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Volvo Penetrating the Us Market

In: Business and Management

Submitted By khansa
Words 528
Pages 3
Volvo model and strategic approach were reviewed to fit the US market. Model change through Mergers and acquisitions with leading US truck manufacturers, product differentiation (adding microwave oven and other features), massive investments ($500 million),consolidation of cab production and truck assembly near to OHIO facility, consolidation of dealers’ network, major cost reduction and job cuts; have not had the expected results in terms of market share increase and profitability. The expected increase in truck demand in 1998 was a therefore a missed opportunity for Volvo.
Issues & recommendations:
1. Network of dealers and After sale approach Although Volvo is vertically integrated (ie developing and producing all major drive-train components), the company failed to design an horizontal integration business strategy. Network of dealers mainly drawn from existing cars sell network and from White Motor Corp a bailed enterprise acquired by Volvo. The network of dealers of white Motor Corp did not serve Volvo because of customers’ perception of this bailed company tough the brand signs have removed from the new truck put on the market. In addition, the after sale market is a substantial one. , after sales services and spare parts constitute the majority of total cost of the truck. Recommendation: Volvo has to review its original purchase price in line with competition and organize and invest in setting up its own distribution network to ensure margin gains with after sales services. In addition, Customers in the US will assess their total cost and seek lowest cost of ownership along with high quality of the engine.

2. Business strategy differentiation: adopt business strategy to specific products can help Volvo better respond to the market needs. The US market deregulation of trucks’ business has led to industry consolidation in large companies who achieved…...

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