Geely's Acquisition of Volvo
GEELY’s ACQUISITION of VOLVO
1. Introduction to the Case
This Case is about * The Automotive Industry of China * The acquisition of “Volvo” by “Geely” (a Chinese firm) * Geely is an automotive company in China, which was engaged in producing non-luxury cars for its local market in the country since 1998. * Li Shufu was the founder of the company, who was basically a poet and has a philosophical attitude towards life. * The time of the case is year 2010.
2. Situational Analysis
Li Shufu was born in China in 1963, the son of a small business owner. He started the business from making photographs of tourists, then he shifted to making refrigerators and refrigerator parts, and from there he diversified again to motorcycle production business. At the age of 35, in 1998, he started the business of producing cars. The name “Geely” came to him in a dream.
Geely was a privately owned firm, which was involved in producing non-luxury cars for its local market of China. For the acquisition of Volvo, Li obtained financing from state-owned banks and governments in China and this acquisition made Geely able to enter in the new market of luxury cars by following a “related diversification” strategy.
Now Geely is heading towards lowering the costs and making Volvo more profitable in the industry and following a growth strategy in its business
3. DEEP LIST Analysis i. Demographics
Volvo was a Swedish company; Geely was planning to produce luxury cars at Volvo plants and offering these cars to local Chinese, who desire to drive these luxury cars. This strategy enabled the Geely to target a new market segment in the country. ii. Ecological
Producing and providing good quality luxury cars to the society for its use. Success of this acquisition settled a good example for potential foreign investers.
iii. Economical
There was great potential in the Chinese markets for luxury cars, as last year of 2009 shows that more than 7
1. Introduction to the Case
This Case is about * The Automotive Industry of China * The acquisition of “Volvo” by “Geely” (a Chinese firm) * Geely is an automotive company in China, which was engaged in producing non-luxury cars for its local market in the country since 1998. * Li Shufu was the founder of the company, who was basically a poet and has a philosophical attitude towards life. * The time of the case is year 2010.
2. Situational Analysis
Li Shufu was born in China in 1963, the son of a small business owner. He started the business from making photographs of tourists, then he shifted to making refrigerators and refrigerator parts, and from there he diversified again to motorcycle production business. At the age of 35, in 1998, he started the business of producing cars. The name “Geely” came to him in a dream.
Geely was a privately owned firm, which was involved in producing non-luxury cars for its local market of China. For the acquisition of Volvo, Li obtained financing from state-owned banks and governments in China and this acquisition made Geely able to enter in the new market of luxury cars by following a “related diversification” strategy.
Now Geely is heading towards lowering the costs and making Volvo more profitable in the industry and following a growth strategy in its business
3. DEEP LIST Analysis i. Demographics
Volvo was a Swedish company; Geely was planning to produce luxury cars at Volvo plants and offering these cars to local Chinese, who desire to drive these luxury cars. This strategy enabled the Geely to target a new market segment in the country. ii. Ecological
Producing and providing good quality luxury cars to the society for its use. Success of this acquisition settled a good example for potential foreign investers.
iii. Economical
There was great potential in the Chinese markets for luxury cars, as last year of 2009 shows that more than 7