Essay On Volvo Acquisition

1939 Words8 Pages
Introduction: In today’s society, there has been a noticeable increase within the global trade industry, allowing business’ the opportunity to compete on a larger scale and have access to greater resources and technology. Over the past few decades China has become one of the largest automotive producers within the market and has the most growth potential worldwide as “car ownership is still remarkably low at 4.78% and is expected to grow significantly” (Huihui, 2012). The Chinese automobile market has started to recognise the importance of strong brand image and reputation. The Geely-Volvo acquisition has provided the Chinese car industry with the ability to expand abroad, gaining access into the international market therefore potentially creating a competitive edge. The acquisition is the biggest international merger taken place by a Chinese company and is intentioned to create a strong force for China as a world economic superpower (Wheelen & Hunger, 2006). According to Li Shufu, Geely’s chairman, the intention behind the acquisition was to gain access to Volvos advanced technology; enhance the Geely brand, to grow the Volvo brand within the Chinese market and to Develop the Chinese automobile industry (Wang, 2011). This essay will provide an insight into weather the Geely-Volvo acquisition can help the Chinese automotive company gain competitive advantages in the global car market. Through analysing the Five Force Model and the Strategic Positioning of the company a conclusion will be determined about the level of competitive advantage created through the acquisition. Five Force Model: Porters Five Force Model is an essential part of analysing the competitive advantage gained through Geely’s acquisition of Volvo. It is an im... ... middle of paper ... ...ill in turn stop the threat of substitutes (Volvo Technology, 2010). Being a reasonably new entrant themselves into the automobile industry, Geely’s existing technology is not quite as refined as Volvo and as such, Volvo’s excellence in vehicle underpinnings, engines and safety technologies will demonstrate to be valuable (Shirouzu). Therefore through the study of Porters Five Force Model, it can be determined that Geely’s strategy to acquire an extremely well established Western automobile manufacturer can help the company to gain competitive advantages in the global car market. Although both Geely and Volvo were formed from reasonably different business environments and cultures, Geely will surly benefit and allow a competitive advantage to be attained, even though the risk is substantially high, the pay off for success is extremely high for both Geely and Volvo.

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