International Business: Volvo's Strategy in the Indian Market

This report provides an in-depth analysis of Volvo's international business operations, with a specific focus on its strategy and performance in the Indian market. The report examines Volvo's organizational structure, entry strategies, competitive positioning, human resource management, and supply chain management. It identifies key issues such as the lack of product variants, the absence of a full-fledged manufacturing facility in India, and the challenges in adapting to local market preferences. The analysis highlights Volvo's international strategy, including its marketing tools, digital leadership, and emphasis on safety features. The report offers several recommendations for Volvo to improve its market share in India, including introducing updated designs, expanding its product portfolio with more variants, establishing a manufacturing unit in India to reduce costs, and participating in auto shows to increase brand exposure. The report concludes that effective implementation of these recommendations will enable Volvo to enhance its competitiveness and achieve greater success in the Indian automobile market.

Running head: INTERNATIONAL BUSINESS ACROSS BORDERS
International Business across borders
Name of the student
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Author note

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Executive summary
The aim of this report is to discuss about the existing organizational structure, current operating
position, competitive strategy, human resource management and supply chain management of
Volvo car. The discussion helped in identifying the issues in the internal management of Volvo,
which are hampering their growth in the Indian market. One of the key areas of improvement,
which is being identified, is the lack of more variants in the product portfolio of Volvo in the
Indian market. In accordance to the issues identified in the report, different recommendations are
being discussed. This report concluded that, effective implementation of the above discussed
recommendations will help Volvo in increasing the market share in the India.

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Table of Contents
Introduction......................................................................................................................................3
Company overview..........................................................................................................................3
International strategy of Volvo........................................................................................................4
Organizational structure and issues.................................................................................................5
Entry strategies initiated..................................................................................................................5
Production and supply chain management of Volvo.......................................................................6
Human resource management..........................................................................................................6
Recommendations............................................................................................................................7
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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Introduction
For the contemporary business organizations, international business plays an important
role in enhancing their organizational performance along with increasing the brand value across
the world (Folsom et al. 2012). However, in initiating the international business, there are
various elements that need to be considered by the business organizations. Business
organizations entering in the global market or in a new foreign market have to redesign their
existing organizational structure, policies and strategy along with initiating an effective and
suitable entry mode strategy in order to achieve success in the host market.
Volvo car is being originated in Sweden and is one of the most prominent carmakers in
the world. They have their presence in all the major economies in the world with having various
operational facilities. Few years ago they have entered in the market of India, which is one of the
largest and most potential automobile markets in the world (Khan 2017). There are various
initiations being done by Volvo in order to get succeed in the Indian market. However, they are
still trailing behind the other carmakers especially the German carmakers in the Indian market.
This report will discuss about the existing organizational structure, current operating
position, competitive strategy, human resource management and supply chain management of
Volvo car. Accordingly, the issues will be identified and recommendations will be discussed in
this report.
Company overview
As discussed earlier, Volvo is one of the leading and prominent car manufacturers in the
world with having different manufacturing facilities around the world. They are known for their

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updated safety features being installed in their cars. Few years ago they entered the market of
India in order to tap the growing market for luxury and higher end cars. However, they are still
far behind the German and other luxury car manufacturers in India in terms of sales and market
share. Though, Volvo has got immense success in the commercial vehicle segments by having
the majority of the market share (Group.volvocars.com 2017). However, in the case of private
automobiles, they are trailing behind their competitors. One of the key reasons for this is the
absence of fully fledged manufacturing facility in India. This made them importing the vehicles
from their manufacturing facilities abroad. Thus, it makes their cars more expensive with the
inclusion of the import duties. In addition, the lack of variants of products of Volvo is also
hampering their effort to more number of customers. On the other hand, Indian market is more
being attracted by good designs (Khan 2017). In this case also, the competitors of Volvo are way
ahead of them in terms of introduction of new and updated designs in their vehicles.
International strategy of Volvo
The international strategy of Volvo car is being designed in order to create a distinctive
image among the global customers. In doing so, they have implemented holistic approach
covering all the major aspects in initiating an effective global strategy (Lee and Carter 2012). In
order to enhance their global competitiveness, Volvo has divided their global strategy in four
main divisions namely marketing tools, digital leadership, dealerships and service. One of the
key competitive strategies being initiated by them is the initiation of Volvo exclusive event for
showcasing their new products rather than participating in the auto shows (Hosein 2012). This
will help them in having the market attention specifically on their products only. Another
competitive strategy for them is the initiation of global products for all market. According to this

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strategy, Volvo offers similar products for all the markets. This helps them in initiating singular
approach in advertising and promoting their products.
One of the key positioning strategies implemented by them is the safety features in their
entire product portfolio. Volvo car is being known as one of the safest automobiles in the world.
They have their majority of their innovations in enhancing the safety features of their cars.
Initiation of first air bags in cars is being initiated by Volvo (Berger 2012). Thus, this positioning
strategy helps them in placing their products as safest options compared to their competitors.
However, one of the key issues being identified in their competitive strategy is the lack of
diverse and large product portfolio along with less concentration on the design (Madsen and
Walker 2015). However, in the segment where Volvo operates in India, design plays an
important role in attracting the customers.
Organizational structure and issues
The organizational structure of Volvo is centralized in nature with having independent
strategic business units in various locations around the world. The units are being divided in Asia
pacific region, Europe, Middle East and Africa and America (Ashkenas et al. 2015). Among
these business units, various corporate functions such as finance, corporate communication and
human resources. Other departments include information technology, design, research and
development and purchasing (Company structure 2017). However, one of the issues being
identified is the lack of ability in determining the domestic requirement of the market of India
and offering product and features accordingly. The existing organizational structure of Volvo is
not proving effective in determining the domestic market.

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Entry strategies initiated
The entry strategy of Volvo depends on the market potentiality and economy of the target
market. In the case of operating in India, Volvo took the route of completely built unit (CBU)
and afterwards they went for importing completely knocked down unit (CKU). These units are
being imported and assembled in India. This strategy further helped them in reducing the price of
their products to some extent (Nieuwenhuis, Beresford and Choi 2012). Recently, they started
the assembly line for their flagship SUV XC90 in India. However, in the case of entering the
market of China and United States, they have started with their own manufacturing plant from
the very beginning. Thus, the entry strategy involved by them is different in different countries.
In India, they are having foreign direct investment but they have only invested in having the
assembly plant in India rather than having the manufacturing plant.
Production and supply chain management of Volvo
Volvo cars have their own logistics support system from Volvo group, which looks after
their supply chain management (Mangan and Lalwani 2016). The cars being manufactured in the
manufacturing facilities of Volvo are being effectively transported to inbound facilities around
the world. Production is also being looked after the specific department of them. However, due
to the less production facilities of Volvo around the world, the time and cost involved for them in
transporting the products to the sales point is more compared to their competitors. This made
their products pricier in the market.
Human resource management
Various employees related issues are being originated in Volvo in past, however
initiation of effective policy of human resource management helps them to avert the issues and

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maintain effective working environment in the organization. Programs such as job enrichments
and job rotation are being initiated by the upper level management in order to enhance the
productivity and motivation of the employees (de Menezes 2012). In addition, a new induction
program is being launched for the newly appointed employees to make them accustomed with
the existing organizational culture. Leadership roles in the internal management play an
important role and in Volvo, leadership is being main motivating factor to generate innovative
ideas from the employees along with maintaining workplace health and safety.
Key issues and opportunities for management
There are various issues and opportunities for the management of Volvo regarding their
business in India. One of the key opportunities is the huge market potential in India. This is due
to the reason that, India is one of the leading developing nations with rapid increase in the
purchasing power of the customers. Thus, the potential market for Volvo cars is also increasing.
On the other hand, challenges for them include determining the local preferences and modifying
their global approach accordingly. As earlier discussed, Volvo maintains global product portfolio
in all countries. However, it will be difficult for them to modify their product portfolio only for
the Indian market, whereas Indian customers may not be attracted if the local preferences are not
being met.
Recommendations
 One of the key issues that are being identified is the lack of updated designs in the
product portfolio of Volvo. Thus, in the Indian market, they cannot able to attract the
customers effectively. Thus, in this case, the recommended steps should be the effective
determination of the domestic taste and preference pattern of the customers regarding the

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car design (Goetsch and Davis 2014). Accordingly, they have either opt for their internal
design team to refresh the design elements of their product portfolio, or they should
outsource that job to the third party design centers such as Pininfarina. It will help them
in introducing newer and updated designs in their entire range of products being offered
in the Indian market.
 To succeed in the Indian market, automobile manufacturers have to introduce different
variants to cater to different sets of customers. However, in the case of Volvo, they have
only limited variants and that too in the similar price range. Thus, in order to cater to
different set of customers in terms of price range and genres of the cars, Volvo should
come up with more variants (De Luca and Atuahene-Gima 2013). It will help them in
targeting a larger market and eventually the brand value will get extended.
 Currently, Volvo is having a single assemble plant in India where the completely
knocked down unites are being imported and assembled. However, most of their
competitors are having manufacturing plants in India for their lower cost models. Thus,
this helps the other car manufacturers in India to offer the products in more competitive
price range by maximizing the localization of the raw materials (Nakajima, Saito and
Uesugi 2016). On the other hand, importing the knocked down units from abroad cost
huge import duties for Volvo, which further increase their price of the cars. Thus, they
are offering products having similar quality and features to the competitors but at much
higher prices. Thus, it is of the urgent need for them to initiate a manufacturing unit in
India. It will help them to increase the use of domestic raw materials more in their
production process, which will help them in aggressively price their products.

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 Though it is being earlier discussed that, Volvo has initiated new marketing strategy
where they will reduce the participation in the trade shows. However, in India, auto
shows attracts a huge number of audience compared to any private shows. Thus, in order
to gain more customer attention for their brands, attending and participating in the auto
shows is important. Delhi auto expo is the largest auto show in India and it attracts a huge
number of attendees. Thus, the private shows by Volvo will not attract this much
audience and hence it is being recommended that for enhancing the brand exposure in the
Indian market, they should consider participating in the auto shows.
 Currently, Volvo is offering global products in all countries. However, in order to gain
more market share in India, it is important for them to effectively determine the domestic
taste and preference and offering products accordingly. There are various aspects that are
being preferred by the customers in foreign markets but not by the Indian customers.
Thus, the products of Volvo, which are commercially successful in the global markets,
are finding tough ground in the Indian shore. Thus, it is being recommended that Volvo
should initiate effective determination of the requirement and preference of the Indian
market.
 Strategic alliances will be beneficial in marketing and targeting the potential customers
effectively and determining the domestic preference pattern. In the case of India,
initiation of strategic relationships with domestic organizations having expertise will help
them to operate in the Indian market effectively (Cartwright and Cooper 2012). The
domestic organization will have more market presence and penetration compared to
Volvo in India and with the help of the strategic alliances, Volvo can leverage the
opportunities.

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Conclusion
Thus, from the above discussion, it can be concluded that, there are various gaps or areas
of improvement are being identified, which are hampering the enhancement of the organizational
performance of Volvo in the Indian market. Various organizational aspects are being discussed
in this report to determine the organizational efficiencies of Volvo along with their key areas of
improvement. One of the key areas of improvement, which is being identified is the lack of more
variants in the product portfolio of Volvo in the Indian market. Another issue is the lack of
attractive design of the cars being offered by Volvo in the Indian market. In accordance to the
issues identified in the report, different recommendations are being discussed. It can be
concluded that, effective implementation of the above discussed recommendations will help
Volvo in increasing the market share in the India.

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Reference
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Berger, E.D., 2012. Software needs seatbelts and airbags. Communications of the ACM, 55(9),
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Cartwright, S. and Cooper, C.L., 2012. Managing mergers acquisitions and strategic alliances.
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https://investors.volvocars.com/en/corporate-governance/company-structure
De Luca, L.M. and Atuahene-Gima, K., 2013, May. Market knowledge dimensions and cross-
functional collaboration: Examining the different routes to product innovation performance.
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de Menezes, L.M., 2012. Job satisfaction and quality management: an empirical
analysis. International Journal of Operations & Production Management, 32(3), pp.308-328.
Folsom, R.H., Gordon, M.W., Spanogle, J.A., Fitzgerald, P.L. and Van Alstine, M.P.,
2012. International business transactions: a problem-oriented coursebook. ThomsonReuters.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Group.volvocars.com. (2017). About Volvo Cars | Volvo Car Group. [online] Available at:
https://group.volvocars.com/ [Accessed 14 Oct. 2017].