Volvo SWOT analysis

Volvo SWOT analysis

Volvo should establish more joint alliances. According to the SWOT analysis, one of the opportunities that Volvo has is to enter into more alliances with ride-hailing companies. In the contemporary society, mobility is a key issue for people. Therefore, partnering with companies that offer car hire and hailing services will increase its market share. For instance, it could provide a company with the cars that it requires and in turn, it earns a percentage of the profit earned. Additionally, it could come up with software applications offering various services to its users. For example, since it manufactures buses, it could partner with a software company to develop an application that allows users to identify and book seats on available buses. The technology could be useful in regions that do not have defined bus times and routes. Join alliances enable a company to expand its product portfolio within and beyond its current specialization and to increase its market share.

Expand into emerging markets. Volvo has focused on its markets in Europe, China, and America at the expense of emerging markets in Africa and other Asian countries. Most countries in Africa are experiencing a high rate of industrialization. It has an opportunity to supply construction companies with trucks and other suitable products. Additionally, they have friendly policies for foreign companies as an incentive to increase investment. Lastly, it could lower the cost of production due to the availability of labor and raw materials. Increasing market share is the most sustainable growth strategy as it enables a company to further focus on the needs of each market segment in terms of geographical location, product use, and financial capability.

Investing in Research. Volvo does not invest a lot in research compared with its competitors despite the fact that research is one of the factors that promote a company’s success. Companies such as BMW and Honda Motors pose a threat in terms of price and product innovation. Therefore, the company should focus on not only acquiring new technology but also developing products that respond to the consumer’s needs and increase its market share. It could engage more with its shareholders to ensure that they know the needs of different groups. For instance, investing more in luxury cars will enable it to meet the growing demand for high-end vehicles in the market.

Another research area that Volvo should invest in is thoroughly testing its products before launching them into the market. Public perception is one of the factors that influence sales. Testing will ensure that customers do not have a negative attitude towards a particular due to faulty products, especially since they hold a high bargaining power and can easily switch from one brand to another. With the evolution from manual to automatic vehicles, product testing is a crucial element since customers do not have the technological capacity to handle errors arising from software malfunction. Safety is one of the core elements of the automotive industry, and ensuring the safety of all road users should be a top priority for companies. Furthermore, recalling products causes a company to incur huge losses in terms of lawsuits, refunds, and reodelling.

Recommendations for BMW

Strengthen Corporate Governance. Weak corporate governance may have contributed to the antitrust allegations that BMW faced in 2017. Some of the key components of strong corporate governance are transparency, accountability, and ethical leadership. Scandals occur when the senior management does not have a clearly defined governance code. For instance, the antitrust allegations were an indication that the management did not maintain high ethical standards while competing. The company could strengthen its corporate governance mechanisms by developing its code of governance instead of relying on existing national and global codes. Additionally, for essential corporate governance principles to be effective, they should not be treated as more guidelines or suggestions. Instead, management should impose strict sanctions and penalties to deter anyone from non-compliance.

Expanding the Product Portfolio. BMW can diversify its product portfolio by developing a line of vehicles that caters to the needs of the middle-class citizens, who occupy a significant portion of the market share. BMW primarily manufactures luxury vehicles, which limits its market share both geographically and financially. Moreover, it will lower its production costs for luxury cars and provide them with the requisite capital to manufacture more affordable ones. They require one to do constant research in order to innovate new and unique features since people buy them for their appearance and exclusivity and not practicability. It could also invest in more product differentiation in its existing lines to emphasize on the unique aspects that make its product superior. Currently, its portfolio consists of three brands: BMW, Mini, and Rolls-Royce. In contrast to Volvo, it does not offer any trucks or buses, which significantly limits its market share. Product differentiation will enable it to justify its high prices and compete on the basis of its features, performance, and quality. Furthermore, it will increase its visibility and enable it to expand into emerging markets, which have varied automotive needs.

Developing Energy-efficient Products and Processes. One of the major trends in the world is environmental sustainability. Companies have been working towards creating products and processes that are not detrimental to the environment by reducing their carbon emissions. Moreover, most governments in the world are committed to environmental protection initiatives and imposing strict sanctions on companies. However, it may be difficult for companies to adhere to them since it will significantly increase their production costs. While BMW has tried to manufacture carbon-efficient vehicles, it is still at the initial stages since most of cars are heavy-duty and require a lot of energy while operating. Develop alternative sources of energy may be expensive as they need an alternative source of energy that can power up its large cars. Therefore, it could develop smaller but more energy-efficient cars.