THE COPPERBELT UNIVERSITY

SCHOOL OF BUSINESS

NAME: MAZIMBA THERESA

SIN:16102273

PROGRAMME: BANKING AND FINANCE

TASK: ASSIGNMENT 9

COURSE: STRATEGIC MANAGEMENT

COURSE CODE: BF 450

LECTURER: Mr. J. BWALYA

DUE DATE: 26th JULY,2020.

SIMILARITY INDEX: 7%

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 Table Of Content

1.0 BACKGROUND ………………….…………………………………………………....3

2.0 DIFFERENTIATION STRATEGY…………………...……………...........................4
2.1 A BETTER, STRONGER AND FASTER ENGINE...............................................4
2.2 VOLVO’S DESIGN................................................................................................4
2.3 POST SALE MAINTENANCE AND FREE TRAINING OFFERED TO
DRIVERS....................................................................................................................4
2.4 ADVERTISING TO THE END USER..................................................................5
2.5 PRODUCT TRIALS..............................................................................................5
2.6 PREMIUM PRICING.............................................................................................5
3.0 SUSTAINABILITY.................................................................................................6
3.1 VALUE .................................................................................................................6
3.2 RARITY.................................................................................................................6
3.3 INIMITABILITY......................................................................................................6
3.4 ORGANIZATIONAL SUPPORT............................................................................6
5.0 RECOMMENDATIONS AND CONCLUSION…………………………………….....7
6.0 REFERENCES……………………………………………………………………........8

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1.0 BACKGROUND
The Volvo Group Car Company was founded by Assar Gabrielsson and Gustaf Larsson
in 1927. The headquarters of the company are located in Gothenburg, Sweden. During
the year of the company establishment the company produced its first ever car, a year
later it produced a truck and in 1934,they launched their bus. Afterwards, the company
underwent various expansions which include the acquisition of majority shareholdings in
Volvo Aero which was earlier known as Svenska.
The company’s global position is strong because of their competitive product
programs,strong dealers with extensive service networks and increasingly more
complete offerings. It has a leading position on the global market. Volvo Group
Company is one of the world’s largest and recognised manufacturers of the construction
equipment,heavy duty trucks,heavy duty diesel engines,buses and leads in the supply
of marine and industrial engines. As a result of their global position they provide for
economies of scale in production,product development, financial services and
purchasing.
Car productions are done in factories around the globe which include Daging, Lu glao
and Chegdu in China, Charleston in the US and Gothenburg in Sweden. The
development of mobility and subscription services for all consumers all over the world
are done in Stockholm and Gothenburg in Sweden.The operations of the company are
delivered on consumer demand for both current and future mobility.
In 2012,the company decided to sell Volvo Aero to GKN a British Company. They also
deal in the exportation of their products which includes their buses,trucks and many
others. The company also came up with various brands in order to clarify their roles and
position on the market which include Volvo Penta,Mack plus many others.
In 2016, Volvo signed a partnership agreement with the Chinese vehicle
manufacturer,Dongfeng which resulted in the acquisition of 45% percent DFCV a new
subsidiary. It also engaged in the sell of buses that ran on electric motors,battery and
Diesel.They were known as hybrid buses.
The company has a market of 190 where there products are sold worldwide and there
operations and production are done in 18 countries. There employee base comprises of
104 000 employees. In 2019, there net sales stood at SEK 432 billion.

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2.0 DIFFERENTIATION STRATEGY
Differentiation strategy involves uniqueness along some dimension that is sufficiently
valued by customers to allow a price premium. Uniqueness is key in differentiation
strategy,it also allows for high prices though its costly. Differentiation strategy involves
various drivers which include product and service attributes,customer relationships and
complements.
The ranking of Volvo’s elements in order of importance will be done as follows:
2.1 A BETTER, STRONGER AND FASTER ENGINE
In December 2018,Volvo built its 10000000th engine since its beginning of operations.
The Volvo car group is differentiated with an engine as it is the heart of a vehicle and it
was the product that Volvo ever invented. It was differentiated from those engines on
the market by marketing it stronger,faster and more reliable than those found on the
market. Volvo engines were faster than those of Tata motors and Ashok Leyland as
they had a 220 -240 break horse power engine as compared to the other which was
110-120 bhp.This means they are efficient and effective.
2.2 VOLVO’S DESIGN
The focus of Volvo’s design strategy is based on premium factors,scandinavian lifestyle
and human care. The cars produced by Volvo group gain recognition by their designs.
The designing of Volvo cars is done and developed by experts and award winning
teams found at design centres in China,the US and Sweden. The designs of Volvo
group are of a modern and high tech equipment as such the company believes that their
cars are safe,attractive and sophiscated mainly for individuals with a lifestyle which is
active. The scandinavian designs are so connected to the scandinavian lifestyle as well
as the swedish heritage. The engine of Volvo’s cars was well designed and positioned
at the back of vehicles which ensured a faster ,quieter ride and the air condition which
was standard.
2.3 POST SALE MAINTENANCE AND FREE TRAINING OFFERED TO DRIVERS
Post sale maintenance and free training offered to drivers gave Volvo group competitive
advantage,this was in addition to its faster and better engine as well having a bus
structure was well designed than the ones by Tata motors and Ashok Leyland. Post

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sale maintenance or repair to equipment by a supplier or manufacturer during as well as
a warrant period.
Volvo increased the life expectancy of its cars from three to ten years by offering post
sale maintenance.This additional service implied that buyers of Volvo products reduced
on maintenance expenses that may arise as a result of purchasing from competitors of
Volvo. Free training for drivers also included offering of proper skills and right attitudes
as well as training drivers to care for passengers and drivers.
2.4 ADVERTISING TO THE END USER
Advertising is key for Volvo as it enhances their differentiation strategy and gives them
competitive advantage. The company promoted its business through advertising directly
to its customers in various places such as cinemas as compared to only focusing on its
bus operators. One of the strategy’s used by Volvo in order to penetrate the market was
the pull strategy of advertising.
2.5 PRODUCT TRIALS
This is the sales promotion of company products in order to get rid of all stocks which
results in reducing resource wastage and cutting on mass production of non profitable
products. It also also attracts and motivates customers.Volvo managed to offer a sales
promotion of its 20 buses during its existence.
2.6 PREMIUM PRICING
The unique nature of Volvo product highly entail the attachment of premium prices.
They usually incur high costs as a result of making their products unique and reaching
their intended market.The Volvo group entered the market with high charges of Rs. 4m
that was there to cover for their various incurred expenses.
Non of the above elements should be dispensed as they contribute to Volvo
differentiation strategy.

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3.0 SUSTAINABILITY
The VRIO analysis is used to ascertain the sustainability of Volvo’s luxury bus strategy:
3.1 V – Value
Value helps to take advantage of opportunities,neutralize threats and value to
customers as well as lowering costs. In as much as a company lowers the costs it has
to to ensure profitability is also realized.
The introduction of faster and luxurious buses gave Volvo an advantage in the market
by adding value to their customers.They took advantage of the opportunity of which
customers needed fast,safe and reliable bus rides compared to what was already on the
market. The fact that the services met the needs of the customers led to huge
excitements as they were able to reach faster and on time.
Neutralization of the threat of losing its customers was done through offering post sale
maintenance which was not offered by its customers.
They have improved in their autonomous driving,electrification,connectivity and safety.
The design of the company innovations are there to simplify and improve life
3.2 R-Rarity
The rarity of the company lies in their designs, innovation and technology. Their design
and brand is so unique and that gives the company strength.The good customer
relationship and goodwill gives the company the rarity characteristic. The bus features
are also unique from their competitors.
3.3 I-Inimitability
Aspects of inimitability include causal ambiguity, social complexity and historical
conditions. These aspects gives most companies an advantage of inimitability as they
are too complex to imitate about any company. Volvo’s inimitability levels are high as
competitors cannot completely imitate them.
3.4 O- Organisational Support
Volvo company is fully organised to ensure value,rarity and inimitability are fully
achieved. They have fully invested in their technology, expert designers,research and
development,their marketing strategy is fully functional this can be seen with a huge
sales they make each year,their have improved their advertising skills and so on.

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4.0 RECOMMENDATIONS AND CONCLUSION
It is recommended that they continue changing their strategic plan as the environment
changes,continue investing in their technology,encourage and continue training their
employees.
All in all Volvo has managed to meet the needs of its customers as well as remain a
leader in its markets by taking advantage of opportunities as well as neutralizing all
threats that they observed and making them their strength through the differentiation
strategy.

5.0 REFERENCE
Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin and Patrick
Regnér (2016). Exploring Strategy, Eleventh Edition, London; Pearson

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O’guinn C.T, Allen C. T and Semenik R.J (2011). PROMO, Integrated Marketing
Communiction, South-Western Cengage Learning, 5191 Natorp Boulevard, Mason.
International Journal

Torbjørn H. Netland and Arild Aspelund (2013) Company-specific Production Systems

and Competitive Advantage: A resource-based view on the Volvo Production Systemof

Operations & Production Management, Vol. 33, Iss. 11/12, pp. 1511-1531.

Volvo Car Group Annual Report2018

Volvo Group presentation (2019)Driving prosperity through transport solutions