Volvo Essay ⋆ Business Essay Examples ⋆ EssayEmpire

One of Sweden’s leading global brands, Volvo is known worldwide for the quality and safety of its transportation vehicles and equipment, particularly its automobiles. The best-known aspect of the Volvo brand is Volvo Cars, which is owned by the Ford Motor Company of the United States. This company is distinct from the Volvo Group, also known as A. B. Volvo, which remains a Swedish company. The Volvo Group builds trucks, buses, construction equipment, and other vehicles, and also maintains a financial services component. Currently, the Volvo-branded companies employ over 100,000 workers, mainly in Sweden, but also in Europe, the United States, and around the world. The headquarters of the auto operations is in Gothenburg, Sweden, as is the Volvo Group’s headquarters. The Volvo Group is a publicly traded company listed on the Stockholm Stock Exchange, while Volvo Cars is wholly owned by Ford Motor, which is also a publicly traded company, headquartered in Dearborn, Michigan.

Volvo was originally founded in 1915 by ball-bearings maker SKF. In 1924 two SKF employees, Assar Gabrielsson and Gustaf Larson, began building cars. Volvo, which means “I go” in Latin, became independent in 1935. First specializing in autos, the company grew impressively from the first hand-built model in the 1920s. By the 1960s, Volvo production reached over 100,000 cars, buses, and trucks at 13 facilities in Sweden employing 18,000 workers. The company’s ethos was very conservative and focused on quality: Volvo had only 15 different vehicle designs in its history and offered only seven different color choices, yet one-tenth of its employees were involved with product inspection.

With the success of models such as the 140 Series, the Amazon, and the 200 Series, Volvo established a reputation for safety innovation. Styling was a secondary consideration as Volvo cars were considered utilitarian. Many common safety features, such as laminated glass, the three-point safety belt, and padded dashboards, were first developed by Volvo. Although the cars were often criticized for their appearance, they were also heralded for their durability. Volvo cars also gained public exposure through the company’s decision to enter into certain motor car races, as Volvo joined the European Touring Car Championship in the 1980s with some success.

Volvo began expanding its global operations beginning in the 1960s, especially its car production. It opened a plant in Halifax, Nova Scotia, Canada, in 1963, the first non–North American plant to operate on the continent. In 1974 the company broke ground on a US$100 million plant in Virginia that was intended to produce 100,000 vehicles and employ 3,500 workers within two years. Yet by 1976, the partially completed plant was still not producing vehicles, a victim of the recession in the auto industry and increased prices for Volvo products that slowed sales. Nonetheless, Volvo cars are still made in Belgium, the Netherlands, Malaysia, and Thailand with worldwide production around 450,000 vehicles.

In 1999 the Ford Motor Company purchased the auto assembly operations of Volvo Cars from the Volvo Group. Volvo became part of Ford’s Premier Automotive Group (PAG) and remains the last brand in PAG since the sale of Land Rover and Jaguar to Tata Motors of India by Ford in 2008. Since being acquired by Ford, Volvo’s auto operations have maintained a very small (less than 1 percent) but steady share of the world auto market, with approximately 2,500 dealers worldwide. While maintaining its reputation for safety and quality, the company has expanded the range of vehicles it produces, launching sport utility vehicles, sports cars, and other types of vehicles. There has been speculation that Ford Motor will sell Volvo, given the parent company’s financial difficulties since 2005, but this has not yet happened.

The remaining Volvo Group has itself since expanded, establishing a link with Renault Trucks, acquiring Mack Trucks from Renault S. A., and Nissan Diesel from Nissan. With the Mack acquisition, Renault became the largest shareholder of the Volvo Group.

Bibliography:

Christian Berggren, The Volvo Experience: Alternatives to Lean Production in Sweden (Cornell University Press, 1992);
Pehr G. Gyllenhammar, People at Work (Addison-Wesley, 1977);
Hong Liu, Lars-Uno Roos, and Robin Wensley, “The Dynamics of Business Orientation: The Case of the Volvo Car Corporation,” Industrial Marketing Management (v.33/4, 2004);
Ake Sandberg, ed., Enriching Production: Perspectives on Volvo’s Uddevalla Plant as an Alternative to Lean Production (Avebury, 1995);
Mosad Zineldin, “International Business Relationship and Entry Modes: A Case of Swedish Automotive Industry Scania and Volvo in Mexico,” Cross Cultural Management: An International Journal (v.14/4, 2007).

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