Term Paper: Volvo’s global strategy

By | April 7, 2012

Sample Term Paper

Initially, the Chinese government faced a lot of difficulties in making its automotive industry a technologically driven industry.  To take this move, government started making joint ventures between the government firms and the international manufacturers.  This strategy has remained successful from financial aspects but later the management and establishment’s disagreements created some big difficulties for these ventures to survive. Later, the weakness of lacking advanced technological facility became a serious threat to the industry. The perspective of Chinese government is however valid, the acquisition of Volvo would particularly provide a competitive edge through technological advancements. The operations in China would be consistent with the Volvo’s global strategy to excel in safety, design and environment friendly and from the viewpoint of Geely, the acquisition of Volvo would add extra flavor to the company’s operations in producing luxury and comfort (Conklin, Cadieux, 2010).

According to an article in New York Times, China had a tough rivalry with the US and gained an upper hand on the number of family cars given away. The average price that Chinese received for their cars rounded to $17,000, while the US sold the same for $30,000. This is however influence due to many factors such as currency difference, cheap labor and low production cost. The article argues that the US automobile industry is still larger than then that of Chinese. Ford’s willingness to accept Volvo’s proposal by Chinese is reflected from the statement of Ford that it preferred Geely as a perfect bidder. This was not too easy, it requires both parties to consider many factors including business secrets, finances and the labor and political factors in Sweden. Finally, in December the accord between Geely and Volvo has been documented while few agreements remained pending (Bradsher, 2010).

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