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Introduction:

Volvo was one of the worlds leading manufacturing of


heavy trucks, with the world head quarter located in
Belgium, the product serving 180 markets and delivering
81,000 medium and heavy trucks. The company was fully
integrated
developing and producing all major drive-train
components, including engines and transmission. The
heavy truck segment took the account of more than 90%
of the overall production. However, the company still
produced the medium-heavy segment in order to offer
the dealer a full product line. During the 1980s the
company began to export and established R&D centers
and production facilities in various countries. Volvo
attempted to penetrate into the U.S. heavy truck market
by acquiring the bankrupt U.S. truck manufacturer White
motor Cooperation and the heavy truck division of
General Motors
in 1988. Of all the parts, the engine itself constitutes
25%-30% of the total truck value, which creates the great
majority of the after-market part of sales management.
This leaded to the modular concept, in which
standardized components were produced centrally for
local assembly. The objective is to reduce the number of
components from 41,000 to under 25000 by the year
2001, while decreasing the number of supplier from
around 16000 to under 400. Moreover, this concept can
be applied to reduce the cost of warehousing, purchasing
and shipping. Currently, the world market for truck in
Western Europe and North America each accounts for
about one-third of the market, the fastest growth is

expected to occur in China and India at an annual rate of


around 11%, which is the highest rate of growth and none
of the Asian competitors are the key players in the world
heavy truck market. This attracted Volvo to consider
entry into these two countries.

History:
While the Volvo Group built its first truck in Sweden in
1928, Volvo first entered the North American truck
market in 1959. It was not until the mid-1970s that Volvo
was established as a permanent part of the U.S. truck
market, through Volvo of America Corp.
1959 - Volvo Titan, Volvo Viking, Volvo Starke launched.
1971 - Volvo placed eight F86 trucks in the United States
for tests.
1974 - Volvo F86 launched in northeastern United States.
1976 - Volvo F613 medium-duty truck launched.
1993 - The Volvo D12 engine launched in the United
States.
1996 - Volvo VN launched.
2000 - Volvo VHD launched.
2002 - The new Volvo VN launched.
2005 - The D16 Engine was launched.
2009 - Volvo introduces EPA '10 Volvo SCR engines and
Volvo Enhanced Cruise (VEC).
2011 - Volvo Trucks assembled its 500,000th truck in the
United States.
2011 - Production of natural gas-powered Volvo VNM
model begins.
2012 - Production of natural gas-powered Volvo VNL
model begins

2013 - Volvo VNX heavy-haul model introduced.


2013 Optimized Series VNM and VNL models introduced
Volvos Global Exports:
Over the years, Volvo evolved into a diversified industrial
group, providing a wide range of products ranging from
cars, trucks, buses, to marine and jet engines. The
company held 14.9% and 10.6% in the European market
and the North American market,
respectively. However, Volvos position in the Asian
market was still weak. New marketing programs had been
introduced in China, India, Pakistan, and together with
Eastern Europe and Mexico in the 1990s. Volvo trucks
were known for high reliability, state of the art safety
features, and good comfort. Volvo Trucks began exporting
trucks as early as the 1930s. The company also launched
major centers (such as R&D and productions institutes) in
several countries such as, Sweden, Belgium, Brazil, and
the U.S. Small assembly plants were located in Latin
America, Africa, and Asia.
Product-line:
Trucks
Buses
Construction equipment
Marine and industrial power system
Aerospace engines
For Volvo Truck, the product lines included European cabover trucks, European conventional trucks and American
conventional trucks.

Achievement and awards:


Export & Freight Transport & Logistics Awards 2013
'Fleet Truck of the Year' - new Volvo FH
Fleet Transport Awards 2013
'Irish Fleet Truck of the Year' - new Volvo FH
'Irish Fleet Truck of the Year Long Haul/Heavy Duty' - new
Volvo FH
'Irish Coach of the Year' - Volvo 9700
Comtrans Commercial Vehicle Show, Moscow 2013
'International Truck of the Year' - new Volvo FH

Major competitors:
Navistar International Corporation
Paccar Inc
Daimler Truck
Profit:
Volvo FH series
SWOT ANALYSIS:
STRENGHT:
Volvos major strength is in its reputation of high
reliability, state of the art safety feature and good
comfort that it provides to the truck driver and its
passengers. It is the major point of differentiation
from their competitors.
Volvo has and advanced production line and
standardized parts and components. This helps the
company with lowering their costs and be more
cost efficient.

Volvo Truck Finance North America was formed in


1995. It offers financing and service contracts to
their customers and thus allowing their customers
to gain more control over their spending and
establish a good relationship with them.
Weakness:
The major weakness of Volvo is its inability to
adjust in their strategies. They have low creativity
in their strategy and tend to imitate the strategies
of their competitors.
The management of Volvo does not have, or
cannot utilize, enough information regarding the
market in the United States. Thus they cannot
compete efficiently with the local competitors, or
even other global competitors.
Compared with the other competitors, Volvo also
seems to be lacking technological integrity and
does not demonstrate themselves as a
technological advanced company.
Opportunities:
The biggest opportunity for the industry was when
the regulations and policies for the trucks were
loosened during the 1990s. The trucks were
allowed to be longer in length, thus leading to
conventional trucks becoming more popular.
Also, in the year 1998, the demand for trucks in
the U.S. market rebounded and reached new
heights. Most companies enjoyed a large growth in
sales during that year.

Threats:
There are significant differences between the
customer demand in the U.S. and the customer
demand in Europe. The difference in preferences
poses a great threat to the companies that want to
enter and survive in the U.S. market because they
cannot apply the way they do business elsewhere
in the U.S.
Also, intense competition in the U.S. market leaves
very little room for mistakes.

Recommendations and Implementation


As the company is facing fierce competition, it has to
move quickly. In the first strategic package, it is feasible
but the results may not be obvious in the short-run. For
strategic, it will also take a certain amount of time for
Volvo to establish a good relationship and show their
product value to the assembly companies. The company
can quickly change their operations and concentrate
production on the few parts that are more profitable,
namely, the engine. The rest of the manufacturing, of the
unprofitable parts, should be divested. The parts can be
Out sourced and purchased from other companies. With
concentrating on engines, the level of profit is expected
to increase and the company can concentrate its funds on
the research and development of the engines. This way,
the companys financial status can be improved in the
short run and be able to establish loyal customers
through their superior customer service.

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