New Business Opportunities and Product Life Cycle Assessment 2

This report assesses the application of new technology to the automobile sector through Volvo's electric cars. It examines the new and emerging business opportunities for Volvo as their electric cars move through the different stages of the product life cycle. The report also evaluates the operations of other businesses in the automobile industry that may not be profitable in the long run.

New business opportunities
and product life cycle -
Assessment 2

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
New and Emerging Business Opportunities for Volvo................................................................3
Unprofitable Businesses to Invest into Long Term.....................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
There have been various innovations and advancements in digital technology in the past
decades and the application of these new innovations and technologies to the operations of
diverse industries provides business organisations with immense opportunities to enhance and
improve their operational performance, efficiency, productivity and profitability in the consumer
markets (Okamoto and et.al., 2018). This report assesses the application of new technology to
automobile sector through Volvo’s electric cars. Volvo is a multinational automobile
manufacturer that operates from its headquarters in Gothenburg, Sweden. Volvo was founded in
1927, an astonishing 93 years ago have operated successfully within the automobiles industries
since then. Through its operations, Volvo has become quite successful earning 431.980 billion kr
as of 2019 in revenues.
MAIN BODY
New and Emerging Business Opportunities for Volvo
As Volvo start to produce and distribute effective and efficient electric cars into the
automobile consumer markets, they can experience new and emerging opportunities in the
consumer markets as their new and innovative electric cars move through the different stages of
its product life cycle. It is of immense importance for Volvo to identify, assess and make use of
these new and emerging opportunities present in the markets of automobile industries, so that
their new products in the form of electric cars can become a successful product in the automobile
industries, which is already a highly competitive landscape (Kishita and et.al., 2016). Identifying,
analysing and making use of all the new and emerging opportunities present to Volvo during the
life cycle of their new electric cars will inevitably help them to maximise their productivity and
profitability in the consumer markets and gain an effective competitive advantage against their
perceived competitors within the automobile industries.
Product Life Cycle Model for Volvo:

Product Life Cycle model is a strategic framework that describes to us the different stages
that a product has to go through from product development in the business organisation to
introduction into the markets to its final discontinuation. It highlights to us all the phases that
Volvo’s new electric cars would eventually face within the consumer markets, as they are first
initially developed at by the engineers and creators of Volvo, introduced into the markets for
consumers to purchase as a new novel product, gain popularity and cause the product’s
productivity and profitability to grow, mature in the automobile markets as consumers have lost
interest into the products as it is no longer a novel product and finally gets discontinued by
Volvo, replacing it for innovative, new products to satisfy the future needs and demands of
customers. The life cycle of electric cars of Volvo, would provide it with various opportunities
within the automobile industries. The product life cycle for electric cars and the new and
emerging opportunities present for Volvo are as follows:
Product Development: This is the first initial phase in the product life cycle of electric cars at
Volvo, where the engineers and creators at Volvo think of various blueprints, specifications,
combinations and designs for the new electric cars that is to be introduced into the automobile
markets. Volvo experiments with various specifications, blueprints, designs and combinations of
technologies, that it deems could make its electric cars novel and innovative product in the
automobile markets, while performing at optimum performance and efficiency (Yalcinkaya and
et.al., 2017). As the engineers at Volvo start to come to an informed decision based on their
experiments, the blueprint of the final product that is to be developed by Volvo is created, that
tries to create a novel and innovative electric car that also is within the prescribed budgeting
limits that management and leadership of Volvo have placed on them. With the design and
blueprint of the electric cars created, the manufacturing of the electric cars is begun by Volvo.
This phase provides Volvo with numerous business opportunities to increase their customer
share, productivity and profitability. The biggest opportunity present relates to the creation of a
novel and innovative product by Volvo that can address the current and future demands of
automobile consumers, while also satisfying and servicing them effectively. The creators and
engineers of Volvo need to conduct thorough research to assess the consumer trends, needs and
requirements of their consumers and create electric cars that satisfies these. If they are able to do
this efficiently, then they can make use of the opportunity in the automobile industries to
immensely increase their productivity, profitability, customer base and market share.

Through the above graph, we can see the relationship between annual sales of Volvo in
relation to time passed. The introduction phase has less sales, with sales increasing in growth
stage. Sales peak at maturity stage of the PLC and then start to decrease at decline stage for
Volvo.
Introduction: This is the phase in the product life cycle of electric cars designed by Volvo where
the product is first introduced into the consumer markets for their customers to purchase. During
this phase, Volvo has to keep the price of the electric cars high as the manufacturing and
distribution costs of the electric cars haven’t been optimised by the organisation. During this
phase the electric cars are able to attract customers simply on the basis of their novel and
innovative designs, with their not being many competitors to the electric cars within the
automobile industries. This phase also present Volvo with various business opportunities to
improve their operations (Pauliuk and et.al., 2017). The biggest opportunity present to Volvo at
the introduction stage is to capture a completely uncaptured market share within the customers of
automobile industries who have been waiting and wish to exclusively purchase electric cars as
opposed to traditional cars operating on internal combustion engines. Doing this can immensely
improve the popularity of electric cars at Volvo and help the product reach the next stage in its
life cycle faster.
Illustration 1: Graphical Representation depicting the Product Life Cycle

Growth: This is the next phase in the life cycle of electric cars of Volvo, where the electric cars
have become immensely popular in the consumer markets of automobile industries, with
increasing number of consumers choosing to purchase the product. Volvo can start to decrease
the prices a little as the manufacturing and logistical operations of Volvo’s electric cars have
been optimised to allow profitability even at reduced costs, which again results in an increased
popularity of the product in the consumer markets, attracting even greater customers towards
Volvo. This phase presents Volvo with huge opportunities to increase their customer base,
market share, productivity and profitability in addition to growing their operations. As this phase
Volvo needs to effectively market their electric cars to all consumers within the automobile
industries to attract as many customers as possible and service them effectively.
Maturity: By this phase Volvo can expect the growth in the popularity and sales of its electric
cars to decrease as compared to the growth phase due to intense competition that its electric cars
now face from alternative and substitute products offered to customers by their perceived
competitors within the automobile industries. Volvo can be engaged in price wars amongst their
competitors and find it hard to acquire new customers (Walter, Leyh and Strahringer, 2017).
Tough this phase brings to the forefront the decreasing popularity of Volvo’s electric cars, there
is still some opportunity for Volvo in the automobile markets to improve its market share,
customer base, productivity and profitability by focusing on their target customers as opposed to
all customers within the market.
Decline: The last phase of the life cycle of Volvo electric cars. By this time newer better
innovative products are available for consumers within the automobile industries and Volvo has
to slash prices of its current range of electric cars considerably to make sales. Volvo can expect
third party distributors to refrain from selling their electric cars as their customers are choosing
newer products. The only opportunity during this phase for Volvo is to identify factors that made
their electric cars popular amongst the automobile consumers and factor those into the product
development of their next iteration of manufactured cars.
Porter’s Value Chain Model for Volvo:
Primary Activities:

 Inbound Logistics: These are activities involved in the operations of business that aid its
supply chain and management of stored products. Volvo has productive relations with its
suppliers for long time period, which allow it to effectively and consistently procure raw
materials needed for its manufacturing operations at competitive prices (Koc and Bozdag,
2017). This provides its products with additional value and increases the overall
profitability of Volvo within the automobile markets.
 Operations: These include all organisational processes and operations of a business that
convert its raw and input materials into finished consumer products. Volvo has a great
network of manufacturing plants that take raw materials and manufacture diverse and
different variety of product ranges offered by Volvo. Most of the manufacturing
operations are automated, done by robots, which are controlled by effective and efficient
information technology systems. This allows for the operations of Volvo to be conducted
with high performance and efficiency, which increases its productivity and profitability in
the automobile markets.
 Outbound Logistics: These include all activities of Volvo that aid in the distribution and
logistics of its manufactured products to consumer markets. Volvo has a sophisticated
distribution network on account of long term investments in the UK with both third party
franchises and authorised sellers and dealers selling its manufactured cars to the
consumers within the automobile industries. This distribution network provides value to
Volvo and allows for optimum productivity and profitability to be achieved by the
business.
 Marketing and Sales: These include all the activities engaged by Volvo to promote and
advertise their products to the consumers within the automobile industries in order to
increase the popularity of their products and attract customers (Pal and Altay, 2019).
Volvo markets through both traditional and digital channels of marketing through tools
such as social media platforms, online websites and traditional marketing tools such as
newspapers, TV and radio commercials, billboards, magazines etc. to attract as large a
section of consumers within the automobile markets as possible and increase sales and
profitability.

Illustration 2: Traditional and digital channels of marketing
 Service: These are activities that help the consumers of Volvo have trust and satisfaction
with their purchased Volvo products. Volvo provides effective pre and post sales services
to its customers through customer service, monthly maintenance of cars, repair, upgrade
and personal modifications of cars purchased by consumers according to their
requirements and specifications.
Secondary Activities:
 HRM: Volvo contains huge number of highly skilled and talented employees that fill a
variety of jobs within its organisational structure.
 Technology: Volvo is capable of developing new and innovative technologies through its
own research and development that its competitors cannot imitate and incorporating it
effectively into its products for optimum performance and efficiency.
Unprofitable Businesses to Invest into Long Term
The automobile industries are highly competitive markets with limited suppliers for
electric cars, increasing their bargaining power. Businesses within the industry also face
moderate buyer’s purchasing power as they have various choice of businesses and product to
choose from based on their preferences (Amara, Halilem and Traoré, 2016). The threats from
substitutes is high while the threat from new entrants is quite low. All of these are applicable to

most businesses that operate within the automobile industries. For these reasons this report
advices against investing into the operations of Tesla Motors, as although currently they are
pioneers in electric car industry, when the automobile industry leaders such as GMC, Toyota,
Volvo, Honda etc., all start to manufacture their electric cars, then this would have immensely
negative impact on the operations of Tesla, as they do not possess the same level of market
experience, customer share, logistical network, supplier relations etc., to outcompete the industry
leaders of automobile markets. This is why it is inadvisable to invest into the operations of Tesla
Motors for profitability in the long run.
CONCLUSION
Based on the findings of the report, it can be concluded that electrification of their
manufactured cars can provide Volvo with huge business opportunities for their current and
future operations. This report examines the new and emerging business opportunities for Volvo
through electrification of their manufactured vehicles in the automobile markets, using Porter’s
Value chain model and Product Life Cycle framework. The report also evaluates the operations
of other businesses within the global automobile industries where it may not be judged for
investments to become profitable in the long run due to various factors.

REFERENCES
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point of product value, environment impact and cost: Case study of automobile engine.
In 25th ISPE International Conference on Transdisciplinary Engineering 2018 (pp.
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