We previously examined the SWOT Analysis of Mercedes-Benz , a leading motor manufacturing company. In this article, we’ll take a close look at the SWOT Analysis of Volvo, its competitor.
VOLVO is a Swedish automotive manufacturer of luxurious cars and vehicles. It is on the top of the world’s leading manufacturer of vehicles like trucks, buses, construction equipment, etc. the Volvo group has production in 18 countries and sells its products in approx 190 countries worldwide.
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In this case study, we will learn about the SWOT Analysis of Volvo that will give us insight into its successful business operations. Before we begin, let us learn more about Volvo, its founding, products, financial status and opponents.
Volvo is a Swedish company that is an automotive manufacturer. It manufactures luxury vehicles like cars, trucks, and more. It was founded in the early 1900s headquartered in Gothenburg, Sweden.
Volvo was built on the principle of safety. The firm was established as a wholly-owned subsidiary of SKF. Volvo is one of the leading proponents of self-driving cars. Uber said on November 20, 2017, that between 2019 and 2021, it will acquire up to 24,000 Volvo cars built to accommodate driverless technology. Volvo Car Corporation was once a subsidiary of Ford Motor Company, but it was sold in 2018 to help the company recover from its losses.
Volvo automobiles have traditionally been advertised as safe, with marketing efforts emphasising the company’s long-standing reputation for solidity and dependability. In new Volvo automobiles, high-tech safety measures are standard equipment. Early in 2021, the firm said that by 2030, it will no longer offer fossil-fuel-powered automobiles, instead opting for electric vehicles.
|Founder||Assar Gabrielsson, Gustaf Larson|
|No. of Employees||96,194|
|Market Cap||510.65 Billion kr (2021)|
|Annual Revenue||338.446 Billion kr (2020)|
|Net Profit||20.074 Billion kr (2020)|
Products of Volvo
Following are the products and services sold and produced by Volvo –
- Construction equipment
- Marine & Industrial engines.
- Financing services
Competitors of Volvo
Following are the major competitors of Volvo –
- Penske Automotive Group
- MAN Truck & Bus
SWOT Analysis of Volvo
By reading the following swot analysis of Volvo you will find out what are the various factors which are responsible for the success of this firm and factors which can be dynamic and game-changing in the future.
1. Strengths of Volvo
The strengths of an organisation are internally driven factors that put the company in the renowned position it is. Following are the strengths of Volvo –
- Diversified portfolio – Volvo has its operation in six business segments which consist of cars, trucks, construction equipment, Volvo Penta, busses, and customer finance. Volvo is very well balanced with the balanced portfolio of its products and generates balanced revenues.
- Strong market position – Volvo is the market leader for most of its segments. Volvo has a strong position throughout the world due to its continuous expansion and use of modern technology. Specifically, in the truck segment, the market share is more than 20% which is the highest for any of its segments. Volvo also leads in the buses and construction equipment.
- Strong research & development – Volvo has given huge importance for its research and development and has a strong focus on it. They have put huge amounts into research and development. Having a great r & d team gives you an edge over competitors’ products and it helps us to stay in the race and innovate ourselves.
- Reliable brand – As a brand, Volvo is one of the most reliable and trusted brands in the world. They have a reputation for making the world’s safest cars and trucks and are having dominance with NHTSA’s 5-star safety rating. The way Volvo cares for its customers by inventing a three-point seat belt is highly appreciated by people.
2. Weaknesses of Volvo
Weaknesses are internal factors that place the company at a disadvantage compared to its competitors. Following are the weaknesses of Volvo –
- Product recall – There are many products of Volvo which have been recalled by the company in recent years. thus has affected the brand image of Volvo and has created a bad impact on the brand name of Volvo. For eg, in 2014,2015 the vnl models were recalled because of the default in their panels. Such things can create a negative impact on the brand hence precautions must be taken in advance.
- Declining margins – Operating income of Volvo has been declining for a few years now. Even though there is growth in revenues the growth in the profit margins is less or even nil at some point in time. The company has continuously lost margins in the past three years continuously. such a decline in margins increases the worry for shareholders.
- Competitors – There are a lot of competitors in the automation industry. Some of the competitors to the Volvo group are general motors, Tata motors, Tesla, lubricon, Kia motors, etc. Volvo faces tough competition in all of its segments which forces them to do product competition. Hence Volvo always has to innovate themselves and keep their prices lower than competitors. The Volvo group always face tough competition and hence it leads to low-profit margins which is one of the biggest weakness which they face
3. Opportunities for Volvo
Opportunities are external factors that the company can potentially benefit from when recognised. Following are the opportunities Volvo can avail –
- Electric cars – Electric cars are the future of the automation industry. After huge demand for Tesla cars and the public’s concern towards sustainability can be a huge opportunity for electric vehicles. Volvo has already started its research and development and they are soon to launch their e-cars at a reasonable price. This can make Volvo a huge success and create more opportunities for them.
- Growing global freight sector – There is a growth in the global road freight sector in value as well as size in the past few years. The sector is about to grow 6% cagr in the next 5 years as expected by analysts. Volvo creates trucks and it is the market leader in that segment worldwide. They can take huge advantage of this situation.
- Strong outlook – The road freight sector is about to grow 6% cagr in the next 5 years as expected by analysts. Especially in the Asia-Pacific region, the trucks market has shown tremendous growth in recent years. Volvo will have a positive impact due to this demand in the future.
- Improving global construction industry – The construction industry has shown great growth in the last few years, even though impacted by pandemics the construction industry has improved largely. It is growing at the rate of 10.3% cagr. In emerging countries, the infrastructure expenditure is expected to be high.
4. Threats to Volvo
Threats are external factors that a company should be aware of to hold its status in the market. Following are threats to Volvo –
- Price wars – Internal competition with competitors causes price wars. Volvo faces tough competition in all of its segments which forces them to do product competition i.e fighting for giving a better quality of product or service, this at times leads to price competition. Hence Volvo always has to innovate themselves and keep their prices lower than competitors.
- Strict environmental-related laws – The automation industry faces huge criticism from environment preservation NGOs and other people. People criticize them for increasing pollution due to the use of cars and methods used for producing such cars. Different countries have different laws. What is legal in one country might not be legal in another country.
- Increasing prices of fuel – The prices of fossil fuels like petrol, diesel, etc have increased very high. This doesn’t allow the majority of the people to use their vehicles in the way they used to before and hence they avoid using their bikes, cars, this leads to decrease in sales of vehicles. Hence increase in the prices of fuels is a threat to Volvo.
- Currency fluctuations – Volvo operates globally in so many countries and hence it receives many kinds of currencies. All currencies are not stable and some are unacceptable due to fluctuations happening in their value. Volvo accepts Swedish Konner and US dollars create fluctuations in their total value.
With this, we come to the conclusion of the SWOT Analysis of Volvo. In the following section, let’s briefly summarise the takeaways of this case study.
Volvo group has been generating positive numbers in its revenues the past few years but now their profit margins have reduced. They need to expand and develop more vehicles with sustainable energy. Some main concerns for Volvo are its competitors, expansion, and sustainability, but with predetermined strategies and proper execution, they can lead the market
Additionally, in light of their marketing, they must begin adapting a strong digital presence. It is so important to have digital marketing skills in today’s digitalized world, since not only is it cost-effective, but has a larger audience reach.
Being a part of the marketing team in renowned companies like Volvo requires expert skills. Acquiring that right and professional knowledge is hence vital. IIDE offers training in certain Digital Skills – check out IIDE’s short-term certification courses include courses on SMM, Media Planning, Search Engine Optimization, email marketing and more, in the span of 5 days.
If you like such exclusive analysis of companies, find more such insightful case studies on our IIDE Knowledge portal.
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