Volvo: Finding True Value In The Electric Bus Market Harvard Case Solution & Analysis

Volvo: Finding True Value In The Electric Bus Market Case Solution

Economic Aspects

The methodology of Volvo must study the inflation rate of the country before entering the new market. Volvo also must monitor the foreign exchange inflows and outflows in the country because its competitors have failed in operating their businesses in different countries, such as:Brazil, Argentina and Venezuela due to the unpredictable foreign exchange market.The Federal Reserve's policy of quantitative easing has resulted in a flood of liquidity in all the global financial markets. Volvo Methodology could derive cheaply in such situations, but there are risks associated with this strategy if the interest rate rises.

Social Factor

The methodology must understand the dynamics of why and how the consumers are buying products from Volvo's the current product categories and it should also study the consumer segments which it wants to target through the Volvo Methodology. Volvo Methodology must perform ethnographic research to understand the attitudes of recreational activities and the chosen activities. The experienced economy is one of the most rapidly developing segments between the millennial and baby boomers.Different cultures exist in different countries, so the methodology of Volvo must analyze the social attitude of the people before initiating the marketing campaign marketing of its new products.

Technological Aspects

The spread of mobile phones has generated a main source of entertainment and has made the entire information available to the general public, and Volvo Methodology should alter its strategy of marketing accordingly.Artificial intelligence &machine learning will generate the benefit of increasing the importance of a speedy development. Volvo Methodology must create efficient strategies to operate in such environment.Volvo Methodology should to develop the level of acceptance of technology in the society before commencing a new product. Most companies enter the market without any infrastructure to support the technology-based model.

Legal Aspect

Volvo Methodology might face legal risks in some of the markets in the form of intellectual property rights. Property rights are also a major concern for Volvo Methodology because it requires an investment in key competitive strategies and globalization infrastructure to expand into the new markets.The methodology of Volvo should be prepared about the monopoly and restrictive trade practices law and it must keep making strategies to overcome their affects.

Environmental Aspect

Volvo is creating a brand image in the market as a corporate social responsibility initiative. Volvo is working on environment-friendly products and is focused on manufacturing electric vehicle to reduce the carbon emission and the energy consumption. Environmental regulations can influence the cost structure of Volvo Methodology. It can also influence the cost of operating the business in the market.

5 Porter Forces

Bargaining Power of Suppliers

The customers change the brand irrespective of the suppliers and the brand’s loyalty is high is high in the industry, so the suppliers are dependent on the brands, which moderates their bargaining power. This moderation of power is caused by the reliance of the suppliers rely over the brand image and the customer base. The R&D department of the company plans and evaluates the situation and tries to innovate and add value. The R&D department asks the suppliers to work according to the stated values. Considering these facts,  the suppliers' bargaining power could be considered as moderate in the industry.

Bargaining Power of Customers:

There are numerous competitors of the company which are operating in the same industry and the customers can easily switch to the products and services of these companies as per their wish. There is a brand loyalty because of the highly positive market image of the company and its luxurious services, which makes the bargaining power of the customers moderate. The reason that prevents the customers from domination is the level and quality of the services that only a few top-ranking companies are offering including the luxuries. Whereas, the continuous innovation in the industry has enabled the companies to come up with new products and to create customers’ loyalty, which might decrease the customers’ domination. The examples of such innovations is the heavy trucks innovation,because it is not an easy decision for truck drivers or other vehicle owners to decide on changing the vehicle frequently. Volvo alone has 100 trucks in the industry.


There are players in the market who are manufacturing heavy trucks and construction equipment, and the competition is high in the industry. The leading companies that are manufacturing the heavy trucks are FAW, Daimler and Tata. There are three main giants that all other companies are competing with, i.e. Audi, Daimler and BMW, because they possess 80% shares in the global market. Whereas, if we talk about Volvo; the company is doing well and captures 10% of the market in the consumer's vehicle and is expected to reach 15-20 percent in the next 4 years. The huge number of manufacturers in the industry depicts a clear picture of the competition in the industry. The rivalry in the manufacturing of heavy trucks is high.

Threat of substitute

Till now there is no specific substitute for heavy trucks and vehicles, because these products are the need of every consumer. The innovation in the industry and the continuous improvement in the cars leavefewer options for the product substitutes. Electric cars are not substitutes but the car engine is, so the threat of substitutes is low in the industry.

The threat of New Entrance

The new entrance cost is very heavy in the industry so the threat of new entrants in is low in the industry of heavy trucks manufacturing and vehicles. Due to the heavy capital requirement; the threat is low. Loyal customers are also the reason behind the low threat of new entrants.


First alternative for Volvo is to conduct a marketing survey of the customers’ preference, buying behavior and their lifestyle pattern in China. Secondly, Volvo should observe its competitors and identify their lacking points and Volvo should also work on the elements which are lacked by its competitors as it would provide an advantage to Volvo over its competitors, which would help it in enhancing its business in China. The third alternative is that Volvo should study the economic trend of the country in which it has decided to expand its business. The Fourth Alternative for Volvo is to make its strategies by considering the fact that China has a rapid growth in the technological sector.


The Alternative 2 and 4 are more applicable for Volvo keeping under consideration the Chinese market. Volvo must study its competitors and identify their weak points, which Volvo should have an expertise in. And secondly, Volvo must make its strategy to compete in the Chinese market and to run its business effectively by keeping under consideration the elements which are necessary to operate business in China............................

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