International Investment & Trade (bap72)

International Investment & Trade (BAP72)

Teaching Staff: Dr. E. Verwaal, Dr. F. Wijen

Exam Field assignment

Introduction of the company:

For this assignment on international trade we have chosen Volvo automotive. The Volvo conglomerate consists of several distinctive pillars, sometimes with very different products. The group produces truck, coaches, marine engines to name a few. Most people however, know Volvo as a premium car manufacturer; this part has been separated from the conglomerate in 1999 when it was sold to Ford Motor Company. Geely automobile has bought Volvo Car Corporation from Ford Motor Company and this deal will be completed in the third quarter of 2010. In this assignment we will discuss Volvo Car Corporation.

Short history of the company:

The name Volvo is Latin for “ I roll”, as the brand name Volvo first was registered by SKF, Svenska Kullagerfabriken. SKF had designed the subsidiary specifically for the American market, as manufacturer of bearings for virtually anything that needed these. However, it never came that far. SKF was already active in the automotive industry as producer of ball bearings. The company saw potential to expand from just ball bearings towards production of automobiles. Founded on the 14th of April 1927, the first Volvo car rolled of the production line and the Volvo company was officially in business. A. Gabrielsson and G. Larson were the “founding fathers” of this newborn brand in Hisingen, Gotenborg, Sweden (Volvogroup.com). These cars were designed to cope with the though weather conditions in Sweden, and the two founders emphasized quality and safety as primary features. Soon after, production got diversified, adding the production of trucks. This was a necessity as the sales of passenger cars fluctuated during the course of a year. Trucks proved to be more stable sales-wise and thus supported Volvo.

In 1935, SKF sold most of its shares in Volvo, establishing AB Volvo. The same year Pentaverken, also known as Penta, was added to the company. This company produced marine engines; further diversifying Volvo products. Only after World War 2 Volvo fired up its engines to become the international company it is today. Please take note that in 1927 a car was still considered very exclusive and only obtainable by the extremely wealthy. The world war was a difficult time for the Swedish company, however after the Second World War times had changed. Cars became available to the public, and were no longer perceived as the exquisite item the car used to be before the war.

The largest Volvo manufacturing plant was established in 1964, Torslanda, Sweden. This plant is still functioning today, producing mainly SUV’s and large