One of the strongest brands of the automotive industry, the Volvo Car Corporation was founded in Gothenburg, Sweden by Assar Gabrielsson and Gustaf Larson in 1927. From the very beginning, the aim of the two owners was to construct vehicles that will be safe, compatible to the Sweden’s climate and awful roads at that time. So the company’s development in last 80 years was focused on safety-the main principle of Volvo’s design, quality and durability of the vehicles. The first truck was introduced and immediately sold in January 1928 and not only in Sweden. In 1930s there was an export of Volvo trucks to Europe. In 1929 the first marine engine was introduced, followed by the first bus that was launched in 1934 as well as the aircraft engines in 1940s making the company to develop and grow and become global group worldwide.
In 1999 Volvo Group sold Volvo Cars to Ford, which was the biggest mistake of Volvo’s management. In December 2008 Ford announced the possible sale and in December 2009 confirmed that the preferred buyer was Geely Automobile, the Chinese Auto manufacturer with which the deal was signed on 28 March 2010 for $1.8 billion.
SWOT Analysis of Volvo
SWOT Analysis is a tool which is used in strategic and marketing analysis of a business. It can be used to confirm the level of readiness and conformity between the organisation’s strategies and its business environment, and to find ways in which the organisation can utilize its strengths to checkmate its weaknesses while it uses its opportunities to checkmate its threats.
Strengths:
- Safety of both the environment and driving is the main strength of the Volvo cars, and hence the Governments policies on safety in driving will not have much influence on the performance of Volvo.
- Volvo has a reputation for big estate cars and last for long periods of time.
- Goteberg safety center which is a world renowned, and hence after the acquisition, Volvo has introduced ten new models for its customers, and hence earned more profits for FORD.
- Volvo has 2400 dealers worldwide and has its presence in 120 countries of the world.
- Huge investments in safety research and development programs.
- Volvo is a wholly owned subsidiary of ford motor company which is a world famous company and this helps the Volvo can draw synergies of technical innovations and improvements for its parent company. And also the buying power.
- 90 years of brand heritage, where Volvo has gained much expertise in manufacturing a car which is very safe in driving and this is the core-competence which has played a vital role which has brought glorious years to Volvo’s brand.
Weakness:
- No change management programs in its product strategy. There has been no innovations and improvements in the product, improvements like fuel-efficient, best performance, etc, which is quite important for Volvo to meet the intense competition.
- There is a decline in the sales of the Volvo’s bi-fuel cars.
- Cannot meet the customer requirement of fuel-efficient cars.
- Even though the prospective customers of Volvo are shifting their interests from the big engine cars to fuel-efficient cars, Volvo still stress only on the safety in their mission statement, where its core positioning strategy to face the present changed perceptions of the consumers and external environments demands should be fuel-efficient and reliable cars.
- Moreover the mission statement aims at providing safest and more exciting car experience for modern families, the brand concentrating on the family sector. But in Europe there is decline in the number of families and many couple is opting to be childless, hence this mission of Volvo would badly hit its performance in future.
- Most of the market for Volvo is in US and Sweden and consequently it is open to irregular economic and political circumstances of those markets.
- Volvos most of the production is from the Belgium and hence, the cars produced in Sweden is very expensive for the US consumers. This is due to the less facilities of production of Volvo cars in US.
- Volvos flexi-fuel cars only in certain geographic markets.
Opportunities:
- There is a hope for further growth for the business due to new business in china and India, with a forecast of sales in china of 10,000 a year.
- The penetration into new markets has an opportunity for improvement in the performance of the company.
Threats:
- Has the Volvo only concentrates on the Safety in its product design, and ignoring on the other aspects like eco-friendly and fuel efficient cars (Toyota Lexus), performance, styling, reliability, handling and value for money, which are all vitally important.
- Low restriction on imports and trade will increase the competition from the Japanese companies in the Asia pacific regions.
- Volvo’s safety may not have any importance as safety is integrated by almost all the car manufacturers. Hence safety which is the main asset for Volvo has no role to play for the improved performance of the company.