Question

The opening case explores the acquisition of Sweden’s Volvo by Chinese giant Geely, now the second largest private automobile manufacturer in China. Geely made the decision to acquire Volvo in an effort to gain the engineering and design skills it needed to successfully compete in the auto industry. So far, the acquisition has been a huge success. Geely has been able to combine Volvo’s brand allure along with its engineering design skill with its own prowess as a manufacturer. Today, Volvos are designed, engineered, and tested in Sweden, and then manufactured in China or the United States.

DQ

1. Why did Geely choose to acquire the design and engineering skills it needed to compete in the auto industry rather than develop those skills itself?

2. China is now the largest market for Volvo. How would you characterize Volvo today? Is it a Chinese company or a Swedish company? What are the implications of your response for sales of Volvos outside of China?

Answer 1