By diversifying into various industries, AB Volvo hoped to insulate itself from problems in any 1 industry.
AB Volvo's main strength is its sheer size. The business employs a critical percentage of Sweden's workforce, and contributes a big quantity to Sweden's GNP every year. AB Volvo's activities have an effect not just over a company, but on the nation's economy like a whole, which puts the business in a specific position to attain concessions from the government that will not be accessible to other companies.
AB Volvo also has a powerful international presence which has helped it accomplish its contemporary size. Currently, much with the company's income comes from overseas, on the result that it has formed alliances with other foreign corporations that may support it in the future. This international presence can also be used to attain entry into far more markets, including using its contacts for automobiles in 1 region to enter the truck or bus market in that nation.
Pehr Gyllenhammar, AB Volvo's CEO, could be the driving force behind the company's strategic direction. As CEO, Gyllenhammar sets the tone for ones entire company, and as the leader of a single of Sweden's most successful companies, he has an influence over the direction of domestic policy, as well. His forceful personality, and his personal conflict with the head of another powerful Swedish corporation (Peter Wallenberg).
The company could continue its contemporary strategy of letting the American car market appreciate only natural growth and entering non-related markets, such as food, to be able to supply the business using a hedge against a downturn in its core businesses. However, this option has the capability for good risk, from the possibility that AB Volvo will forego growth inside the American car market, and from the possibility that it is going to not be in a position to attain important growth in the meals sector.
Joint ventures, which may perhaps prove an attractive alternative to some of AB Volvo's problems abroad, have the difficulty that foreign investors may possibly retain only as much as 40 percent of the Swedish company's capital. Thus joint ventures can't be full partnerships among 2 companies, which would enhance the synergistic relationship in between the two. Like a result, it truly is difficult for AB Volvo (or any other Swedish organization) to form strategic alliances with organizations overseas which will have beneficial long-term benefit.
Implementing this plan means how the business should sell off its meals operation along with other non-transportation items. Any such implementation also methods how the company should start planning for your time after Gyllenhammar is no longer with AB Volvo. Even though Gyllenhammar is in large component responsible for ones company's success, he is also a strong liability towards the company as a result of his forceful personality. Regardless, he is closely known on the company and there's likely being a void left inside the management if he have been to leave suddenly.
Building on its powerful core company also permits AB Volvo to eat advantage of strategic alliances it has formed with other companies, and which it doesn't yet have (to a beneficial extent) in its other industry segments.
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