INTBUS 1000 International Business Environment and Operational Facilit

or their 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 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.

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 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 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.
• 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.

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.

Reference 

Ashkenas, R., Ulrich, D., Jick, T. and Kerr, S., 2015. The boundaryless organization: Breaking the chains of organizational structure. John Wiley & Sons.

Berger, E.D., 2012. Software needs seatbelts and airbags. Communications of the ACM, 55(9), pp.48-53.

Cartwright, S. and Cooper, C.L., 2012. Managing mergers acquisitions and strategic alliances.

Company structure. (2017). Investors.volvocars.com. Retrieved 14 October 2017, from 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. American Marketing Association.

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].

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Khan, A. (2017). 2017 Likely To Be Record Year For India High-end Cars Sales. [online] BW Businessworld. Available at: https://businessworld.in/article/2017-Likely-To-Be-Record-Year-For-India-High-end-Cars-Sales/20-04-2017-116674/ [Accessed 14 Oct. 2017].

Lee, K. and Carter, S., 2012. Global marketing management. Oxford University Press.

Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.

Mangan, J. and Lalwani, C., 2016. Global logistics and supply chain management. John Wiley & Sons.

Nakajima, K., Saito, Y.U. and Uesugi, I., 2016. The localization of interfirm transaction relationships and industry agglomeration.

Nieuwenhuis, P., Beresford, A. and Choi, A.K.Y., 2012. Shipping or local production? CO 2 impact of a strategic decision: an automotive industry case study. International Journal of Production Economics, 140(1), pp.138-148.