Q1) (A) Generic Competitive strategyA location of the business within trade defines that whether the effectiveness of the business is under or beyond the average of the trade. The long term period is effective on the basis of good benefit. There are 3 generic strategy by using that the firm can achieve advantage. These strategies are Differentiation strategy, cost leadership and focus. So on the basis of this lets discuss the pros and cons of the Volvo.
(I) Differentiation strategy: As we know that Volvo is such a company who is retaining differentiation strategy. As the name of the brand raises the sensation of security. The rates of the Volvo car is not the cheap and it’s seen as expensive as the cars are known as tremendously safe cars due to the strategies use in designing the cars. The design are done in such a way that it is very safe to use. Volvo has boosted other companies by manufacturing such safe product in the market by using its strengths and by adopting differentiation strategy effectively. On the other hand the negotiating power of the consumer also reduced due to such differentiated product. Volvo because it uses the differentiation strategy it can sell its product CITATION Lou13 l 3081 (Louis, 2013)at a premium rates. There are also pros and cons for thus policy like the firm can enjoy the limits as the brand image permits the firm to charge a premium rates. The cons can be for this policy the consumers can be taken by imitation, as the consumers will changes their choice according the price as everyone believe in saving money.
(II) Cost leadership strategy: When the companies’ objectives is to be the lowest rate manufacturer, it is taking the cost leadership policy. As per the report of the Volvo combined venture policy is undertaken by the firm for its effectiveness and like how it’s achieved its objectives. This venture has help Volvo in expansion of business by increasing sale thus this help in improving the aims of the firm. Example of Walmart can also be taken in here as Walmart goals to sell products at low rates to the sellers using cost leadership policy. Later they started using differentiation strategy once its image is created in the market. Even many Chinese firm is undertaking cost leadership policy and believe in selling products at cheaper rates without caring about the quality of products. The pros of the Volvo can be that the firm can earn high if the sales are high. The business with the cheaper rates do not want to compete with the competitors who is more effective with the high rates. Likewise it that cons like if the value insights become lesser than the firm may suffer. The cost leader might not be able to identify the vital trends of the surroundings due to the need to low the cost. Even another cons was when Volvo loss the faithfulness of consumers when it failed to analyse the actions of value chain and that cause risk to the firm. Even the functioning loss of the Volvo was partly as this policy tends to increase the firm joint venture and they did not achieve success in that.
(III) Focus strategy: In this to have a specific consumer group is required by the focus strategy. As in evaluations with country residents the consumers are in smaller group. Volvos goal is to sell products to those who can have enough money who can afford. The rates of the Volvo are usually high as relate to the other automobile firms. The cons of this can be the problem can be arise if there is less demand. The firm can have loss from the small as well as huge firms who has implemented the narrow focus strategy than the anxious firms. The pros of the Volvo can be expertise can be hired by the company to give more knowledge about the goods and facilities that are offered. The firm can enjoy the profit margin by adopting low cost strategy.
To survive in the trade the firm should choose a unique strategy. For Volvo differentiation strategy works best as product of Volvo provides the good quality and amenities as well that satisfy the customers and which also increase the strength of the firm As it also have an innovative product and is also diversified in research and development. As Volvo is always focus on bringing new things so rates are not focused.
Q1 (B) Strategy clockFor a strategic zones various options can be discovered by the strategic clock. This clocks tells how the products should be classified based on two aspect that is perceived value and price. The strategic model is an expansion of the generic competitive policy. There are various types of zones like differentiation, focused differentiation, competitive strategies and hybrid strategy.
Differentiation: This procedure at direct cost give high quality of item. This is located at 12:00 o’clock. The business moves 2 o’clock once it gets enough customers. Because of this the nature of product reduces minute and charges high cost of products.
Less rates organizations: This method is taking high advantages and gives less quality product. The situation of this organization is between 7 o’clock to 9 o’clock.
Hybrid actions: The business which give functional quality product at direct cost is recognized with this policy. This functional cost can be accomplished by all customers. The situation of this organization is between 9 o’clock to 12 o’clock.
Non-focused procedures: This procedure gives low quality product at high cost and customers would not purchase that products. Those who re connected with this administrations wind up completely.
Source of diagramCITATION Bow l 3081 (Bowmanstrartegyclock, n.d.)
From the above diagram based on that we can say that Tata motors is based on price based strategy and Volvo is based on the differentiation policy. The goal of the Volvo is to high quality products to the customers as the brand name plays a vital role in the strategy zone of the firm. As buyers are aware of the products of the Volvo and even the brand of Volvo is good so Volvo can achieve the relative rates as well as can add value that are the requirements of the differentiation strategy. CITATION Wit08 l 3081 (Reuter, 2008)Q2) (A) Game theory:For Volvo game theory must be more vital. For Volvo it can be said that they can obtained same strategy every time as it gives good results or they can even use 2strategies at same time. So on the basis of the results various strategy can be used by various business accordingly. Best strategy should be adopted by the Volvo that gives no loss or less loss to the firm. There are also various types of game theory CITATION Mit10 l 3081 (Osak, 2010)(a) Leading strategies: These strategies can be best for Volvo as it doesn’t affect the policies of firm rivalry. These can also be said like u just obtain results without caring about rivalry and just busy in maximizing profit of the firm. Volvo don’t care about what their competitors are dong and they are just interested in increasing their profit without thinking about the external factors. These strategy can be removed from the game once identification is done by Volvo CITATION Nit18 l 3081 (Nitisha, 2018).
(b) Minimax Strategy: Profitability is the main motto of every firm so likewise Volvo motto is also the same. So the main aim of the Volvo is how to increase profit without making no loss so this is like mixture of strategy. The concept of Oligopoly can be involved here as the firm struggle to lesser the risks. So here in Volvo if the firm got three option in making new models or bringing something new to the market than first they should decide that form 3option which one is more suitable and demanded and after that manufacturing should be done. So by doing this they can make profit as if that option works in a better way than the firm can be benefitted and it is better for both the employee and the company as well.
(c) Maximin strategy: As every firm main motto is to increase profit with less loss and that’s their main objectives. These strategy name is adopted by Volvo in which mixture of policy can be applied for making choices that includes procedure of the company either composite or modest. So whatever loss is achieved by Volvo that they will use another options and that will be built on the loss. And from all that the options that gives the high results that will be selected this is how Maximin strategy works.
(d) Pure and diversified strategies: These can be understood like the firm that gives the best result with huge profit and which is also benefitted to the players. Volvo has obtained such a policy that it gives best payouts. Strategy used by Volvo is unique and this results into good payoffs. Different strategies can be used to obtain profits by the Volvo. Pure and mixed strategies can be used by Volvo to get best results. So if mixed strategies are used at different time and then it would be even difficult for the competitor to win in the market as they don’t know which strategy they are going to obtain in which way so like how Volvo can earn profit.
Q2) (B) Michael Porter’s 5forces model1) Supplier power: The authority of the supplier is low particularly when the business has been adopted by the Chinese firm. Once it is entered into the foreign market than Volvo can compete with others by collaborating with external suppliers. Like if Volvo do partnership with Tata motors than both the company can get benefits. So once Volvo’s collaboration is done with external firm than it can offer less rates than Europe.
2) Buyer power: As Volvo is trading with big numbers of buyers say round 120countries so from that it can be said that buyer power is high. Volvo is launching various products in an innovative so the customers can have variety of choices to buy as product offered are unique, safe and eco-friendly CITATION Por85 l 3081 (Porter, 1985).
3) Competitive rivalry: Volvo do have different competitors like Audi, Lexus and BMW so rivalry is high. Though, all this company also offer same characteristic and quality of cars. Volvo’s placing declaration that they are providing the safest cars in the marketplace is vulnerable as there are other businesses that provides high safety standard as well like Renault. So Volvo is not invulnerable on competitors burden anymore, in fact it is more prejudiced.
4) Threat of substitute: This is always present in automobile industry. In metro cities people relay on other transportation choices and escape using cars to save time and to even avoid traffic. But it is not a threat for Volvo as they aim customers whose needs of having car is high rather than family. In country like USA people are prefer to buy Volvo that means that their choices of substitute are low. So it can be conclude that the threat of substitute is not very high as target market are customers with high need for a huge and safe car.
5) Threat of new entrant: As entering in the market is very costly time consuming and for that expertise knowledge is necessary. As before doing all that to create brand image is very necessary and that work is more risky as consumers trust only those brands which is good and experienced (Mercedes-Benz). In here those companies who are old (Long existence) have benefit rather than new entrant.
Q3) Control mechanism
(a) Premise control:
As every policy is based on special planning or guesses. Premise control is planned to check thoroughly and constantly whether the premises on which the plan is constructed are still true. If and vital premise is not true than the planned should be changed. The success of Volvo can be depend on how the control of Volvo’s premises are made. The main of the premise control for the Volvo is that they just do testing before launching the product in the market so if any control is to be done than it can be done before. There are two main concepts of the premise control example environmental factor that is recognized in an innovative way and also societal changes. Volvo need to use the start control to identify the possibilities and check those uncertainties well and if those uncertainties arise than what would be the options all should be thought off. Another possibility is that Volvo has arrangement to give luxury transport directions at high rate to both corporate class and working class persons. It can be supportive for the two persons. But the problem arises if local people of the two classes refuse the transport profits then Volvo should have policy to form their travellers. By doing this it turn out to be less effort by working with the oppositions and reduction the costs of tickets to get more clients through this policy. This is how they can provide benefit with low cost. Volvo can also think to increase fuel rates through which Volvo would influenced. Many countries like China and Bangladesh Volvo can continue onward these nations where work cost is less so the cost is naturally less. To increase value Volvo can use the human power this is how premise control can be done. CITATION joh18 l 3081 (dubois, 2018)(B) Implementation control:
After all the steps are done then implementation is done means to put the plans into movements and before doing that testing should be done that all the plan are working properly and if any problem occurs before taking action it should be sort it out. This is how this helps in controlling whole system. There can be some procedure control that should be taken care off like
Checking organization threat: So for Volvo before taking any action they should do checking from each and every point and once if it’s perfect than only they should launched the product. So from this the desired results can be achieved or not and for that which technique should be used and how implementation should needs to be done it’s all decided. So for Volvo if implementation process id one at right place and at right time than the desired results can be obtained.
Q4) Graph of Tata and Volvo
Following is the graph showing the moves of “Tata motors and Volvo on the bases of the price and perceived quality”. On the X axis Perceived quality is shown and on the y axis the price is shown. We can see that the Volvo is based on the differentiation strategy while Tata motors is price based. So for Volvo if any competitors enters into the market than following steps should be taken:
As company with the low cost grows fast than the Volvo Company in India by doing clever things to reduce the gap of ability. They can copy the designs, colours, raw materials and even the numbers of models of the Volvo to exist in the market. So for that precautions should be taken by the Volvo Company before and should redesign the Company by using USP policy.
Sometimes at the early stage the influence of low cost company is not taken into consideration by Volvo, but as the marketplace leads the rivalry between Volvo and low cost Company. So for that Volvo should always be ready with the unique design to compete its enemy by observing the undertakings of the low cost competitors and act accordingly. So that they can maintained their customers.
A low-cost local competitor of Volvo may shutdown the gap of presentation and quality by taking backing benefit of clients that are looking to defend the companies and own interests of business. As competition amongst the traders has keened by consumers quite often and even many times low-cost companies are being helped to upgrade their offers. So Volvo has to be enduring and wait for the long-term benefits by not compromising on quality as quality products have the profits in long run.
Volvo should consume all the choices available to respond the low-cost company. Volvo needs to fight back against its competitor and they should change their strategy so that they can’t compete. Volvo can introduce product with the competitive rates so that attempt can be made to separate the Volvo from competitors. Technical service with the product insurance policy can built a strong relations with the consumers. These schemes can make consumers faithful to the product and jump to the low-cost Company CITATION Kim05 l 3081 (Kim, 2005).
Innovations and up gradations should be made by the Volvo likewise to answer the threats. As the low cost company can’t afford the latest and high technology so such technology should be used to fight against them. This is how Volvo can engrossed on the keys of selling products to the directed consumers.
Q5) SustainabilitySustainability also offers an understandings into how the Volvo group creates and value of consumers, stakeholders and shareholders as well as culture. The bus strategy of Volvo is highly sustainable and this is the most vital policy of Volvo. The internal storage of the bus for the bag storage as well the designs of the bus and the chases of the bus are design in a unique way. So numerous security features propelled like (VDS) Volvo Dynamic Steering, (CWEB) Collision Warning and Emergency brake and (LKS) Lane keeping systemCITATION Vol18 l 3081 (global, 2018) The Volvo sustainable award was inaugurated by Volvo buses in the year 2011 with the goal of endorsing sustainable flexibility solution CITATION Vsm12 l 3081 (Vsma, 2012). These can be called as the inimitable advantage in the place of transports and this will remain ongoing to fascinate entries from across the different countries. The upcoming way or say the future of the Volvo looks very positive the way they are launching and satisfying the customer and even the luxury bus is increasing the strategy of the Volvo in satisfying its aims.
The marketing policy of the Volvo is also sustainable that guarantees the sustainability of the luxury bus of the Volvo. The Volvo bus launched make the company product sustainable. The luxury bus has changes the trends and that growths the company development. The Volvo company has launched the product is such a way that it is safe to use and even fuel consumption is less with the modern designs which are the basic necessity for the sustainability of the product. So economic, Environmental and social maintainability are also taken care off and these re some of the reasons that distinguishes the company from the other automobile company. Thus this is how Volvo plays a vital role in different local, religion and cross-border management initiatives to evaluate the feasibility of sustainable transport organizationCITATION Vol1 l 3081 (Volvo, 2017).