Problem Statement
Volvo, a renowned player in the automobile industry is facing the challenge of sustaining its market share and remaining competitive in the industry. The company needs to analyze its position in the market and wants to identify its options that are available.
Analysis
STP Analysis
The main purpose of Volvo's existence has been to design everything around people. A core philosophy born simply from it emerged as a company and where the brand essence has been elegantly condensed into three simple words:’’ DESIGNED AROUND YOU’’ a statement confirming Volvo’s commitment to create Scandinavian luxury cars that understand people with SUV as its segment.
Its target market is aimed at the high end young business executives who prefer luxurious and safe cars, that can be enjoyed with the family experience and be classy at the same time. It is positioned as the safest cars to drive by adding innovative safety features. Volvo has always remained true to its Scandinavian heritage where environment friendly aspects are focused. This has allowed Volvo to specifically position itself based on its safety features combined with a premium experience giving it an edge over its competitors.
SWOT Analysis
Strengths
Volvo holds supremacy in having the most efficient and world class safety standards. It also holds a wide range of car models with variant colors that best suits the preferences of the customers. It is a brand that enchants the elite class with its elegant designs and classic style.
The brand is highly inclined in maintaining its standards and giving its customer a quality and safe driving experience. It has workforce around 100,000 around the globe.
Weakness
The drawback for Volvo is that it has a very limited penetration towards middle-income customers as it tags itself with high prices especially in the emerging economies. A brand cannot be purchased by people earning an average income. It also fails to capture a strong market share because of the presence of other global automobile giants.
Opportunity
Opportunity that lies for Volvo is to expand itself in the automobile market. It can also earn more market share in integrating with current entities involved in an automobile business and can increase per-capita income and purchasing power by making it affordable for consumers with middle income.
Threat
The threat of Volvo is the supremacy of other big international automobile players in the market. Continuous innovation and enhanced features added by its competitors. Another reason what hinders its sales is the usage of government vehicles and high fuel prices that discourages the customer to purchase.
Porters Five Force Analysis
Supplier Power to Bargain
For greater Profits and Lower Investments in Suppliers cost Volvo will play smart by collaborating with the Chinese Suppliers who will most probably offer lower prices than the European ones. This will give Volvo the chance to dictate their terms rather than the Suppliers and Volvo can hence, gain greater benefits and save greater revenue in one go.
Buyer Power to Bargain
The Buyer stance remains strong overall. Although Volvo is offering innovative, safety enhancements and environmental friendly products, competitors, on the other hand, are equally coming up with better substitutes. This gives the buyer greater options to choose from and thus, have a dominant power over Volvo.
Competitive Rivalry
Automobile industries give each other a cut throat competition. Major Volvo competitors are Audi, Saabs, Lexus, Mercedes-Benz and BMW, which not only offer the same features but more on lower prices as well. Claiming to be the only safest car with high standards might be in lukewarm waters now as another Company ‘Renault’ offers the same distinct feature now. Hence, Volvo is not safe from any tough rival competition anymore and puts Volvo in some level of a vulnerable position making it unsafe from any competition.
Threat of Substitution
With greater competition, there is always a chance of greater substitutes. But Volvo’s USP that features the safety element and family friendly car has given it an edge over other substitutes in the US where mainly people prefer using Volvo for being safe. Therefore, it is clear that Volvo’s Prospective threats such as Public transport is not a big threat as big families prefer safe and big cars giving Volvo a Greater edge and keeping it safe from any threats from different substitutes..................................
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