Geely's Acquisition of Volvo: Challenges and Opportunities SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Geely's Acquisition of Volvo: Challenges and Opportunities
For more than a decade, the government of China had sought to develop an automotive industry. The government's initial steps involved the creation of joint ventures in which government-owned firms became partners of foreign privately owned corporations. Most of these joint ventures were extremely successful financially. However, ongoing differences in management preferences created a continual tension within the joint ventures. Of particular concern was a desire of the government of China to ensure that its new automotive industry would adopt the latest advances in technologies. This subject of technology transfer, and how the government of China could best support it, became a central issue in China's automotive industry. From the perspective of the government of China, Geely's acquisition of Volvo would be a major step in achieving technology transfer on an ongoing basis. Geely's China operations would be able to quickly and easily adopt Volvo's cutting-edge safety features and production operations. From Geely's perspective, the Volvo acquisition would provide it with a new set of luxury vehicles for sale in China that would fill a gap in Geely's automotive lineup. Nevertheless, Geely faced the challenge that Ford had continually lost money in Volvo. How to reverse these losses would become a major challenge for Geely.
Swot Analysis of "Geely's Acquisition of Volvo: Challenges and Opportunities" written by David W. Conklin, Danielle Cadieux includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Geely's Volvo facing as an external strategic factors. Some of the topics covered in Geely's Acquisition of Volvo: Challenges and Opportunities case study are - Strategic Management Strategies, Government and Global Business.
Some of the macro environment factors that can be used to understand the Geely's Acquisition of Volvo: Challenges and Opportunities casestudy better are - – increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing commodity prices, central banks are concerned over increasing inflation, technology disruption,
there is backlash against globalization, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Geely's Acquisition of Volvo: Challenges and Opportunities
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Geely's Acquisition of Volvo: Challenges and Opportunities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Geely's Volvo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Geely's Volvo operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Geely's Acquisition of Volvo: Challenges and Opportunities can be done for the following purposes –
1. Strategic planning using facts provided in Geely's Acquisition of Volvo: Challenges and Opportunities case study
2. Improving business portfolio management of Geely's Volvo
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Geely's Volvo
Strengths Geely's Acquisition of Volvo: Challenges and Opportunities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Geely's Volvo in Geely's Acquisition of Volvo: Challenges and Opportunities Harvard Business Review case study are -
Strong track record of project management
– Geely's Volvo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Global Business field
– Geely's Volvo is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Geely's Volvo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Geely's Volvo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Geely's Volvo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Geely's Volvo is one of the most innovative firm in sector. Manager in Geely's Acquisition of Volvo: Challenges and Opportunities Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Geely's Volvo is one of the leading recruiters in the industry. Managers in the Geely's Acquisition of Volvo: Challenges and Opportunities are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Geely's Volvo has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Geely's Acquisition of Volvo: Challenges and Opportunities HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Geely's Volvo are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Geely's Volvo has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Geely's Acquisition of Volvo: Challenges and Opportunities Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Geely's Volvo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Geely's Volvo is present in almost all the verticals within the industry. This has provided firm in Geely's Acquisition of Volvo: Challenges and Opportunities case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Geely's Volvo is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David W. Conklin, Danielle Cadieux can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Geely's Volvo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Geely's Volvo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Geely's Acquisition of Volvo: Challenges and Opportunities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Geely's Acquisition of Volvo: Challenges and Opportunities are -
Slow decision making process
– As mentioned earlier in the report, Geely's Volvo has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Geely's Volvo even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Geely's Volvo has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Geely's Volvo products
– To increase the profitability and margins on the products, Geely's Volvo needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Geely's Volvo has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Geely's Volvo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Geely's Acquisition of Volvo: Challenges and Opportunities can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Geely's Acquisition of Volvo: Challenges and Opportunities, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Geely's Volvo has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Geely's Acquisition of Volvo: Challenges and Opportunities should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Geely's Volvo is dominated by functional specialists. It is not different from other players in the Global Business segment. Geely's Volvo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Geely's Volvo to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Geely's Acquisition of Volvo: Challenges and Opportunities HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Geely's Volvo has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, David W. Conklin, Danielle Cadieux suggests that, Geely's Volvo is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Geely's Volvo, firm in the HBR case study Geely's Acquisition of Volvo: Challenges and Opportunities needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Geely's Acquisition of Volvo: Challenges and Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Geely's Acquisition of Volvo: Challenges and Opportunities are -
Developing new processes and practices
– Geely's Volvo can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Geely's Volvo to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Geely's Volvo can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Geely's Volvo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Geely's Volvo has opened avenues for new revenue streams for the organization in the industry. This can help Geely's Volvo to build a more holistic ecosystem as suggested in the Geely's Acquisition of Volvo: Challenges and Opportunities case study. Geely's Volvo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Geely's Volvo can use these opportunities to build new business models that can help the communities that Geely's Volvo operates in. Secondly it can use opportunities from government spending in Global Business sector.
Better consumer reach
– The expansion of the 5G network will help Geely's Volvo to increase its market reach. Geely's Volvo will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Geely's Volvo can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Geely's Volvo to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Geely's Volvo to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Geely's Volvo to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Low interest rates
– Even though inflation is raising its head in most developed economies, Geely's Volvo can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Geely's Volvo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Geely's Volvo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Geely's Acquisition of Volvo: Challenges and Opportunities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Geely's Acquisition of Volvo: Challenges and Opportunities are -
High dependence on third party suppliers
– Geely's Volvo high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Geely's Volvo business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Geely's Volvo needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Geely's Volvo will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Geely's Volvo needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing wage structure of Geely's Volvo
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Geely's Volvo.
Consumer confidence and its impact on Geely's Volvo demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Geely's Acquisition of Volvo: Challenges and Opportunities, Geely's Volvo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Stagnating economy with rate increase
– Geely's Volvo can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Geely's Volvo in the Global Business sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Geely's Volvo has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Geely's Volvo needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Geely's Volvo.
Environmental challenges
– Geely's Volvo needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Geely's Volvo can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of Geely's Acquisition of Volvo: Challenges and Opportunities Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Geely's Acquisition of Volvo: Challenges and Opportunities needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Geely's Acquisition of Volvo: Challenges and Opportunities is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Geely's Acquisition of Volvo: Challenges and Opportunities is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Geely's Acquisition of Volvo: Challenges and Opportunities is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Geely's Volvo needs to make to build a sustainable competitive advantage.