BUS301 Global Strategy: Geely's Volvo Acquisition Case Analysis

This report analyzes Geely's acquisition of Volvo from Ford, examining whether this strategic move can help Geely gain a competitive advantage in the global car market. The acquisition, completed in 2010, allowed Geely to access advanced technologies and enhance its brand value. The report discusses the challenges and synergies encountered during the merger, including differences in leadership styles and branding strategies. It highlights the advantages Geely gained, such as access to Volvo's technology, enhanced brand value, and increased market opportunities, particularly in China. The report also considers the impact of globalization and China's growing economic power on the acquisition. The analysis covers Geely's financial performance, brand value, and corporate culture, as well as Volvo's reputation for safety and technology. The conclusion emphasizes Geely's potential for success through increased brand value and technology utilization, ultimately aiming to develop a strong competitive advantage in the global automobile industry. The report references several academic sources to support its claims.

Running head: INTERNATIONAL BUSINESS ANALYSIS
INTERNATIONAL BUSINESS ANALYSIS
Name of the Student
Name of the University
Author Note

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Introduction
As discussed by Carvalho and Ogasavara (2017), mergers and acquisitions can be
defined as the process that is based on the ways by which the effective consolidation of the
organizations are achieved with the help of different financial transactions. The process of
mergers and acquisitions also include many other transactions like, purchase of the assets,
tender offers and management acquisitions (Chen, Wang and Young 2015). The process of
merger takes place after the board of directors of the two organizations provide approval to
the combination of different aspects of the companies. The acquisitions on the other hand are
based on the ways by which a particular organization is able to gain the majority stakes of the
acquired organization (Chimenson and Fang 2016).
The essay will be based on the acquisition that was made by the Chinese organization
named Geely Holdings. The organization had acquired Volvo from the US automobile based
giant Ford. The analysis will be mainly related to the ways by which the acquisition has
proved to be effective for the operations of Geely in the automobile industry. The advantage
that has been received by Geely due to the acquisition of a large Western organization will be
the most important part of the analysis.
Discussion based on the acquisition of Volvo by Geely
As discussed by Fang and Chimenson (2017), the Chinese automobile organization
Geely Holding Group was successful in completing the acquisition process of Volvo from the
large automobile giant Ford in the year 2010. This was the first time that a Chinese
organization had gained 100 percent shares of a foreign based rival organization. The
chairman of Geely, Li Shufu had also pledged that the acquisition world be able to play a
major role in the ways by which the Chinese organization can aim at pushing the shares in the

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market by keeping to the characteristics that have are a part of its operations (Fang and Wang
2018).
According to Gao (2015), the safety based concerns were considered by the Chairman
of Geely Holdings in order to maintain the sales of the cars of Volvo. The strategy and scope
of the company has been a major factor that was discussed by the Chairman of Geely
Holdings. Geely Holdings had purchased Volvo from Ford at a time the automobile giant had
started facing major issues related to levels of profitability (Lattemann et al. 2017). The
organization had thereby decided to start with divestment of its resources and assets in order
to maintain its position in the automobile industry. The deal had also helped Volvo to recover
from the crisis that had taken place in the automobile industry. The acquisition had led to an
increase in the share value of Geely in the year 2010 by more than 5% (Lebedev et al. 2015).
According to Liu (2019), the acquisition of Volvo was a major step that was taken by
Geely Holdings towards internationalisation of its operations. The acquisition was also able
to lead to high levels of profits and intense levels of technology transfer in the history of
Geely. Many conflicts have taken place based on the merging based operations that have
occurred between the organizations that belong to two entirely different countries (Peng et al.
2017). The major issues that had occurred in the organizations include, the differences that
exist between the leadership styles, resource sharing process and the branding based strategy
as well. The challenges and synergies that have been encountered in the merger based
operations between Volvo and Geely has been a major factor that has affected the levels of
revenues and profitability as well (Ramamurti and Williamson 2019).
The major factors that had been able to play an important part in the acquisition based
operations of the organizations are based on the advantages that were gained by Geely
Holding due to effective acquisition process. Geely had received access to the advanced

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technologies that were developed by Volvo. The acquisition had also helped in effective
enhancement of the brand value of Geely in the automobile industry. The attention that has
been received by Geely in various countries due to the acquisition of Volvo was a major
advantage that was provided to the organization (SHEN and CHEN 2017).
According to von Bismarck and Zheng (2016), the different models that have been
developed by Volvo over the years of its operations in the automobile industry like V60 and
S60 can prove to be highly profitable for increasing the revenues of Geely. The acquisition of
Volvo had also increased the possibilities of growth of Geely in the automobile based market
of China. The economic growth that has taken place in China is considered to be a major
factor that has an impact on the ways by which the automobile industry has grown (Yakob
2018). The growth of automobile industry is thereby not only based on the domestic market;
overseas or international expansion is also an important part of the ways by which
organizations in the automobile industry are able to maintain their profitable operations.
Geely had thereby received support from the government in order to complete the acquisition
based operations in an effective manner (Yiyi 2017).
According to von Bismarck and Zheng (2016), globalization is a major factor that is
related to the acquisition based process that has been implemented by Geely Holdings.
Globalization can be defined as the process that is based on the ways by which different
societies, regional economies and cultures are able to interact with each other in an effective
manner. The process of globalization is based on the impact that it has on the political
systems and the cultures of different countries (Ramamurti and Williamson 2019). The
method based on acquisition is thereby able to affect the ways by which Geely is able to
merge its operations in order to develop the products based on needs of global customers. The
power of China that has been formed in the world economy is considered to be a major factor
that has affected the acquisition process in a huge manner. The different international

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organizations need to develop their relationships with the Chinese organizations in order to
provide the best levels of services to the customers (Carvalho and Ogasavara 2017).
As discussed by Fang and Chimenson (2017), the annual sales of Geely in the year
1998 was around 200 cars that had reached to more than 326710 cars in the year 2009. The
annual increase in sales that had been experienced by the organization every year was 96%.
The average annual growth that had been experienced by the organization for the last five
years is 20%. The growth was achieved by Geely Holding with the help of explosive
development and favourable conditions in the automobile industry (SHEN and CHEN 2017).
The development that has been depicted in the domestic Chinese automobile based market is
high and this has shown a huge growth in the last few years. The market share that has been
gained by Geely Holding in the automobile industry is more than 4% in the Chinese
automobile industry. The financial condition that has been developed by Geely Holding in the
automobile industry has been quite strong for the last few years. The profits of Geely have
been rising in a steady way even in the financial crisis based situation that occurred in China.
The growth has been quite sufficient for the organization to maintain the domestic and
international expansion based operations (von Bismarck and Zheng 2016).
As discussed by Fang and Chimenson (2017), the brand value that has been developed
by Geely in the automobile industry is not high as it is regarded a low value organization and
the products are also considered to be of low quality. Geely has been operating and providing
competition to the organizations that are a part of the low cost based segments. A corporate
culture has been formed by the organization that is based on effective entrepreneurship under
leadership of the chairman of Geely, Li Shufu (Peng et al. 2017). The innovations in the
technology that have been implemented by the organization are however not considered to be
highly effective for development of high performing automobiles. Geely has also developed
its international expansion based operations in different countries in order to offer the

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products to the consumers in different parts of the world. The major purpose of the operations
of Geely Holding in the future is based on the ways by which technologies can be developed
in order to develop different products (von Bismarck and Zheng 2016). The acquisition of
international automobile organizations is considered to be an important factor that is related
to the operations of Geely Holding in the industry.
Volvo Car Corporation is Swedish automobile based organization that has developed
its headquarter in Sweden. The organization was established in the year 1927 and was
originally a major subsidiary of Swedish organization named SKF. The brand name of Volvo
is associated with the modern technologies in a huge manner (Carvalho and Ogasavara 2017).
The advanced safety based support that is provided to the consumers by Volvo is considered
to be an important factor that is able to affect the ways by which the company has developed
its products and offered them to the customers. The reputation that has been formed by Volvo
in the industry is considered to be a major that has led to the success of the organization
(SHEN and CHEN 2017).
The two organizations have quite a few points of similarities in the operations that
have been performed in the automobile industry. This has a major impact on the ways by
which acquisition process can be implemented. The differences that exist between the two
organizations are considered to be important aspects related to the operations. The changing
state of the Chinese economy is considered to be a major factor that has been able to affect
the ways by which the acquisition process can be successful (Carvalho and Ogasavara 2017).
The acquisition will be able to provide major opportunities based on growth to Geely
Holding. The major competitive advantage that will be gained by Geely is based on the
improvement of brand value of the organization. Volvo has gained the position of premium
car brand in different parts of China and North America. The lack of proper brand value of
Geely will be fulfilled in an effective manner with the help of the high brand value that is

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gained by Volvo. The brand value of Geely is quite weak and the acquisition process can
have an impact on the ways by which the value of Volvo can help in enhancing its operations
(Ramamurti and Williamson 2019). The differences in cost structures of the two
organizations are also considered to be important factors that have an impact on the products
that are developed and offered to the consumers. However, in spite of many different
challenges the organizations can gain a lot from the development of the acquisition process.
Geely will be successful in the development of an effective competitive advantage in the
industry with the help of modern technologies and high brand value of Volvo (Carvalho and
Ogasavara 2017).
Conclusion
The essay can be concluded by stating that Geely will be able to gain huge levels of
success from the operations that are performed in the automobile industry. The organizations
will be able to gain a lot from the ways by which the brand value can increased and the
technologies can be used in an effective manner as well. The value of Volvo in the
automobile industry will be able to support the organization in a huge manner in order to
develop a major competitive advantage.

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