What Were Volvos Motivations to Enter the U.S Market?

What were Volvos motivations to enter the U.S Market?

The U.S heavy truck market was a very attractive market and a market Volvo intended to penetrate. If Volvo intended to become a global player or successful in the global industry they would have to be a “major presence in all the major markets including the U.S” CEO, Volvo Truck Corporation (Porter and Solvell, 2006, p. 1) The U.S industry is very attractive given its size geographically speaking, and also logistically meeting the U.S transportation demand.  This can be seen in the registration of new trucks, between the years of 1994   through to 2000, North America registered 820,000 units, Western Europe registered just 563,000 units (Porter and Solvell, 2006, p. 3)  North America registered 31% more new heavy trucks than Western Europe. This demonstrates just how attractive the U.S market was to Volvo and other competing vehicle manufacturers. The U.S companies; “Ford and GM retrenched their European truck operations” (Porter and Solvell, 2006, p. 5), leaving Paccar the only U.S threat in Europe and the U.K. If Volvo could compete in the U.S market with the major players, this would differentiate them from their rivals in Europe and reinforce their global market position. Also potential customers in Europe and the rest of the world would see their success in the U.S, and be more likely to buy from Volvo than a company’s outside Europe.   Volvo could also gain a strong position in Europe, competing with the likes of   Daimler-Benz, Renault-RVI, MAN, Scania, and Iveco.

Heavy trucks were configured two ways: cab-over trucks and conventional trucks, with front mounted engines and a large hood (Porter and Solvell, 2006) Cab-over truck designs were very successful in Europe. Geographically, Europe has narrow streets and bending roads. This suits the design and manoeuvrability of the cab-over. However, the conventional trucks suited the U.S geographically, this is due to the roads or highways that are straight and wide sometimes for hundreds of miles. Volvo produced both designs of truck, which enabled them to build trucks that could be used in the U.S or Europe depending on the demand (Porter and Solvell, 2006, p. 13) Volvo the brand has also prided itself on creating safe vehicles that are also very reliable. The conventional truck design is a safer model than the cab-over, as the cab sits behind the engine. These are trucks that Volvo can produce to high standard, while maintaining their reputation of the safest vehicle producer in the motor industry. Even though the U.S market size or attractiveness was the key motivating factor, Volvo’s ability to build both designs of truck or model, gave them the confidence to compete in the U.S and reinforces their rational to enter the market.

What industry structural conditions did Volvo meet?

Volvo was trying to penetrate the U.S market. To accomplish this they were required to meet or understand the industry environment or structural conditions. The U.S market was notorious for been a difficult environment to operate in. Karl-Erling Trogen , CEO of Volvo trucks made a statement “that those who can succeed in the U.S market can do it anywhere in the whole world. Therefore we have to maintain our presence in the U.S market.” (Porter and Solvell, 2006, p. 12)