Volvo Competitive Advantage

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The purpose of the paper is to examine the international operation of multinational corporation giant Volvo. The study will primarily focus on its automobile industry in Europe. The main objective of the study is to analyse the Volvo automobile industry in UK. As per European Report (2003), the credit for stimulating growth in Europe market globally goes to strong development and the automotive adjustment in the automotive industry. The Volvo has high competition in European market with 40 different manufacturers offering products (Economic Report 2003). In the given context, the PESTLE analysis of Volvo will focus upon areas such as the country environment, socio-economic culture, competitive condition and analysis of technology.
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It targets mid-luxury customers by offering luxurious cars with innovative features. The market penetration strategy will not be suitable for the company as it will imply selling the same product in the same market at a lower price. It would increase the challenges Volvo is facing in terms of price rise of complementary goods and strict environment protection laws in UK. As the preference of UK customers has been changing from large engine luxury cars to fuel-efficient cars, reduction of price of cars will not help the company to raise its sales in the market (Harris…show more content…
Total sales of cars rose up to 22% in September 2013 in comparison to the previous year. The overall sales went up to 2.6 percent in 2013. It is a mid-luxury brand but is not as expensive as BMW, Audi, and Mercedes-Benz. It provides its customers strong benefits through strong BIK (Benefit in Kind) figures, with a V40 D2 price at 43 pounds for 20% taxpayers and 85 pounds for 40% tax payers. These figures beat the figures of BMW and Audi (Latest Volvo News 2013). The demand in the UK market is driven by quality and performance features of cars. High demand of premium S40 in UK is an example of how technology and performance features are driving the car segment in UK. Parry and Graves (2008) mention the strategy of ‘Built to Order (BTO)’ used by Volvo to control its inventory costs and link the mass production facility to demands from the customers. Quality, high safety standards and environment friendly features of Volvo cars have made the company create its niche in the car market segment (Parry and Graves 2008).
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