IB2090 Marketing Seminar Week 4 Case Study
Volvo – Putting the Vroom back into Sales
Volvo became one of the most successful automotive brands for its parent Ford Motor Corporation. When Ford bought Volvo, they bought not only a successful brand and a unique culture, which has never been forced into being just a Ford subsidiary. Volvo maintained independence but benefited from platform sharing, shared research and development, and combined buying power. However, sales for Volvo in 2008 were dramatically down by 18.3% in 2008, and sales were continuing to underperform in 2009. Volvo is a relatively small car manufacturer with less than 1% market share of 62 million cars sold worldwide annually. The world car market is facing enormous difficulties due to sluggish demand, poor economic climates in key markets, and overcapacity within the industry. A white knight in the form of Chinese manufacturer Geely paid Ford $1.8 billion for the car brand, hoping to reverse Volvo’s downward trajectory.
The company’s overall long-term aim is to sell 800,000 cars by 2020. The company ceased assembly operations in South Africa, and has now started ramping up production in China. The company has built a factory in China with a capacity to produce 100,000 a year, with a second plant in the pipeline to build an additional 100,000 cars. Geely has big plans for Volvo in China. It believes that success can be achieved through strategic positioning and operational effectiveness (e.g. shared technologies, cost advantages). Their emphasis is on design, safety, and sustainability. The company has launched the DRIVe initiative aimed at reducing the carbon emissions of its popular models. Furthermore, it also aims at launching a further plug-in hybrid models.
The case traces the problems facing Volvo and discusses the company’s planned turnaround strategy, and they are trying to come up with strategies to halt the decline. Volvo has launched Volvo Vision 2020, where the firm aims to differentiate itself from its competitors. The two central blanks of this strategy is an ongoing commitment to the...