A. Identification Of Major Problems Case Study Samples

Type of paper: Case Study

Topic: Company, Culture, Acquisition, Workplace, Vehicles, Employee, Business, Cars

Pages: 5

Words: 1375

Published: 2020/12/14

Volvo and Geely

Geely is a privately owned automotive manufacturing company in China. The company was established in 1986. The primary competency of the company is in its manufacturing of motorcycles, automobiles, and parts including transmissions and engines. Geely sales are derived from the Chinese market. Majority of the company’s sales are from cars. Geely is recognized for producing cheap cars that target the masses. However, because of other foreign automotive brands operating in the country, competition has been steep for the company. Geely needs to revamp and differentiate its produces in order to acquire a greater share in the market. On the other hand, Volvo Car Corporation is a Swedish automotive company established in 1924. The cars produced by the company were known to be steady and strong and were designed to withstand the harsh and cold climate of the country. Such tradition of manufacturing safe and sturdy cars later became of symbol of pride. In 1999, Ford took over Volvo to help in the expansion of its car lineup, enabling it to obtain greater access to the European market. During the middle part of 2000, the sales of Volvo started to decline because of the increasing competition. A number of manufacturing efforts, as well as cost-cutting measures, were adopted; however, the company failed to gain any profit. Because of the extreme competition, the company wishes to expand its business from domestic and foreign firms to the international market.

B. Analysis of the problem

The problem seen in this ambition was the fact that the company is relatively new, and it is not a recognized company. Moreover, Geely does export cars to other nations but the sales volume is still low when compared to the sales is obtained domestically. Geely is also confronted with the challenge of meeting the emissions and safety regulations that are established in the market. Another problem is the general stereotype of cars in China as blatant imitations of foreign cars. The Chinese do not have enough skill to design cars.
The acquisition of Volvo by a Chinese automotive company shocked everyone. For the Chinese, it was a time of national pride and a fulfillment of becoming a global player in the car market. For Geely, the acquisition event was a great way to strategize.
C. Evaluate alternative
The acquisition of Volvo by Geely served as a great advantage to Volvo. Volvo has plans to broaden its market. Hence, Merger and Acquisition is just the right decision for the two companies. The secret to growth through acquisition is by synergies benefits. Development through acquisition is cheaper, quicker and less risky (Vulpiani). The benefits that come with the acquisition are innumerable. First, it is easier to finance the company’s growth through acquisition. It also enables both companies to establish customer loyalty. Acquisition entails low risk for Volvo and Greely. Most importantly, with the acquisition, it becomes easier to integrate. Moreover, by engaging in the acquisition, this provided added value to Volvo’s existing channel and it also increases market share. In addition, acquisition eliminates competition and reduces overhead percentage (Vulpiani).
D. Recommended course of action
One of the apparent problems seen in the acquisition of Volvo by Greely is the difference in their cultures. There are also differences in the management and organization styles. Geely is trying to pursue cultural pluralism as a strategy. The recommendation for this case is for Volvo to retain its management plan and will operate just the way they did before. In this way, the two companies will be able to reduce cultural shocks, and the networks and processes are minimized. Cultural pluralism would work best for both Geely and Volvo. A combination or integration of cultural differences would be risky. However, with the recommendations here, this will completely make use of the strengths of the two companies while they tap on the synergistic impacts. By identifying their strengths, the two companies will be able to learn from one another and utilize the synergy impacts of integrating cultures (Coffey et al.). This procedure would be applied gradually to avoid misunderstandings and mistake. It is essential to determine the strengths of Geely and Volvo and then combine their strengths together. Volvo is known for creating high-end, safe cars. However, they lack the experience of operating in the Chinese market. On the contrary, Greely has great expertise but does not have the advanced technology that the other company uses. By combining the company’s synergies, this can lead to power and success (Coffey et al.). When handling the differences in cultures, it is likewise important to take into account the strengths. Geely is an advocate of collectivism. On the other hand, Volvo emphasizes individualism. Reaching a balance between these two is crucial. Geely must also encourage innovation, offer personal space for employees, and motivate and encourage employee. Volvo must promote cooperation and teamwork. In addition, the two companies must be open to accepting each other’s cultural differences (Coffey et al.). Such acceptance includes understanding the demands of the employees, and the measures that the enterprise should take. Geely must also establish corporate social responsibility if it wants to be successful. For instance, in donations to charity as well as environmental protection questions, deficiencies still exist. Volvo and Geely must increase cultural awareness by facilitating the strengths identification. On the contrary, employees must understand and try hard to the culture of another. Cultural awareness can be achieved by establishing a Dialog and Cooperation Committee (DCC); however, this should focus only on long-term and large-scale strategy issues since most acquisition problems are related to the employees. The merging of two companies must provide two forms of culture backgrounds be it in training or learning opportunities (Coffey et al.). The companies must have a Culture Integration Committee, which may encompass language training, entertainment parties, and lectures for the workers to ensure that cultural exchange happens. So as to promote cultural exchange, the companies may set up an award committee that will give recognition to employees who rendered exemplary performance or those who provide a greater contribution to aid cultural exchange (Xia). In the process, this will have a signaling operation for the workers. By the way of promotion continuous cooperation and communication, the unity model can be promoted and at the same the efficiency of work among employees can be enhanced. Likewise, the employee diversity and internationalization can be equalized (Xia). Incessant monitoring and reviewing of cultural integration is also crucial to the operation of the two companies. It is significant to constantly monitor and review the condition of the culture integration. This enables fast response to issues that may happen due to diverse cultural backgrounds. In addition, monitoring and reviewing may tackle issues such as synergy impacts, management plan, and problems related to diverse corporate cultures (Xia). Whenever issues within the companies arise and such issues are related to culture, the company committee must address it right away to avoid internal conflict. The management must be reactive and active and must respond globally by taking into account negotiation and intercultural communication. This establishes cultural synergies. The two companies must also build trust and promote transparency. All employees must be treated accordingly with trust, respect, and transparency. Organizational plans and management plans must be disseminated and made known to all employees in an honest and direct way possible. Inability to do this could undermine trust and cause demotivation to employees. Geely is not merely about acquisition of technologies that Volvo has. The two companies must also realize that the two employees are the assets of the company.

Works Cited

Coffey, John, Linda Holbeche, and Valerie Garrow. Reaping the Benefits Of Mergers And Acquisitions. Oxford: Butterworth-Heinemann, 2002. Print.
Vulpiani, Marco. 'Cost Of Capital And Valuation Of Merging And Acquisition Operations'. Business Valuation Review 24.4 (2005): 157-165. Web.
Xia, Zhou. 'Strategic Analysis Of Synergistic Effect On M&A; A Of Volvo Car Corporation By Geely Automobile'. iBusiness 03.01 (2011): 5-15. Web.

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