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02/12/2012

How Should Volvo Evolve With The Changing Marketing?


How should Volvo evolve with the changing marketing?

 

Introduction

            With the emergence of changes in the market environment, different organization have started to be affected by it, specifically in terms on how they will be able to cope with these changes.  Accordingly, marketing is considered as one of the most essential elements of the global enterprise.  Primarily, the main goal of this is to analyse how VOLVO evolve with the changing marketing condition.

Overview of the Case

            The case was about VOLVO one of the known brand in car manufacturing and automotive. The business enterprise has been known for being innovative and known for having strong brands throughout the years and gaining the title of international Icon in the Swedish market. In the given case,  it shows that VOLVO has achieved their global position because of the ability of the management to consider business strategies and methods that enhance their marketing position.  Based on the case, the business enterprise is enjoying good car sales with their partnership with Ford. However, in spite of its good market position, car sales have been down in 2005 affecting the overall performance of the business enterprise.  The design philosophy of the business enterprise includes having good design which not only considers styling the surface but also to make the product easy to use and understood.  Volvo management sees to it that the products offered in the market are highly functional and adheres to their vision of being the most design and successful premium car brand in the global market.

Macro and Micro Environment

The marketing environments are composed of the actors as well as forces outside the business enterprise which influences the marketing management’s capability to establish as well as sustain successful relationships with the stakeholders.  The marketing environments provide both threats and opportunities and it continuously changing rapidly. Marketing environments are composed of two components which includes the micro environment and the macro environment. The micro environments compose of the actors which are close the industry which influences its capability to serve their clients. Such factors include the suppliers, marketing, business enterprise, intermediaries, customer markets, publics and competitors. On the other hand, macro environments consists of the large societal elements which have direct and indirect influence in the microenvironment and these includes the technological, cultural, political, natural, economic and demographic contexts.

There are five macro-environment and micro-environment elements which affect the automotive industries, specifically Volvo.  These include, globalization, rival industries, product differentiation, supply chain restructuring, product development and distribution and marketing (Boos Allen and Hamilton 1999).

Macro Environment

 Accordingly, car manufacturers and industries as well as their suppliers will continue to face growing macro and micro environmental challenges, tough global competition, and more demanding clients that continuously change in terms of behavior. In addition, capital shortages and skilled human resources as well as time pressures are also exacerbating these challenges (Formidable Changes 2000, p.13).  As car manufacturers and firms compete for market share as well as add manufacturing capabilities so as to establish where they hope to sell, they lose the economic returns to themselves and also aggravating their overcapacity issue on large aspects.

Another macro environment that affects the business enterprise is the emerging market consumers and customers increasingly demand the same levels of technology and quality as clients in mature economic markets making the local content rules as well as supply chain economics dictate that suppliers established their own manufacturing close to assembly facilities. The contexts of a “world car” with one common design, customized at low cost to meet the needs of the client sand  and is elegant and alluring still challenges most car companies such as Volvo (Boos Allen and Hamilton 1999, p.4; Formidable Changes 2000, p.13). In addition, car companies like Volvo should be able to offer differentiated car products which suffice client’s desires and needs. Herein, the macro and micro environmental challenges is to be able to comprehend consumer preferences as well as respond accordingly via an strategy which both clients and target market’ functional and expressive attributes and enable them to appreciate and value the product.  Moreover, another micro environment element is the product development challenge which is categorized along two dimensions. First is to learn how to identify  the parts of the car where consumers are indifferent from those that are visible and essential and significant to generating and preserving brand identity. The second dimension is to reduce the cost of product development so as to be able to make product differentiation more inexpensive (Boos Allen and Hamilton 1999). The consideration of derivatives from emerging platforms results in shorter time periods required to enhance and expand new products and permits producers to more quickly adjust to shifts in clients changing preferences (Andrews 1999, p.19).

 In addition, car manufacturer players have been preoccupied with dropping their overall levels of vertical integration, both to make sure that purchased parts are world-class and to eventually minimize their fixed costs of assets and labor as well as reduction of the number of industries which supply directly to the car industries and delegating some of the production scheduling, routine tasks of purchasing, and inventory management to their “Tier One” suppliers.  The aspect of the supplier consolidation is a potential solution but suppliers must enhance and expand relevant new capabilities to be able to transform and change themselves from assemblers or integrators into system solution providers. Such also encompasses surpassing the car industries like Volvo’s customer into the  clients to be able  to comprehend their wants and needs for an automotive systems.

SWOT Analysis

            This part of the report will provide the analysis of the strategic position of Volvo. Based on the provided case, the strategic position of the business enterprise has been challenged because of the changing marketing conditions. To be able to ensure  that the business enterprise will not be left behind by these changes, Volvo has been able to involve themselves into the expansion to product as well as technological developments and quality products. This part will identify the strengths, weaknesses, opportunities, and threats for Volvo.

PESTLE Analysis

Volvo’s macro and micro factor and environment will also be analyzed using PESTLE Analysis. PESTLE stands for Political, Economical, Socio-cultural, Technological, Legal and Ecological aspects.

            Political

            It can be said that the political factor and environment involves the role of the government and its affects in an business enterprise, specifically automotive industry. It also includes the extent to which the government intervenes in the economic status of the industry. The Federal government has been very supportive with the automotive industry.

Since the government believes that these industries will be beneficial for the region, the government is also open for other possibilities of considering automotive industry that will meet the needs of both the local residents and their investor.

            Economical

It can be noted that the amount of economic activity in the economic factor and environment is extremely an important aspect.  Whilst assessing the economic factor as well as the marketing environment in which automotive industry operates. The government tries to terminate the level of economic activity to give positive and friendly aspects and environment for the automotive industry. It can be said that economic situation is strong and stable for countries that considers Volvo operations. With this, The economic stability of the region has helped the automotive industry  to have a good economic performance.

            Socio-Cultural

            Social factor and environment is of great value when being applied to various business enterprises, specifically automotive industries. It can be said that the global market has been noted to have diverse people with diverse auto industry needs d to be.  By and large, diverse consumer’s affects Volvo in a way that the changing behavior or clients on the global market can affect the way the customer considers their marketing approach and strategic management approach to be implemented.

            Technological

            Technological factor has helped in the reduction of hindrances for entry for other automotive industry. It has also supplemented in the cost of capital in most aspects of the industry, to enhance the manufactured vehicles provided by automotive industry.  Through the use of strategic marketing, it becomes easy for automotive industry to promote the business to their target market in the global market. In addition, technological factors also affect Volvo in a manner that it enables the company to create and establish new brands and products that would meet the changing behavior or preferences for a car of their clients.

            Legal

            Legal aspect is also an essential element for business factor and environment. It can be said that since the automotive industry industries have stiff competition and different regulations are provided these industries have been subject for different policies of the legal authorities.  Volvo  ensures that they will never be accused for any illegal actions which in return will help them have a good reputation in the market factor and environment.

            Ecological

            The ecological factors directly impact the automotive industry trends and the automotive industry industries. Accordingly, the government should adhere to their corporate social responsibility of considering the environment when producing new car models. The company should ensure that they adhere to the environmental programs of protecting the environment from global warming.  This element play inessential part in the success of the automotive industry as it affects input manufacturing capacity. Without proper yield, Volvo will be unable to meet the existing market demand, establishing strong opportunity for its competitors.

Micro-Environment (Strengths and Weaknesses)

Strengths

*      State of the art and first-rate new fleet of car manufacturing strategy to accommodate convenient travel and meet changing needs of their clients.

*      The magnitude of the Volvo’s operations permits them on pro over their rival car manufacturers by providing cars and automobiles to wider variety of passengers and clients.

*      Volvo has knowledgeable as well as skillful employees which enable Volvo’s operational research to perform better by the stakeholders of the industry and employees become its strengths.

*      The stronger customer orientation gives expertise in passenger and clients aspects.

*      The Volvo uses online marketing strategies and methods to reach international clients easily through their websites.

Weaknesses

*      The inadequacy of marketing strategies and methods which will help in reinforcing their competitive standards to retain clients.

*      It seems that Volvo lacks more improved market schemes to attract more consumers in global market.

Macro-Environment

 Opportunities

*      Accessibility of immense products pose a great opportunities if Volvo will use it properly

*      Global transitions can be of advantage and opportunity for the Volvo to work with.

*      Virtual reality could provide a new marketing approach for the Volvo along with creativity, and innovation

*      The trends in information technology can provide ample opportunities to different business domains such as Volvo.

Threats

*      Volvo’s inter threats is its being centralized and bureaucratic system  and inability to maximize their potentials in being under Ford.

*      The orientation on local as well as national issues pose significant threat since much more conflicts  that it neglect can be found in the global market.

*      The threat of neglecting global issues in its place of deeply focusing on the local and global level. It provides tremendous threats when Volvo ignore these.

*      The aspect of globalization which can be a strengths and opportunities but can also be a threat if not to be vigilant and keen of its treachery and tricks.

*      Technological changes as well as clients’ behavior can also be a threat if interpreted wrongly.

Marketing Strategy

Strategic Options

Based on the given case study, the most dominant strategic or effective management model and concepts in recent years is known as the strategic management model (David, 2001). According to Porter (1998), he claims that the intensity of competition in companies like Volvo is neither a matter of coincidence or bad luck. Rather, competition in any companies like Volvo such as car manufacturing is rooted in its underlying economic structure as well as goes well beyond the behavior of current competitors. Generally, strategic options refer to the long-term plan of actions that is generated to enable industries to attain their organization objectives. It is the basis which will serve as a standard for the Volvo to efficiently achieve their goal.

            Based on the given case, it can be said that the main strategic approach of the Volvo is with regards to their ability to transform the entire corporation into a Volvo that provides the latest in the media corporations accordingly, the main goal of Volvo is to create a company which is unified, creative and logical. The objectives of the management is to establish companies like Volvo with the agility as well as alertness to find strategic opportunities in the changing marketing environment,  with the notion to anticipate and intervene challenges through the use of  contemporary approach. 

            With the mission of the Volvo to be the number choice in car products in the global market, the Volvo should be able to provide quality and high technology services and productions that suits the needs of the changing consumers in the global market. 

            For this strategic options plan, it is recommended that the management of Volvo should focus on managing their marketing strategies effectively . Furthermore, in order to maximize the advantage of merging with other companies, the management should be able to handle the merging efficiently. y. In line with the marketing development, the Volvo should maximize the utilization of their financial resources in the changes in the market environment. In addition, the company also highly needs financial resources, to sustain their strategic options by considering employee trainings to ensure that the changes in line with their marketing planning sill be successful.

            In these strategic options, it can be said that initiation of the strategic planning is highly recommended. . Accordingly, the company needs to strategically plans their strategic options of changing their marketing approach as part of the strategic options wherein the management team identifies ways and techniques to initiate the development or implement their objectives.  In this regard, the company can be  considered when an organization intends to instigate or initiate a certain project, in this case the Volvo marketing communication development and through interactive media development that will enhance the competitiveness of the industry (Elkin, 1998).

The strategic plan for each strategic option, particularly n terms of their resource planning, assures that the Volvo only considered a strategic planning approach that will benefit the Volvo to achieve their marketing objectives.  In this manner, the management of Volvo should be able to incorporate strategic planning as well as implementation in line with its resources for both strategic options

Conclusion

Automobile industries such as Volvo can be considered as one of the most powerful as well as competitive industries in the global market. However, with the growing macro and micro environmental challenges, the company is faced with the issues and problems that should be given attention such as lower sales and others. In this regard, companies like Volvo should consider new marketing approach to cope with the changing global environment.

Reference

David, FAR. (2001). Strategic Management: Concepts and Cases. 8th ed. Prentice Hall, Inc: Upper Saddle River, NJ

 

Dreier, A. (2002).  Strategic Management and Core Competencies: Theory and    Application. Westport, CT: Quorum Book

 

Porter, M. E. (1998). What is Strategy? Harvard Business Review, November-December, pp.61-78.

 

 

 

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