Case Study Of Volvo’s Different Indian Buses Essay

Question:

1.a. Conduct a thorough analysis of the Generic competitive strategies for Volvo. Discuss the pros and cons of each and finally, choose one that would work best for the company.

b.Using the strategy clock, indentify and explain the strategy zone for Volvo’s and Tata Motors’ strategy.

2 a. Choose any one of the following Interactive strategies to discuss it’s suitability for the company:

  • Hypercompetitive strategy
  • Cooperation
  • Game theory
b. Explain the various kinds of benefits that Volvo can achieve by cooperating with other firms in terms of Michael Porter’s five forces
3. Explain in detail any two control mechanisms that can be put into place to ensure the efficacy of Volvo’s strategy?
4. Plot the moves of Volvo and Tata Motors on the axes of price and perceived quality and explain in detail what steps Volvo should follow if a low cost rival enters in to the Indian Bus market.
5. How sustainable is Volvo’s luxury bus strategy? Explain clearly.

Answer:

Answer 1

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.

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

  • 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.

  1. b)

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.

Answer 2

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.

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.

  1. 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

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).

Answer 3

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).

Answer 4

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.

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.
  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.

Answer 5

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).

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.

References

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Christiansen, B. (2016). Cultural Indoctrination in Global Hypercompetition: A Conceptual Framework for International Management. International Journal of Productivity Management and Assessment Technologies (IJPMAT), 4(1), 39-51.

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