Volvo Memo Essay example

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Volvo Trucks (A): Penetrating the U.S. Market

Executive Summary

The strategic problem is that Volvo is not creating superior value (Appendix 1) for its customers in the US market by utilizing its existence from early 70’s and thus has the poor market share of 11% relative to the top 3 competitors within the industry. The strategic opportunity is to increase the market share from 11.6% to 20% by 2001 by creating a product differentiation advantage. Through the acquisition of a technologically advanced company, Volvo will be able to gain competitive advantage in the industry. Volvo has not been able to grow their market share above 12% since they entered the US market in 1975 and thus they find themselves ‘stuck in the middle--which
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Fleet buyers and leasing companies buy the heavy trucks in mass amounts, which are driven by truck drivers who are the centers of influence in the heavy truck industry. By providing them comfort through a sleeping cabin, heavy trucks with this feature will change the mindset of drivers toward Volvo heavy truck segment. The implication for Volvo is an increase in brand awareness in the industry, created through positive word of mouth from drivers and in the long run, further create an increase in the market share.

Case Questions
Volvo entered the US heavy truck market in 1975 and missed the opportunity to acquire Freightliner (Appendix 3), which was acquired by Daimler-Benz and later became the market leader. Due to the difference in the European and US industry regulations, Volvo was not successful in implementing the same strategy as they did in Europe. This further made it more difficult to standardize their product within the heavy truck segment and benefit from economies of scale or scope, thus implying that the globalization of the heavy truck industry is very difficult.

In 1988 Volvo was unable to meet the high demand of heavy trucks, which led them to acquire GM Heavy Truck. Unfortunately, Volvo did not use this acquisition to their advantage, and failed to integrate this acquisition into a higher profit margin. In order to effectively cater to their customers (fleet operators and leasing companies), Volvo used this opportunity to provide

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