...companies are holding foots in China. Geely took start in 1998 when Li Shufu diversified from motorcycle manufacturing to car manufacturing company. This company was financed by a state owned bank. Geely is full filling the need gaps of economy class cars. No doubt it is modern company but with low-tech. Strategies Geely’s Corporate strategy Geely is going to purchase Volvo with the support of Government of China who wants to develop cutting edge technology infrastructure in the country to meet the needs of near future. For this they decides to get FDIs and mergers with well known and reputed companies of the world. Ford motor took a move in 1999 and took over Volvo in US$ 6.45b. But with passage of time they could not get hold on it and company went into loss. Volvo is the best brand in the Europ with BMW and Mecedes. Now Gelly is there to get Volvo in US$ 1.8b. Geely’s Strategy Geely is focusing China and its production in 2009 was 330000 vehicles. Small and low cost vehicle are the main products of the company. Now with the emerging times Geely wants to full fill the future needs of Luxury cars in China and to compete with Mercedes and BMW. Geely’s functional strategy Geely is operating in China and it is easy to cover both Geely and Volvo’s channels to intensify the brand image in west as well as in China. • Environmental (DEEPLIST) analysis...
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...GEELY’s ACQUISITION of VOLVO 1. Introduction to the Case This Case is about * The Automotive Industry of China * The acquisition of “Volvo” by “Geely” (a Chinese firm) * Geely is an automotive company in China, which was engaged in producing non-luxury cars for its local market in the country since 1998. * Li Shufu was the founder of the company, who was basically a poet and has a philosophical attitude towards life. * The time of the case is year 2010. 2. Situational Analysis Li Shufu was born in China in 1963, the son of a small business owner. He started the business from making photographs of tourists, then he shifted to making refrigerators and refrigerator parts, and from there he diversified again to motorcycle production business. At the age of 35, in 1998, he started the business of producing cars. The name “Geely” came to him in a dream. Geely was a privately owned firm, which was involved in producing non-luxury cars for its local market of China. For the acquisition of Volvo, Li obtained financing from state-owned banks and governments in China and this acquisition made Geely able to enter in the new market of luxury cars by following a “related diversification” strategy. Now Geely is heading towards lowering the costs and making Volvo more profitable in the industry and following a growth strategy in its business 3. DEEP LIST Analysis i. Demographics Volvo was a Swedish company; Geely was planning to produce luxury...
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...Case Name: GEELY’s ACQUISITION of VOLVO 1. INTRODUCTION INDUSTRY | AUTOMOTIVE INDUSTRY | TIME OF CASE | 2010 | ISSUE ON HAND | ACQUISITION OF “VOLVO” BY “GEELY” | KEY PLAYERS | “VOLVO” AND “GEELY” | COMPANY COUNTRY | CHINA | FOUNDER OF THE COMPANY | LI SHUFU | PRODUCT | LUXURY CARS | 2. SITUATIONAL ANALYSIS Li Shufu was born in China in 1963, the son of a small business owner. He started the business from making photographs of tourists, then he shifted to making refrigerators and refrigerator parts, and from there he diversified again to motorcycle production business. At the age of 35, in 1998, he started the business of producing cars. The name “Geely” came to him in a dream. Geely was a privately owned firm, which was involved in producing non-luxury cars for its local market of China. For the acquisition of Volvo, Li obtained financing from state-owned banks and governments in China and this acquisition made Geely able to enter in the new market of luxury cars by following a “related diversification” strategy. Now Geely is heading towards lowering the costs and making Volvo more profitable in the industry and following a growth strategy in its business 3. DEEP LIST ANALYSIS Demographics Volvo was a Swedish company; Geely was planning to produce luxury cars at Volvo plants and offering these cars to local Chinese, who desire to drive these luxury cars. This strategy enabled the Geely to target a new market segment in the country...
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...Assess Volvo’s strategy and performance prior to being acquired by Geely. Targeting the lower end of premium auto segment, historically, Volvo has focused on sustaining competitive advantage in safety through constant innovation. Over the last 82 years, the strategy has earned Volvo a strong brand equity and global recognition of its reliance and adherence to high safety standards. However, in 2000s it struggled with profitability due to increasing competition, changing customer preferences, and ineffective cost management and, finally, the recession. Discuss Geely’s strategy and competitive positioning in the auto industry prior to acquiring Volvo. In contrast to Volvo, Geely targeted the low cost-low quality budget segment, pursuing tier 2 and 3 towns in China. With relatively short history and small size, up until recently Geely had been mostly using the imitation strategy in its car design and production, which allowed for growth and increasing profitability. However, to accelerate growth of its modest market share, Geely has shifted its focus on technology in order to differentiate from the steep competition. Its competitive positioning is being in transition from low price advantage to technological advantage, with the objective to rapidly expand domestically and internationally. Why did Geely acquire Volvo? What are some of the merger integration challenges Geely faces, and how should they be addressed? There is very little overlap between Geely and Volvo...
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...fusion is not so difficult as people think, as long as we can be truly understand and be good to respect people from different party. Not only the culture differences, but also the differences in humanity behavior, would be well treated and accepted by each party. The human understanding, respect, dare and be good from Geely and Volvo both sides, make all the negative factors to be transformed into a positive force. Workers union in Western countries, is useful in helping the enterprises to improve competitiveness and maintain the vitality of the enterprises. Benevolent invincible is the highest integration way. Keywords： Cultural diversity，Fusion，core values, benevolent, invincible 1. Skepticism On Geely's Volvo Ambitions Before the merge, some reporters and market analyst said that China's Geely Automobile may well find that its resources cannot accommodate such a takeover. It is just a despite of the Chinese automaker's ambitions. Geely, an only 11 years old company, which is the youngest and the most aggressive of China's carmakers, is undertaking a feasibility study on acquiring Volvo. Management has yet to submit a proposal to the relevant authorities. Geely, which is owned by the city of Wuhu in Anhui province, is seeking funding from local banks and private equity firms to back a bid of more than 30 billion yuan ($4.4 billion), Cai Jing said, cited from some unnamed market sources. Geely would need to...
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...Resolutions for Geely’s case: It is hard to find the overlap between Volvo’s Prestige position and Geely’s low cost product position. They don’t have any common customer base, have language and cultural barriers, time zone barriers, while China is a collectivist society and Swedish is individualist, and historical barriers where Chinese pay attention to the past and pays less attention to long-term future, Swedish are the opposite. The high value of Volvo brand is very challenging work for Geely. Geely is unknown to people in industrial nations, and known for low-cost and quality product domestically, this impacts the value of the Volvo brand. Cost structure also plays a significant role where Sweden is a high-cost country, and China a low cost. Though production is moved to China, the problem is the low products installed in Volvo car cannot be accepted by Volvo management. Exchange rates among buying and selling in different countries, how can the profit be distributed: Swedish Kronas or Chinese Yuan? Tax considerations, Inflation rate, cost of capital all has to be considered. Even though Geely’s merger for now has saved Volvo from financial loss, and Volvo cannot get any financial help from Ford Company after the merger, the European Investment Bank does not want to get involved with Geely as they find Geely as a weak owner, and are opinionated that it does not have the finance capacity to invest in Volvo. Therefore, this a great challenge for Volvo to secure...
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...Fierce Market Competition Geely sees the acquisition as an opportunity to expand its business into high-end market of luxury vehicles through building up Volvo into a successful luxury brand. However, although the market position of Volvo is clear and both Geely and Volvo are full of confidence, the prospective seems very tough. Firstly, long positioned in luxury vehicle market, Volvo has a share in Chinese luxury vehicle market, but compared to other big brands, it is too small and growing very slowly. In 2010, Audi sold 225,580 cars, enjoying an increasing rate of 43.5% comparing to last year; Bens reached sales of 147,670 cars and an amazing growth rate of 115%; the sales of BMW was 169,000 cars which increased by 87%. Volvo, however, only sold 31,000 and increased by 36.2%. These figures are not only inferior to the three competitors, but also disappointing to the target of Volvo, which is to reach 200,000 sedans sales in 2015 with an annual increasing rate of 50%. Besides the low growth rate which is far behind market average, Volvo is also the one with the largest discount rate of selling prices. Although Volvo is quite ambitious to challenge Bens and BMW which Volvo sees as competitors, the image building and brand value of Volvo in Chinese luxury vehicle market are far inferior to the competing brands. Secondly, Volvo’s capacity is not large enough to support such an ambitious target of production. Currently, China market is only the fourth largest market of...
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...A Case Study of the Acquisition of Swedish Volvo by Chinese Geely Author: Lieke Wang Supervisor: Thomas Danborg Master's Thesis in Business Administration, MBA programme February 2011 Abstract The acquisition of the famous Swedish Volvo by the unknown Chinese Geely has attracted a lot of attention in the world-wide medias, particularly in Sweden and China. It is the largest overseas acquisition ever by a Chinese company, which marks a beginning of a new era that the fastest growing China has become a superpower in the world economy. Because this acquisition is such a complex business where two involved companies are so much different, it is of high interest to make a case study of this in the business research area. The thesis begins the study by looking at the basic facts of these two companies: the products, market, finance situation, brand and technology, etc. It was found that these two companies have very little in similarity, but a huge difference in product segment, technology and brand, inter-culture, language, etc. Therefore, there is no immediate cost saving through the integration of two companies and the sharing of the common components, which indicates that the risk of failure of this acquisition is relatively big. However, there do exist some opportunities lying ahead. The most obvious opportunity is the possible rapid expansion in the growing Chinese market as Volvo’s second home market. To be successful in China, Volvo must address several issues: quickly...
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...How Volvo Car Corporation Integrates Cloud Infrastructure into its Networks Volvo utilized data mining in an effort to discover the unknown valuable relationships in the data collected and to assist in making early predictive information. It created a network of sensors and CPUs that were embedded throughout the cars and from which data was captured. Data was also captured from customer relationship systems (CRM), dealership systems, product development and design systems and from the production floors in their factories. The terabytes of data collected was streamed via the cloud to its centralized hub or Volvo Data Warehouse. From the warehouse Volvo received real-time analysis of data captured. The data could then be archived and accessed on demand. How Volvo Car Corporation Transforms Data into Knowledge From the Volvo Data Warehouse all the data from the various data streams is analyzed and transformed into knowledge. The information generated gives Volvo the ability to early predict potential issues such a mechanical problems which would show up only after the manufacturing process is completed. The data is insightful and Volvo can fix a problem during the manufacturing process before it becomes a hazard to customers. This real time analysis gives Volvo a competitive edge. Better maintenance plans for the vehicles are designed because they can predict when parts for various cars need to be checked or replaced. Volvo became the first company to implement an Early...
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...Chery Auto's Success Story (BSTR 377) ------------------------------------------------- Abstract: China based Chery Automobile is one of the top ten car manufacturers and the leading exporter of cars in the country. Started as an automotive company by the Wuhu government in 1997, Chery designed engines for cars. After finding no buyers for its engines, it decided to build its own car. Chery entered into tie-up with another automotive company which had license to sell cars to retail customers in China. After obtaining its own license, Chery implemented a four-phase strategy to develop its technical strengths. Chery started exporting cars as early as 2001 and became the largest exporter of cars among the Chinese car companies. Chery expanded globally to have its presence in over 70 countries by 2009. | | ------------------------------------------------- Issues: » Study and analyze the competitive strategies of Chinese automobile companies. » Understand how Chery Auto used available resources effectively to manufacture cars. » Examine how a startup company could develop R&D capabilities by collaborating with other firms. » Study the globalization strategies of Chery Auto. » Evaluate the challenges faced by Chery Auto in the near future. ------------------------------------------------- Contents: | Page No. | Introduction | 1 | Background Note | 2 | The Growth Strategy | 3 | Going Global | 5 | The Challenges | 7 | The Road Ahead | 9 | ...
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...Nour Shaker Supervisor: PhD. Jose Ferraz-Nunes Examiner: PhD. Bengt Kjellen Master’s thesis in International Business 15 ECTS Department of Economics and Informatics University West Spring term 2010 ABSTRACT Over the past two decades, the open-door of the market supply in China has had a massive impact on the automotive market. This development contributes to the globalization of the automobile industry that involved the integration of the Chinese domestic market into the international markets. Among many reasons, motivation to gain access to industrialized markets and to gain access to superior technology, management resources and knowledge are the most driving factors of the Chinese automotive industry for the internationalization and going abroad strategy of China´s automotive industry. This study investigated whether different external globalization drivers and internal organization factors have differential effects on various dimensions of China´s automakers firms’ global strategy. Most of the studies written about global strategies have implemented only either of the internal or the external drivers of the internationalization of the firms. The contribution of the paper introduces a more comprehensive model on the global expansion of a firm. This paper concludes that China´s automotive industry has some competitive advantages such as low cost, while, facing a number of challenges that hinder the internationalization of Chinese automobile companies. It also...
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...|[pic] |BA 388T Strategic management | | |Section 02310 | | |SPRING 2014 | Professor Stephen E. Courter Class Time and Location 9:30 -11:00 am GSB 3.106 Office CBA 3.236 Office Hours Mondays 10:30-11:30 am and Thursdays 1:00-2:30 pm Also By Appointment Phone 512-232-3441 E-Mail Steve.Courter@Mccombs.utexas.edu Course Web Page via Blackboard Teaching Assistant Vanessa Gonzales Vanessa.Gonzales@mba14.mccombs.utexas.edu Course Objectives The traditional purpose of this course is to help you integrate your knowledge of the functional areas of business into a holistic view of the firm and thereby determine and execute proper business level and corporate strategies. Additionally, the field of strategic management has developed a number of concepts and models unique to a general management view, and designed to provide the tools to analyze the firm and its environment. A second purpose of the course will be to digest this body of knowledge, and explore real life situations in applying its...
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...Ford and the world automobile industry in 2012 At the beginning of 2012, the Chief Financial O cer of Ford Motor Company, Lewis Booth, was reviewing his nancial forecasts for 2012-16. Ford’s turnaround since the crisis of 2007-8 had been remarkable. After a loss of $14.7 billion in 2008, Ford earned net pro ts of $6.6 billion in 2010, and it looked as though Ford’s pro t for 2011 would exceed this. The recovery had been much more rapid than Booth had expected. Ford’s business plan of December 2008 projected that it would not break even until 2011.1 Booth attributed the speed of the turnaround to three factors: rst government measures in North America and Europe to stimulate demand through incentives for scrapping old cars and subsidies for purchasing new, fuel-e cient models; second, the recovery of demand in several major markets including China, India, Brazil and the US; third, Ford’s own restructuring. The “One Ford” transformation plan introduced in 2006 had closed plants, cut Ford’s workforce from 295 000 at the beginning of 2006 to 148 000 at the end of 2011, sold Jaguar, Land Rover and Volvo and a large chunk of Mazda; integrated Ford’s global activities; and accelerated product development including an increasing emphasis on smaller cars. Despite these successes, Booth looked to the future with much trepidation. Ford’s performance over the next ve years would depend on three main factors: Ford’s ability to continuing success with its One Ford strategy, the state of the...
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...Letter of Transmittal 02 December, 2011. Dr. ABM Shahidul Islam Professor, Department of Marketing Faculty of Business Studies University of Dhaka Sub: Request for acceptance of the term-paper Sir, We are very pleased to be able to submit our term-paper on “Volvo - an overview”. In developing the report we have followed the format and instructions given by you. In every sphere of our report, we have tried our level best to make a good combination of learning from the Integrated Marketing Communication Course. We also tried to match our theoretical knowledge and the direct experience gathered during the preparation of our term-paper. In this report, we have tried to be as descriptive as possible for the convenience for the reader. Any clarification required & query needed regarding our report will be gratefully acknowledged. Yours obediently Mudassar Mahmood Khan Md. Matiul Islam Md. Abdur Rahman Bhuiyan Md. Ehsanul Haque ID No. 41018003 ID No: 40609063 ID No: 40610059 ID No: 41018044 18th Batch 9th Batch 10th Batch 18th Batch EMBA EMBA EMBA EMBA Dept. of Marketing Dept. of Marketing Dept. of Marketing Dept. of Marketing University of Dhaka University of Dhaka University of Dhaka ...
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...China’s Auto Sector Development and Policies: Issues and Implications Rachel Tang Analyst in Asian Affairs June 25, 2012 Congressional Research Service 7-5700 www.crs.gov R40924 CRS Report for Congress Prepared for Members and Committees of Congress China’s Auto Sector Development and Policies: Issues and Implications Summary The automobile industry, a key sector in China’s industrialization and modernization efforts, has been developing rapidly since the 1990s. In recent years, China has become the world’s largest automotive producer, with annual vehicle output of over 18 million units in 2011. China is now also the world’s biggest market for automobile sales. Meanwhile, China’s auto sector development and policies have caused concerns in the United States, from automotive trade, China’s failure to effectively enforce trade agreements and laws, to market barriers and government policies that increasingly favor Chinese manufacturers, which could affect business operations and prospects of international companies doing business in (or with) China. China’s auto industry has developed extensively through foreign direct investment, which has come in the form of alliances and joint ventures between international automobile manufacturers and Chinese partners. These international automobile manufacturers, who generally dominate the higher end of the Chinese market, have focused on making cars for China’s large and fastgrowing market. The domestic Chinese automakers, who...
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