Mgmt 485w Case 5

Saud Asiri

MGMT 485w

Section #: 15105

10/29/16

Case 5

The factor that drove for the expansion in the international market was the strategy that Geely put forward to expand. In their strategy they made it where they create their Volvo cars in China in a way that won’t affect the operations and the employment in Europe. They decided in making Shanghai serve as Volvo headquarters and make it the center for production and design.

Moreover, the factors for international expansion they try to focus on optimizing its network sourcing in headquarter for the global market. They also understand that image is very important for Volvo because it’s a luxury car. They try to optimize the idea of “luxury” and technology which is a huge factor for the company to expand. They also believe in establishing two different organizational cultures just like Renault and Nissan as an example.

There are many strategic benefits of acquiring Volvo, and a huge cost. Volvo got turned around when purchased by Geely because the Chinese automobile market is huge in profit. As mentioned, the first step was building the manufacture site in China to double the capacity. This increase in production will help Li in his plan to sell 150 thousand cars by 2012.  

The obstacles Volvo might find is management practice because it has to be different than Geely. For example, Volvo has an organized corporate culture whereas Geely in led by only Li. This could come as a problem because it’s a reason to conflict. Another obstacle would be the language barrier between Volvo and Geely. Another obstacle can be that the Asian culture focus on the society as a hole unlike Europe where it based on individuality.

Geely can overcome the obstacle by keeping Volvo independent in order to maintain brand equity. Also, since they have linguistic problems, they can create a joint training programs to create a good working culture.