Geely's Acquisition of Volvo: A Global Competitive Strategy Analysis

This report examines Geely's global strategy, specifically focusing on its acquisition of Volvo and its impact on gaining a competitive advantage in the international car market. The report begins with an introduction to global strategy and its importance, followed by a case study analyzing Geely's decision to acquire Volvo. The analysis explores the benefits of the acquisition, including leveraging synergies, boosting revenue, saving time, and expanding market footprint. The report also delves into the historical context of Geely's growth, the factors contributing to its success, and the advantages gained through the acquisition, such as brand awareness and economies of scale. The conclusion emphasizes the significance of acquisition in business growth and development, highlighting the benefits of globalization and the strategic turning point that the Volvo acquisition represents for Geely. The report references various books and journals to support its findings, providing a comprehensive overview of Geely's global strategy and its implications for competitive advantage.

Global Business
Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Case Study...................................................................................................................................1
CONCLUSION ...............................................................................................................................5
REFERNCES ..................................................................................................................................6
.........................................................................................................................................................6

INTRODUCTION
Global strategy is a elaborated plan of action which company develops to target growth
beyond its borders or it is a procedure of planning how a business or product can be successful
around the world. Along with this, global organisation has investment and which is present in
various countries as it markets its goods or services through the use of an identical co-ordinated
image or brand in every market (Hou and et. al., 2014). IN many cases, there is one on corporate
office who is responsible for managing or handing worldwide strategy. Moreover, global strategy
mainly accent on cost management, ratio and volume. Furthermore, it benefits organization in
expanding their target customer which improves overall performance of firm and add value to
customer. This report is based upon the case study of Chinese car maker Geely, who enter into
a international market by acquisition of Volvo. In this, report has to justify the point whether
decision of Geely to trade globally will help them to gain competitive advantage.
MAIN BODY
Case Study
Do you think Geely’s strategy to acquire a well-established Western auto-mobile manufacturer
can help the company to gain competitive advantages in the global car market? And why?
Yes, Geely's strategy for acquiring the Volvo automobile manufacturer enable the firm to
attain high profitability and can gain competitive advantage. Globalisation is a huge and complex
aspect, although it is defined as a activity by which territorial economies, societies and cultural
act and become unified assisted by worldwide network of communication, transportation and
trade (Mol and Brewster, 2014). This process has high impact on business environment (internal
and external), culture, political system, economic growth and development etc. across the globe.
Apart from this, in today's competitive world globalisation or global marketing is not a new term
as every companies are familiar with it as well as it serves as major component for business
growth in an effective and efficient manner. It encourage firms to adapt innovative or latest
technologies in order to implement or produce impressive or creative product which add value to
company's brand image. This has transformed the balance of world in terms of economic and
political powers. During 2000s, most of the famous industrial nations went into recession
whereas China has emerged as world's new economy superpower. Moreover, China has
benefited with global marketing or globalisation in the past decades as it's growth rate is

enhancing in an impressive way. As, China was one of the poorest country among nation but
they are well known for their hard work and flexibility to adapt any kind of challenges and make
use of all possible business opportunities which helps them to achieve high level of sales in
effective way (Merchant, 2014). Although, by using their cheap labour and immense domestic
market, China has attracted huge foreign direct investment from multi national companies which
help them in developing modern technology in manufacturing, automobile sector and many
more. Furthermore, the acquisition by Chinese car maker Geely of Volvo creates the big
challenging and threat to several companies across the globe. It reflects several phenomena like
it is an international merge which is the result of globalisation and in which many issues has to
solve i.e. cultural differences, different management style cost allocation etc. Along with this,
acquisition is done by a local company of China i.e. Geely as it mark as a rising power of Geely
in order to expand their market globally. Thus, this acquisition enable the Geely to improve their
overall performance and can attain high level of profit maximisation in an effective and efficient
manner.
History of Geely manufacturer.
Before 2011, Geely was relatively small and unknown car maker in China, but it took
initiative to become a global competitor. It is introduced in the year of 1986 by Shufu Li and it is
started it's journey as manufacturing home appliances and in 1997 they began to manufacture
automobile and it's founder has ambitious plan for Geely which encouraged them to expand their
market share (Donoghue, 2014). As the name defines Geely as fortune and lucky, likewise its
Founder believed that only by becoming as good as the best international brands which Geely
can compete in China and internationally. However, Li was aware about the market scenario of
toady's competitive world that Chinese car-makers had weakness in operations, design, safety,
quality and brand building. Thus, it motivated them to acquire one of the famous automobile
firm i.e. Volvo which allow them to enhance their market share.
Factor which enrich Geely's to gain competitive advantage in a global car market
Acquiring Volvo Car was one of the most essential turning point in Geely development.
It aid them to lay a base for building a global bodied culture. Automobiles are an international
industry and that encourage companies for being more flexible and inclusive. However,
integration allows the company to de express national, social, religious, communication and
regional deviation at the same time they can gradually foster a culture of respect, adaption,

inclusiveness and integration (Lin, 2014). As, Geely's founder understand the current market
situation that Chinese automobile industry were weak in quality , safety which creates a excellent
opportunity to them to be a unique among competitors. While Volvo Car Group is a pioneer of
leader in self-driving technology and they put their main attention on customer's safety and this
is one of the main reason for Geely to perform effectively and innovatively and it leads them to
achieve high level of proficiency. Some of the advantages which Geely can achieve by
acquisition of Volvo company is described below:
 Possibleness to leverages synergies: A plan of action or effective acquisition enable the
company to achieve synergies in their business growth as well as it offers real value for
both the parties i.e. acquired and acquiring. In terms of cost synergy, it states cutting cost
by taking advantage of overlapping operations or resources and strengthen them in one
entity. However, acquisition enable the Geely for cost cutting in providing redundant
facilities, workforce or business units and areas of operation that help them to attain high
profit maximisation in an effective manner (Chen and Miller, 2015).
 Boost the revenue: As acquisition provides revenue synergy which vary the competitive
balance of power and create chance to change market dynamic, sell more products and
can raise prices. It help company to access new into markets and can expand the customer
base which allow Geely to achieve profitability.
 Save time and long learning curves: One of the another benefit of acquisition which lead
company to enhance their efficiency and effectiveness at global level i.e. it saves times
and expense to achieve growth. Hence, Geely is capable of developing and delivering
service of its own which is more easier and cost effective to them in acquisition which
allow them to capture customer attention and improves customer base (Casanueva,
Gallego and Revilla, 2015).
 Growth: Geely strategy for growth i.e. acquisition provides enormous business
opportunity to grow and encourage them to adapt latest technology in order to produce
best quality of product which enable them to enhance customer satisfaction level and can
add value to company' brand image.
 Examine value chain: With the help of acquisition, Geely can focus on rising its worth by
reducing or removing unneeded costs and enrich performance as well as it help them to
maintain their relationship between finance and cost. Along with this, it helps the firm to

deliver best quality of product in low cost which enhance their market share and add
value to customer.
 Anticipate competition: Acquisition helps the firm to identify or examine their
potentiality or capability as well as enable them to compare or analyse their strength and
weakness with their competitors. By analysing market share, customer service, brand
image and customer satisfaction helps Geely to strengthen their market position and can
gain competitive advantage in global market (Johansson and et. al,2018).
 Enable benchmarking : It is an effectual means through which accomplishment of higher
sales of competition becomes assertable. Along with this, this process measure the
performance of an system against the competitor execution and making use of
information as a basis of setting and alter organisation goal, strategies and targets.
Moreover, through benchmarking, it allow the Geely to analyse their potentiality and in
order to increase their production level by making effective use of technology and
manpower.
 Expands footprint : A major credit which acquisition provides tom Geely is that it enable
the firm to maintain their ambiance such as working culture, motivation, recognition
effort etc. even after taking over another firm. However, acquisition allow Geely to
provide proper and impressive working condition to its employees which leads them to
achieve high employee satisfaction and productivity. Moreover, subordinate satisfaction
is one of the key element for gaining competitive advantage as they are the main assets
for company's growth an enhancement (Awate, Larsen and Mudambi, 2015).
 Brand awareness: This activity arises when acquisition is done by any organisation. AS
this is concerned with creating awareness among customer or employees which add value
to firm's brand image and profitability. However, Geely can gain competitive advantage
by strong brand name and goodwill which creates positive attitude in the mindset of
population and they can accomplish their organisational goal in effective and efficient
manner.
 Economies of scale: By acquisition, firm can get enormous business opportunity and
encourage them to adapt challenges or threat by adapting innovative or latest technology
which enable them to attain high profitability and productivity. Along with this, it allow
an organisation to reduce their cost on product, reduce duplication of work as well as can

apply suitable modification on product and many more, and these all factors lead
company to obtain economies of scale.
From the above mentioned factors for gaining competitive advantage, Geely can reach
their destination very effectively and efficiently as they are well known for their
flexibility and openness which stand them out among competitors. Moreover,
acquisition is one of the biggest turning point for Geely in improving their overall
performance and also to gain competitive advantage (Rao and Dai, 2016).
CONCLUSION
The above stated report it has been concluded that acquisition is one of the essential
component for business growth and development in a productive way. At the same time global
strategy benefits the firm in various ways like enhance the potentiality to generate revenue,
access to talented or expertise workforce, exposure to Foreign Direct Investment (FDI) and many
more and all these elements the company to gain competitive advantage impressively. Along
with this, for enhancing the productivity at global level, it plays a crucial, role in achieving
business goals and objectives. Apart from this, the acquisition of Swedish Volvo by Chinese
Geely is a direct result of globalisation as it prepare the way to obtain profit maximisation with
the optimum utilisation of resources. However, benefited from globalisation, China will be next
superpower in world economy. It is believed that this acquisition is just a beginning of Chinese
economy expansion overseas. Thus, it is noted that Geely new strategy of acquiring Volvo is the
turning point for them and it will lead them to attain high level of profitability and can gain
competitive advantage in an effective and efficient manner.

REFERNCES
Books and journals