Volvo: Case Study: Geey And Volvo

2125 Words9 Pages
Case Study on Geely and Volvo
International American University
Aashish Gautam
MGT 590: Strategic Management
Shashwat Dhakal
APRIL 25, 2016

Brief Overview
The automobile industry of China has grown drastically over the past decades. From producing 2 million vehicles in 1990, the production increased to around 9.5 million in 2008. Due to this huge number of prospect buyers of vehicles have grown in China.
The financial crisis in the world was triggered due to the failure in insurance and banking companies poor decisions on lending on US real estate that turned to crisis. This led to recession in world 's economy and reduced the consumer 's consumption behavior dramatically. Chrysler and GM which were in world top automobile
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Volvo is a well established Swedish car manufacturer company focusing more on the safety of the people. The initial batch of Volvo cars were made very steady and tough for withstanding the bad climate of Sweden. This trend of producing cars that were safe and sturdy became their characteristics and became their core competencies in the market. Ford acquired Volvo in 1999 and it was Ford 's strategic plan for expanding its luxury lineup and have better market share in Europe. Strategic planning was one thing and the result showed another thing. Within a year of acquisition, the sales of Volvo car decreased due to exchange rates issues, economic crisis and consumers changing preference. Ford tried to revive through restructuring and cost-cutting, but became
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• Geely 's management agreed to allow Volvo operate independently but due to not having operations in China they could not take advantage of Chinese government 's new decision that the government agencies must have cars of local automakers. As Volvo cannot be considered as local automaker, this left them out of huge potential market.
• Another issue is language and cultural differences between the two. In Asia, people give more value to society as a whole while in West people give more emphasis on individualism. Also Chinese use mandarin for communication while the people in West use English language as their main language and unlike them very few Chinese fortunate to study abroad speak English. The differences would make it very hard to flow the communication between the executives of both and integration and coordination would be a brutal task.
• Lack of experience may lead to Geely not having the skills required to integrate
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