Volvo AB SWOT Analysis and Core Competencies

Category: Business
Date added
2021/11/20
Pages:  8
Words:  2407
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How it works

The trucking industry is forever evolving. Government regulations, technology, and market trends are a few of the changes that can affect the truck manufacturing industry. To remain relevant and gain a competitive advantage, Volvo must continue to learn and evolve. This paper will explore Volvo AB’s core competencies and it will also identify the strengths and weaknesses of the organization. It will explore consumer trends and explain how they influence the brand of the company.

Volvo AB will design, manufacture, and sell a low-cost Class 8 vehicle for buyers. The vehicle will start at a price lower than the industry’s average and will be offered through Boutique style shops. Introducing an economical truck can attract new entry drivers and trucking companies with little or limited funding opportunities. It can also assist the company in achieving some of its objectives, gaining a significant market share in the United States. Thus, becoming the leader in the truck manufacturing industry.

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SWOT Analysis

Marketing presents several essential instruments to evaluate the organization’s current market position. The SWOT analysis is a tool that assist the organization is identifying and understanding its internal strengths and weaknesses. It also identifies external business opportunities and threats. The flowing SWOT analysis will identify the strengths and weaknesses of one of the leading manufacturers in the world, Volvo Group.

Strengths

Volvo’s has a diverse collection of products it offers its customers. The organization has a broad selection of models and custom versions. Additionally, it has a significant brand selection including Terex Trucks, Renault Trucks, Prevost, Nova Buses, and Mack (‘Volvo Trucks USA’, n.d.). The company has over four thousand customizations. Buyers can customize vehicles through an online portal which helps streamline the buying process. The company has been around for nearly a century. It is known for its reputation of manufacturing some of the safest vehicles in the industry. The company is one the only truck manufacturing organizations that offer side air bags on the driver side in all of its trucks. Customer protection is a priority of the company and it is committed to the continuous safety of all its clients. Additionally, the company prides itself with its exceptional safety standards compared to its rivals.

Research and development are essential in maintaining a competitive edge on rivals. Volvo has the abilities and resources for research and development. In fact, the company invest greatly in it. Doing so has kept the company ahead of its rivals and trends. Innovation is part of Volvo’s DNA. The company has a history of pioneering many features for its products. It established the three-point seat belt in 1959 which is credited for saving over one million lives (Borroz, 2009). Additionally, the company-initiated values to assist in protecting the environment. It launched the three-way catalytic converter to decrease exhaust emissions in its vehicles. (Volvo Group Innovation, n.d). Innovating will only increase as time go by and the company will continue to lead the industry in discovering revolutionary products.

Weaknesses

Recalls have been a critical factor impacting Volvo. Volvo has experienced a numerous amount of truck recalls over the years. They are in relation to tire hazards, electronic failures, defective brake components, problems with steering, and several other issues (‘HDT”, 2017). The most recent recall involves specific models that have issues with the steer axles. Customers can lose its trust in organizations when there are multiple recalls. Ultimately, it will affect the company’s finances because it absorbs any cost associated with the recall.

The cost of ownership of Volvo trucks are much higher than its rivals. With all the fundamental features Volvo trucks offer, the organization struggles to produce a low-cost heavy-duty truck. Competitors such as Freightliner has decreased the cost of ownership. With production in the United States, the company sold a significant number of Cascadias in the US. Freightliner is also the largest manufacturer in the industry (‘Daimler at a Glance Financial 2017’ [PDF file], n.d.)

Freightliner is Volvo AB’s greatest competitor and it also has the largest percentage of market share in the United States (Statistica, n.d.). Volvo lacks the ability to attract U.S. customers. The company operates two manufacturing facilities within the U.S. borders whereas Freightliner has eight (‘Daimler at a Glance Financial 2017’ [PDF file], n.d.).

Keeping up with demand has been problematic for Volvo. The company’s supply chain has some weaknesses and is strained. Expanding globally requires the ability to forecast appropriately which the organization has achieved. The objective is to keep costs down by decreasing the amount of disruptions in the supply chain.

Opportunities

It is predicted that the trucking freight will continue to increase yearly (Heavy Duty Trucking , 2018). In fact, it is predicted that the amount of freight will increase thirty-five percent by the year 2029 (Heavy Duty Trucking , 2018). Volvo has an opportunity to capitalize on the growth and gain an advantage of its rivals. Volvo, a national brand, can take advantage of technological advancements. The company strives to remain ahead of others and is constantly testing new ideas. For example, the company has tested and implemented a software to assist drivers in maintaining lane position (Volvo Group Innovation, n.d). Furthermore, the company is currently testing autonomous trucks. Although driverless trucks are not available, it demonstrates the company’s commitment to technology trends.

Promoting new products or ideas require new marketing campaigns. Volvo is known for utilizing diverse platforms such as YouTube to market its products. It has been successful in utilizing B2B videos. Today, advertising assist in creating a demand for products, and it creates economic growth (Blake, 2015). Volvo can take advantage of marketing opportunities by creating an awareness of its new products and purchasing opportunities.

Creating new jobs can be beneficial for the organization and society. Volvo is committed to helping societies it operates in. Expanding in the United States will provide employment opportunities for those who desire it and create a sustainable environment. With Volvo expanding its manufacturing facilities in the United States, it decreases the necessity to import.

Threats

Regulations are consistently changing; therefore, it is imperative Volvo Group remain compliant with government agencies. The Environmental Protection Agency implemented rigorous emission guidelines (‘AllGov’, n.d.). In 2017, the EPA and NHTSH (National Highway Traffic Safety Administration) signed a proposal to dismantle the emission regulations. The agencies would like to alleviate the greenhouse gas by producing cleaner vehicles. Additionally, they want to reduce the amount of fuel usage (‘AllGov’, n.d.). Governmental guidelines can be detrimental to the trucking industry.

Competition in the truck manufacturing industry is intense. Volvo’s competitors are constantly modernizing their products. Currently, the company is the second largest truck manufacturer in the industry (Statistica, n.d.). Freightliner and other rivals are striving to remain ahead of Volvo. In do so, the aggressiveness may create a strong price struggle for the companies.

Ethical issues can influence Volvo, remaining committed to the code of conduct. The Code of Conduct highlights crucial standards that are relevant to the organization. It includes: respect, compliance with the law, conflict of interest, protection of company information. The company has a detailed guideline that explains each code and its expectations. Volvo AB operate in different countries. There are different laws in each country so it’s important that Volvo AB follow those laws especially when it pertains to human rights (Volvo Group, n.d.). Although the objective is to increase the market share in the United States, the company will expand the new truck in additional markets. It is important that Volvo stay committed to its policies regarding conduct. It is also extremely important to remain aware of laws of the countries it operates in.

As the truck industry fluctuates so will consumer trends. Currently there are several consumer trends that can influence the branding of the proposed idea. With low truck supply and high freight demand, the industry is suffering from the shortage of drivers (Knichel, 2018). Thus, creating a crisis in the movement of freight. Furthermore, as older drivers retire, the ability to fill open vacancies have become stagnant. Introducing a low-cost truck can attract new entrants and motivate them to purchase from Volvo.

Electronic monitoring devices are trends buyers are seeking. Government regulations are requiring the utilizations of such devices to monitor drivers’ work day. They are making sure drivers are only working within the hours allowed legally. In the past, drivers manually kept time using a paper log. Rate increase can also influence the operation of the industry. Increase in fright movement can motivate new entrants to the industry. Smaller trucking companies and some drivers own older trucks that are not in compliant with the new laws. Many must depend on after market monitoring devices with costly installation costs (Knichel, 2018). With Volvo manufacturing a low-cost truck, it will pre-install the software in all trucks.

As the industry evolves, so does consumers’ behavior. Logistics Apps are being utilized by companies such as Amazon and Convoy (Knichel, 2018). Thus, changing the shipping environment. Drivers, trucking companies, and shippers are adapting to the changes in shipping trends. Installing logistic Apps can assist consumers in finding available freight and connect them with others. Connectivity can change lives.

Ethic violations can damage an organization for long term success. It can diminish its chances of establishing long term relationships with its customers. It can also hurt its trust and brand image. Ethical violations can also damage the organization internally. Employees are prone to behave unethical in an unethical environment. Thus, negatively impacting production and the company’s bottom line.

Core competencies are profound skills that supports an organization ability to offer exceptional worth (Bain & Company , 2018). Volvo Group has several core competencies that separate the company form its rivals. Safety is Volvo’s foundation for its brand. The company has established safety standards early within the establishment of the organization. With the invention of the three-point seat belt, the company is credited for saving over a million lives (Wyant Group, n.d.). The company also is responsible for introducing the rear facing child safety seat in 1972 (Wyant Group, n.d.). Other safety innovations include side impact air bags and built in child booster seats. Volvo has one of the best crash test facilities in the industry. The company can test crashes in various types of accidents including rollovers. Additionally, it employs a crash investigation team to analyze data for crashes involving its brand (Wyant Group, n.d.).

Quality is an exceptional skill of Volvo. Customer satisfaction and innovation are objectives of Volvo in its quest to be leader the industry (The Volvo Group, n.d.). It uses a process-based approach for delivering superior satisfaction with all parties involved. Products and services will exceed customers’ expectations and all employees will remain customer-focused. For example, sales representatives in France act as business coordinators and must understand the dynamics of a technician to assist the customer and securing a desired level of service (Volvo Group, 2016).

All trucks are inspected and tested thoroughly on the assembly lines. The company only utilizes Volvo parts designed to the company’s specifications and employs highly skilled engineers (Volvo Truck Global , n.d.). Utilizing Telematic technology assist the company in monitoring several critical elements such as battery, brakes, and clutch (Volvo Truck Global , n.d.).

Environmental policies are designed to communicate Volvo’s dedication in protecting the environment. It also assists the company is passing on savings to the customers through manufacturing energy efficient products (Environmental Care, n.d.). Volvo Group was the original company to be recognized by the WWF Climate Savers program (Environmental Care, n.d.). The organization is credited for launching several award programs for environmental programs and scientific discoveries (Environmental Care, n.d.).

Conclusion

Volvo Group has a strong strategic position in the market. The company has critical strong points to build upon and several weaknesses to improve on. Introducing a new product will provide the organization with external opportunities to take advantage of to remain ahead of its rivals. Providing quality, safe, and environmentally friendly products is a priority of the group. It prides itself in the many contributions to the protection of the ecosystem. The company is also satisfied with the amount of time and dedication it made in producing some of the safest vehicles on the road. Although the company has made significant impacts, it believes there are still more work to be done. The industry is experiencing significant transformations. From government regulations, technology advancements to customers’ behavior. With all the industry changes, Volvo must continue to explore internal and external factors to expand its brand and gain additional market share. It is possible for Volvo to gain a competitive advantage and achieve success in marketing the industry-first economical semi-truck.

References

  1. ‘AllGov’. (n.d.). Retrieved from http://www.allgov.com/departments/department-of-transportation?detailsDepartmentID=578
  2. ‘Daimler at a Glance Financial 2017’ [PDF file]. (n.d.). Retrieved from https://www.daimler.com/documents/investors/reports/annual-report/daimler/daimler-ir-daimler-at-a-glance-2017.pdf
  3. ‘HDT’ . (2017, July 13). Retrieved from https://www.truckinginfo.com/138581/volvo-recalls-over-6-000-trucks-due-to-potential-brake-issue
  4. Bain & Company . (2018, April 2). Retrieved from https://www.bain.com/insights/management-tools-core-competencies/
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  9. Heavy Duty Trucking . (2018, September 7). Retrieved from https://www.truckinginfo.com/312756/atas-freight-forecast-projects-growth-for-trucking
  10. Knichel, K. (2018, February 8). Forbes. Retrieved from https://www.forbes.com/sites/theyec/2018/02/08/the-four-biggest-freight-transportation-trends-to-watch-for-in-2018/#537256bef16a
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  15. Transportation & Logistics. (n.d.). Retrieved from The Statistics Portal: https://www.statista.com/statistics/469263/research-and-development-expenses-of-volvo-group/
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  19. Wyant Group. (n.d.). Retrieved from n.d.: https://wyantgroup.com/where-does-volvos-reputation-for-safety-come-from/
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Volvo AB SWOT Analysis and Core Competencies. (2021, Nov 20). Retrieved from https://papersowl.com/examples/volvo-ab-swot-analysis-and-core-competencies/

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