VOLVO TRUCKS

Prepared by Group Synergy

TABLE OF CONTENT
PART I PART II PART III PART IV PART V PART VI

PART VII

Overview of Case Internal Analysis External Analysis Critical Issues Alternative Strategies Recommendation and Implementation Case Questions and Answer
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Overview Overview
PART I
PART II PART III PART IV PART V PART VI PART VII

The U.S. market is the worlds most difficult market, those who can succeed there can do it anywhere in the whole world.
------ Karl-Erling Trogen

Copyright Group "Synergy" 2006

Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Mission:
To be a leader in the worlds heavy truck industry, producing high reliability, state-of-the-art safety trucks for the business users and individual households, and establishing higher value throughout the value chain.
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PART II
PART III PART IV PART V PART VI PART VII

Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Objective
The companys management was trying to break the 12% market share barrier on the way towards

PART II
PART III PART IV PART V PART VI PART VII

20% and to raise profitability.

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Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

PART II
PART III PART IV PART V PART VI PART VII

Diversification(1980s) Refocuse(mid-1990s) Portfolio Strategy

Trucks Buses

Integration
Vertical Horizontal

Construction Equipment

Backward Forward

Marine and industrial power systems Aerospace Engines

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Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Acquisition
WHITE MOTOR (1981) GM heavy truck division (1988)

PART II
PART III PART IV PART V PART VI PART VII

North America Finance (1995) Product development

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Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Product / Operation
Produce all major drive-train components Research & Development Try to use modular concept

PART II
PART III PART IV PART V PART VI PART VII

Marketing
Product & Price Place & Promotion

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Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Organization
Volvo Group

PART II
PART III PART IV PART V PART VI PART VII North America European

Trucks

Buses

Construction Equipment

Marine and Industrial Power System

Aerospace Engines

Asian
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Mission Mission

Goal Goal

Strategy Strategy

Performance Performance

Functional Functional Analysis Analysis

PART I

Financial Analysis
Operating Margin
16. 00% 14. 00% 12. 00% Percentage 10. 00% 8. 00% 6. 00% 4. 00% 2. 00% 0. 00% 1992 1994 1996 1998 2000 2002 N avi ar st P accar S cani a D ai l m er-B enz RVI V ol vo Time

PART II
PART III PART IV PART V PART VI PART VII

Market Share Growth

35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1986 1988 1990 1992 1994 1996 1998 2000 Time

Market Share (Percentage)

Freightliner (D-B) Paccar Navistar RVI Volvo

GLOBAL SALES

SALES 30 ($ billions) 25 20 15 10 5
7.744 8.407 7.919 5.89

27.054

6.742

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Volvo

Navistar

Paccar

Scania

DaimlerBens

RVL

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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II

Economic
Cyclical industry

PART III
PART IV PART V PART VI PART VII

Social-cultural
Different preference with European

Political-Legal
Truck Length restrict

Technology
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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II

Different preference Maturity

PART III
PART IV PART V PART VI PART VII

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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II

PART III
PART IV PART V PART VI PART VII Threat of New Entrants

Bargaining Power of Buyer

Threat of Substitute Goods

Competitive Rivalry & Barrier of Exit

Bargaining Power of Supplier

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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II

Quality of products Understand customer

PART III
PART IV PART V PART VI PART VII

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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II Infrastructure Human Resource Management

PART III
PART IV PART V PART VI PART VII

Technology Development
Procurement
Service

Marketing Inbound Outbound And Sales Operations

Logistics

Logistics

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General Business Five-Force General Business Five-Force Environment Environment Analysis Environment Environment

Analysis

Key Key Success Success

Value Value Stakeholders Stakeholders Chain Chain Analysis Analysis Analysis Analysis

PART I PART II

PART III
PART IV Supplier PART V PART VI PART VII
St oc kh ol de rs
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Dealers

Customers

PART I

PART II PART III

PART IV PART V PART VI PART VII

Strengths

Weakness

Opportunity

Treats

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PART I

PART II PART III

PART IV PART V PART VI PART VII

Brand reputation Advance production line Modern assembly line Financial service

Weakness

Opportunity

Treats

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PART I

PART II PART III

PART IV PART V PART VI PART VII

Strengths

Lower creativity Unclear direction Lack of market Information Technology problem

Opportunity

Treats

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PART I

PART II PART III

PART IV PART V PART VI PART VII

Strengths

Weakness

Low political regulation Rebounded demand

Treats

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PART I

PART II PART III

PART IV PART V PART VI PART VII

Strengths

Weakness

Opportunity

Different demand Intense competition Lower globalization

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Critical Issues Critical Issues

PART I PART II PART III

PART IV
PART V PART VI PART VII

CI-1: Benefit of full integration is unseen and can be cause of inefficiency; CI-2: Market share in US market is low.

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Strategic Package Strategic Package

PART I PART II PART III PART IV

PART V
PART VI PART VII

SP-1: Decentralize and give authority for the North American Division to manage. SP-2: Focus on the R&D of the engine and outsource minor parts. SP-3: Produce components for assembly companies

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Recommendation & Implementation Recommendation & Implementation

PART I PART II PART III PART IV PART V

Quick Change Feasible Fit to the market

PART VI
PART VII

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QUESTION QUESTION One One

QUESTION QUESTION Two Two

QUESTION QUESTION Three Three

QUESTION QUESTION Four Four

PART I PART II PART III PART IV PART V PART VI

What should VOLVO truck do in 2000 will respect to the North American market?
Maintain presence Stronger brand Outsourcing more

PART VII

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QUESTION QUESTION One One

QUESTION QUESTION Two Two

QUESTION QUESTION Three Three

QUESTION QUESTION Four Four

PART I PART II PART III PART IV PART V PART VI

Describe Volvo's penetration strategy in the U.S. and Volvos global strategy
Penetration in US Global strategy

PART VII

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QUESTION QUESTION One One

QUESTION QUESTION Two Two

QUESTION QUESTION Three Three

QUESTION QUESTION Four Four

PART I PART II PART III PART IV PART V PART VI

What is the most critical period? Why didnt Volvo exit?

1981 Face sales drop by 38%

PART VII

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QUESTION QUESTION One One

QUESTION QUESTION Two Two

QUESTION QUESTION Three Three

QUESTION QUESTION Four Four

PART I PART II PART III PART IV PART V PART VI

Why is heavy truck industry so slow in globalizing?

Different design preferences Different restriction and regulation Different economic status quo Different logistic

PART VII

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Operating Margin
16. 00% 14. 00% 12. 00% Percentage 10. 00% 8. 00% 6. 00% 4. 00% 2. 00% 0. 00% 1992 1994 1996 1998 2000 2002 Time N avi ar st P accar S cani a D ai l m er-B enz RVI V ol vo

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Market Share Growth

35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1986 1988 1990 1992 1994 1996 1998 2000 Time

M arket Share (Percentage)

Freightliner (D-B)

Paccar

Navistar

RVI

Volvo

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GLOBAL SALES

SALES

($ billions) 25 20 15 10 5 0
Volvo Navistar Paccar Scania DaimlerBens RVL

30

27.054

7.744

8.407

7.919

5.89

6.742

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