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Volvo trucks case study

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Penetrating the U.S Market
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Penetrating the U.S Market

Best known for cars

A leading European heavy truck manufacturer

One of the top three heavy truck competitors in the world

in 2000

Beginning in 1975,Volvo had been attempting to

penetrate the U.S. heavy truck market.

Trucks could be devided into light, medium and heavy trucks based on gross vehicle weight (GVW).

• The light truck (GVW class 1-4), using gasoline engines.

• Medium truck (GVW class 5-7) and heavy truck (GVW class 8, or over 15 tons), using diesel engines.

Heavy trucks were used for range of activities including highway cargo hauling, construction, refuse collection and other specialty application.

heavy truck chassis were also the core of specialty vehicles such as buses, fire engine, etc.

Fire engines

Bus

Cab-over Design: Volvo FH series in Europe

Conventional Design:Volvo VN Series in the United states

Registrations of New Trucks (Heavy Trucks in Thousands of unit)

1994 1996 1998 2000

Western Europe 135 175 207 246

North America 207 270 236 207

Japan 55 56 32 34

Body

components

Diesel engines

Gearboxes

Axles

Truck assembly

Specialized

body companies

Leasing firms

Distributors Truck operators

The Heavy Truck Value System

Europe Asia United States

U.S. Heavy Truck Market Share (over 15 tons)

1925 : Was founded to produce cars (Car : 1927,Truck : 1928 )

1980 : became a conglomerate

mid- 1990 : reversed and refocused on vehicles and heavy equipment

1998 : total corporate sales had reached $27 billion , cars had been the most important source of profit of Volvo

1999 : The worldwide car business was sold to ford.

Volvo became a manufacturer of transport solutions for commercial use. ( Trucks, buses, construction

equipment, marine and industrial power system, and aerospace engines )

Volvo‘s product line

• European cab-over trucks (The FH series for long-haul and FL

series for construction and distribution use)

• European conventional trucks (The NH series)

• American conventional trucks (The VN and 770 series)

A long term Volvo objective

• Was to reduce the number of components

• Decreasing the number of suppliers

• Reduced the costs of warehousing, purchasing and shipping

Volvo’s Global Operations in 2000

1955 : Volvo’s presence in the U.S. (Volvo passenger car)

1970 : Volvo truck decided to become a global player.

1975 : Leading to the decision to enter the U.S. market.

1978 : Freightliner cooperate with White Motor

corporation

Freightliner and Volvo team up.

1981 : Volvo decided to acquire the White Motor

corporation

Volvo White introduced the Integral sleeper.

1988 : Volvo acquired GM’s heavy truck business.

a new brand was created “WHITEGMC”

1990 – 1994 : The U.S. heavy truck market grew

1995 : Volvo Truck Finance North America was formed.

1996 : Launch of the new VN series.

1997 : Introduced new lager VN (770 series)

1998 : Industry demand rebounded.

U.S. market share and profitability were

unsatisfactory.

Management was considering ways to enable

Volvo to finally break the 12% market share barrier on the way towards 20%

1. Why has Volvo spread its value chain for heavy trucks

around the world? How can you explain why certain

activities are performed in

• เพ่ือสร้างความแข็งแกร่งของบริษัท

• เพ่ือกระจายสินค้าอย่างทัว่ถึง

• เพ่ือให้ operation อยู่ใกล้กบั dealer เพ่ือให้เข้าถึงลกูค้าได้ดีย่ิงขึน้

2. Certain locations?

3. Why have European-based truck manufactures become

the global leaders and not American or Asian companies?

• มีความเป็นผู้น า

• กล้าไปลยุตลาดใหม่

• กล้า take over บริษัทตา่งๆ

• มีความเช่ียวชาญด้าน technical

4. Why is volvo(as well as other European companies) so

committed to entering the U.S.market?

• Volvo Truck decided to become a “GLOBAL PLAYER”.

• Attractive opportunities offered by US Geography &

Transportation business for player like Volvo.

• Highest sales of 45% in 1980 compared to other regions.

• Result into to a global advantage over its competitors not

only in U.S. but also shows a strong position over its

European competitors.

5. What step has Volvo taken towards establishing itself in

the United States?

• Acquisition of White Motor Corporation.

Why has the company had so much difficultly?

• Difficult to attract enough dealers.

• Traditionally the relations between manufacturers and

dealers in the U.S. had been quite adversarial.

6. What should Volvo do in 2000?

• Entering further into global markets such as Asia & Africa

• Inauguration new operational offices to strengthen its global presence

• Collaboration with local business partners

o Local Manufacturing

o Sales and distribution

• Coordinated for common brand name & product development

• Developing more fuel efficient vehicles

• Provide full-service leases, finance leases, contract maintenance agreements and rentals

• Developing customer care centers for help in case of an emergency breakdown

7. What are the implications of the Volvo Truck case for

how countries should attract foreign investment?

• Dealers must support to sale the product.

• ไม่มีระบบผกูขาดภายในประเทศ

Thank you

Pratya Cheevaparaboon 5620224142

Pornthida Itthisatienkul 5620224150

Kanokwan Nimngern 5620224157

Preechaya Pongpassorn 5620224177

Manimeth Phetrasuwan 5620224184


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