business partners geared towards addressing the challenges like poor business ethics, pathetic working conditions as well as complicity of human rights abuses. A company that looks into the above issues, has significant advantages and better placed to grow business. Volvo Group is working tirelessly to become a reliable business partner. This they do by building long-term relations with suppliers and vendors. A typical example is the Volvo’s acquisition of White Motor Corporation (WMC) in 1981 and GM heavy truck business in 1988.
c. Did Volvo pick the right market entry strategy in the US
Volvo chose the right approach to go into into the market only that there was stiff competation existing in the market. Other vehicle manufacturing companies such as the Daimler Benz had a big market segment. Beating a company that was famous in the world market was not an easy task. Proper planning to ensure correct result-oriented strategies were mandatory. Volvo’s acquisition of the United States manufacturer of heavy vehicles, the white Motors Corporation was an attempt to improve its market share. Although the idea did not yield positive results, the effort was the right one.
The management had tested all possible measures to ensure that it withstood competition and at least maintain a breakeven. After entering de, novo the company managed to acquire the white motors corporation, which was a positive step since the company remained near break even. Even with the leading makers of trucks penetrating the United States market, the Volvo Company made efforts to maintain its distribution routes. To acquire a considerable market segment the Volvo Company decided to be diverse. Apart from manufacturing vehicles, the company started making other products like pharmaceuticals and processed food.
This attempt was an effort to penetrate the market and improve the share in the market. These efforts were fruitful after the company withdrew from making pharmaceuticals and food and emphasized on heavy track manufacture plus heavy machines. The strategies of venturing into the market became positive as the company’s market share improved considerably. Volvo’s effort helped it to become a leader in heavy tracks making and served over 170 markets. Through this, it acquired proper market share that was important in his profitability.
Volvo company managed a share of the market above 14% which was an astounding improvement compared to the previous cases. The market segment in the Asian regions was low but the company was in the process of laying strategies to ensure improvements in the region. In the United States, the company made improvements every year. For example, from the year 1996 to 1998 there was a good market share in the United States market. The sales for heavy trucks improved from about 15000 to 24000 although the year 2000 there was a slight drop in the market share plus sales. Volvo Company concentrated on making heavy machinery and vehicles. Other products made only 10 percent of the overall production. The idea based on modulation was an attempt to perform standardization of components. Volvo integrated this process in order to reduce the components number and in turn decrease the quantity of supplies.
The idea worked for the company since it made changes in terms of product development. The costs used for the purposes of shipping dropped plus those of purchasing and warehousing. The company managed to penetrate into the vehicle market by forming centers in different regions throughout Europe and in the United States. Through these centers, the export of its products was easy. Acquiring White Motors Corporation was an important strategy to improve Volvo’s well fare. The company market share was above 20% although later the share declined. Volvo efforts of acquisition were fruitful. The company also acquired GM Corporation, which concentrated on heavy vehicle manufacturing. The company’s goal was to achieve a status of being a business partner by ensuring proper customer relationships. Volvo strategies to ensure cost reduction and proper market segmentation yielded positive results for the company.
d. What should Volvo do in 2000 to make its presence in the US market viable?
For the organization to maintain its existence in the growing and competitive market in the US, they have to take the step of studying the emerging trends in the market. They should be considering the changing taste of the customers and carry out the effective change in their marketing system. In business context, the environment is always in a changing state. The business environment always changes with time and the taste that the existing customers prefer. If the companies do not value these external factors then their products will always attract the perception of being obsolete. This situation is often applicable in the US market, which is affected to larger extent by the customer’s taste and the growing technology. The effect of rapidly growing technology in the US has always made its market to be a subject of change; the customers expect the manufacturers to use the changing technology to improve the products towards their taste. Volvo should therefore study the taste of its customers in the wide market of US and then be ready for any necessary modification on their products. Generally, the Volvo Company should embrace the use of technology in their manufacturing system because it has been the talk of the day; for any significant change necessary for their market. The company should often carry out market research to ensure that they know of the existing trend and consequently take the step of changing with respect to the trends. The market research will also help the company to be conversant with the standard quality needed in the market. This therefore is solution to future rebounding demand by customer as the company had earlier witnessed.
The company should focus on having a long-term relationship with the business partners. Relationship with the partners is effective in the operation of the business and earning of trust from the various stakeholders. Poor relationship with the partners always upholds a poor business ethics of the company therefore destroying the good reputation held by the company. For the Volvo Company to grow its business in the coming years, it therefore has to deal with the problem of being a reliable partner for their customers and their stakeholders. To ensure a good relationship with the customer, they will need to provide their products at non-exploitative prices and in a desirable quality. This will automatically make the customers to prefer their product as the company holds good intentions for them. The Volvo Company will earn a good relationship by ensuring them of a better pay and a good working environment. Improved relationship with the stakeholders will ensure that every member of the company is aware of the goals and a better way of achieving them. The efficiency of the company’s production will also depend on the input by the stakeholders. The US market is expanding and will eventually be in need of more output. For the company to satisfy this arising need in the market it will need to increase the efficiency within the manufacturing department. The company will only achieve this if they increase the number of skilled workers and their respective effectiveness. Good relationship with the suppliers will also aid in meeting the growing demand in the US market.
