Business Strategy Analysis: Volvo's Indian Bus Market Case Study

This case study analyzes Volvo's strategic positioning and competitive environment within the Indian bus market. It examines Volvo's adoption of differentiation strategies, its response to hyper-competition, and the application of Porter's five forces. The study explores various control mechanisms implemented by Volvo, including personal and output control, to ensure operational efficiency. Furthermore, it delves into Volvo's approach to sustainability, encompassing societal contributions, transportation sustainability initiatives, and environmental responsibility. The analysis also highlights challenges posed by competitors like Tata Motors and suggests strategies for maintaining market leadership, such as service differentiation and a customer-centric approach. The case study provides insights into Volvo's efforts to balance profitability with social and environmental considerations, demonstrating a commitment to long-term sustainability.

Case –study: Volvo’s different Indian buses

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Q1
Generic competitive strategies for Volvo
There are many competitive strategies that can be that can be adopted by Volvo in order to
excel in the market some of these strategies may include-
Differentiation strategy – this strategy involve providing different products as well as services
that make the firm completely different from all the firms which belongs to same industry
(Oxford, 2016). In such cases customer is also willing to pay extra money for the uniqueness
of the product so, by this we can say that under this strategy target customer group become
price-insensitive as a result, higher the number of additional features higher would be the cost
of the product as compared to non-differentiated items.
Advantages
 Company has full right to charge extra amount for the extra services from their
target customers.
 This will help the organisation in establishing supreme image in the eyes of
the society.
 Firm can easily approach to all those number of suppliers which provide high
quality of products (Rothaermel, 2015).
 It helped the organisation to build reliable customer base.
Disadvantages
 It involves huge cost in the terms of research and development.
 Organisations always have to work under the pressure that anytime
competitors can come up with the product which might be similar to their product.

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Combination strategy – Whenever the organisation is planning to enhance its business they
choose for combination strategy. As the name suggested it involve combination of two or
more than two grand strategies like, stability, diversification, expansion and many more
(Hollensen, 2015).
Advantages
 It becomes essential to identify strength and weakness of the firm at the time
of combination strategy as, this will help in developing appropriate strategy to grasp
the opportunity and to overcome the threats.
 Company can expand its business activities in the different geographical areas
with the support of others firms after integration.
Disadvantages
 There are chances of conflicts because of different opinion possess by the
directors as well as the stakeholders.
 Differences may occur between the organisations because of diversity in the
cultures of their employees. Further there are chances that overall financial stability of
the firms can get affected by it.
Focus strategy – this strategy lay down its major focus on wide recognition in the society. In
order to establish image, organisation try to focus on their particular segment in spite of
entering into all the areas (Krueger & Casey, 2014). Under this organisations try’s to
differentiate it from their competitors. This strategy is also been used to provide market
niches which helps the organisations in advertisement as well as in sales promotion.
Advantages

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 Many experts are available in the market to offer goods along with the suitable
services.
 Customers get proper knowledge about the product during the campaigns
organised by the firms
Disadvantages
 If the selected target segment possesses the limited demand for the product
then organisation may have to face many issues.
 Company just have to focus on the target market. Once it establish
organisation, be sooner or later be able to expand it further.
From the above analysis it can be said that although there are many generic
competitive strategies but among all differentiation strategy, if adopted by the Volvo
will help it to take its business to the great heights.
There are many other organisation which are indulge in providing travelling services
but still the people prefer trains over busses. However, if the VOLVO provides them
something different then it will help the organisation in creating its unique image in
the market.
b)

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Figure 1 strategy clock
As per the strategy clock, it will be the best for Volvo because maximum people living in the
India belongs to low class families so, if the travelling fair is appropriate then only they will
be able to attract new customer and helps in enhancing profitability of an organisation.
Tata Motor cannot fit them in hybrid zone so, in order to increase their profitability they are
left with no other option except the one that is to focus on middle class families as, earning
capacity of the people living in India is not very well.
Q2
Hyper competition basically refers to a situation in which competitors move ahead in order to
grasp the advantages available in the market before their rivals take them (Christiansen,
2016). Volvo being in the competitive environment so, this strategy will enable the firm to
identifying the competitive advantages present in the external environment and timely
overcome revivals competitive advantages.
It will also help the firm in destroying as well as in removing disequilibrium in the
marketplace. This strategy includes quick innovations because of which firm likely to face
quick response from its competitors.

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This strategy will enable the Volvo to win in the market because of the following (McGrath
& Kim, 2014) reasons-
 Speedy response to all the opportunity as well as all the counterattacks done
by the rivalries.
 By using this strategy Volvo will be able to recognise that what changes a
customer wants in their services.
Swedish bus company Volvo over the period has recognised that, stakeholder’s satisfaction is
very important to run the business for the loner period. Among all the stakeholders drivers
play their key role in the firm so, this strategy will help the organisation in adopting new
methods for attracting these employees so that they can continue to provide valuable services
to their customers.
b)
Michael E. Porter is beneficial for the organisations because this enable them in identifying
competitiveness present with the industries and develops strategies for the same (Dobbs,
2012). Five forces of the porter are –
 Competition with the individuals who belongs to the same industry.
 Problems that are likely to occur while the entry into the new market
 Bargaining capacity of the target customer group.
 Suppliers power
 Risk of substitute products

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Figure 2Michael E. Porter
All these are the common risk which are likely to be faced by the all the organisations but if
the organisation corporate with one other they can not only overcome all these problems but
can also avail benefits in many areas (Porter, 2011). Some of these benefits are-
1. A chance of conflicts reduces between the firms if they work on corporate
lines.
2. Wide area can easily be occupied by the Volvo in the shorter period.
3. Ease in diversifying the range of services without any threat.
4. Volvo will be able to run its business on smooth lines because of no
competition left after the cooperation between different firms.
5. Cooperation between the different agencies that are involved in providing
travelling services will be able to set fixed price this will overcome the bargaining
power.
6. Revivals will no longer come up with substitute goods because now they will
focus more on maintaining good relations (Tanwar, 2013).

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Q3
Establishing control mechanism is very important within the organisation in order to
assure that whatever the work is performed within the firm that should be as the
predetermined standards (Chen & Francis, 2012) so, that an organisation can attain all the
goals with the specific time. There are different types of controls that can be established by
the firm depending upon the kind of strategy made.
As the Volvo has adopted differentiation strategy so, it can improve its performance
by exercising personal control and output control. As Volvo has many drivers so it’s
important to assure that they should perform their work as per the set norms of the company
whereas (Patra, 2017), output control will help the Volvo in setting the goals as per the
different geographical areas. This will help the firm to evaluate the profitability and the
contribution made by the personnel’s (Friedland, 2012).
Q4
Volvo buses have occupies 76% of total luxuries buses in India. Costs of the Volvo
buses are 10 times more than the local buses. When it was bit difficult for the organisation
that time organisation took the help of private bus firms who can manage the buses with the
city with by charging high ticket prices.
In the terms of the quality no sacrifice was made by the organisation because in order to
assure faster ride 240-250hp engines were used in the buses along with it to attract
customer’s good interior and storage bags were also placed.

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Figure 3 price and quality of buses
Tata motor being a competitor of Volvo lounged new buses that range from 66 lakh
and 15 lakh. Along with it company planned to expand its production capacity (Ray, 2012).
Every entrepreneur has to face many challenges and biggest among them are rivals. Similar
to the fact, in the near future Volvo may also have to face all these challenges especially
when any new firm with the low process will enter in the market. In order to overcome all
these issues following steps can be taken –
1. Volvo should try to create some unique features in its services it will help the
organisation to safeguard itself from all the future challenges. Service differentiation
will help the organisation in maintaining their customer base which is key element in
in the sustainability of the Volvo.
2. Focus only on the customer – “costumer is the king of the market “proper
analysis should be conducted by the organisation so, that they can make suitable
changes in the in their services. This helps the Volvo to grape the opportunity over
others in the field.

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3. Believe in quality – Volvo should focus only on the quality of the services that
they are providing to their target customers. Maintaining optimum quality will not
only help the organisation in retaining their existing customers but it will help them in
attracting new customers.
Q5
In order to survive in the business for the longer period it’s essential to give equal
importance to the surrounding in which business is being operated. It basically means that
entrepreneur should not only focus on earning money Volvo has adopted differential strategy
with the aim of provide services to its customers in the sustainable manner that’s why now
the organisation is working for the society and many other groups.
Work for the society –
There are many programmes related to the society which are been developed by the
organisation. These programs aim at protecting the interest of employees working with the
organisation mainly the bus drivers apart from this special fund is also created by the
company that is, disaster relief fund. Such funds are used by the Volvo in providing help to
all the financial aids to people who struck at the time of floods, earthquake and many other
disasters (Docherty & Nyhan, 2012).
Transportation sustainability -
Maintaining fuel efficiency as well as providing the services on time is the two main
things that can largely affect the profitability of the organisation. As differentiation is the
strategy adopted by the firm so, organisation is planning automation, connectivity and many
more things (Wehner, 2017).

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Apart from this time to time investment are made in research and development so, that
company can more better engines which have high power. Considering the fact, that the
pollution has increased over the years so, Volvo is trying to overcome this issue.
World food programme – many countries are facing food crises so, Volvo group gave the
donation of more than 2 million. Such things not only create good image of the organisation
in the eyes of society and its target group members but will indirectly help in profitability of
the organisation (Satterthwaite, Reid & Bass, 2013).
Apart from all the above, company has done some promises with the society. One of
them is electronic Volvos. Swedish manufacturers are planning to lounge electric buses in the
year 2025. This step is taken by the organisation as a result of market analysis done by them.
From the analysis organisation can judged that in the upcoming years more importance will
be paid by all the stakeholders on the environment and maintain ecological balance which is
not possible at least with the buses which produce co2.
All these changes are not to be introduces at the same time so, proper planning is required for
the same. Proper planning will help the Volvo to be on the top in the market without the fair
of any rival. Although India is still considered as a developing country but still there are few
organisations like Volvo which are helping the country like India to grow and develop.

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