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As earlier stated in the previous section, data from two case studies will serve as the basis for this analysis, furthermore, analysis of the questionnaire responses will be revealed with charts and tables to ascertain the coherency between the interview responses and the factors revealed in the analysis of the case studies. This is further elaborated in the chart below.
This case study is exploring the failed strategic alliance that occurred between; Volvo (Swedish car manufacturing firm) and Renault (French car manufacturing firm). Although cordial relationship has existed between the two firms for a couple of decades before 1990, in 1990 Volvo and Renault collaborated and formed an alliance (Renault bought 25% of Volvo’s car production section and Volvo became the owner of 20% of Renault’s motorcar section, furthermore, they both held 45% of each other’s company’s truck division). The two companies, being highly successful automobile firms, many thought the alliance will lead to the obliteration of competition and will grant them total control of the automobile market.
Unfortunately, the Volvo-Renault Alliance only lasted for 3 years. In other to completely grasp in depth the factors that contributed to the early demise of the alliance, the analysis incorporates the various perceptions of respondents on the factors considered by the two giant automobile firms that culminated into the formation of the alliance and the challenges that eventually led to the demise of the alliance.
Volvo is a Swedish automobile firm established 1927 by Assar Gabrielson and Gustaf Larson, it currently boasts of more than 2,300 local dealers worldwide and its biggest markets exists in Sweden, China and the United states of America. The company deals in the production of both trucks and cars, with trucks contributing to about 63% of its overall net sales. Olof Pearson has been holding the position of CEO since 2011. Renault is a French automobile car manufacturer established in 1898 by Louise Renault and his brothers, the firm quickly made a name for itself and gained popularity in motor racing by notching up a good number of wins consecutively. Today, Renault is present in well over 118 nations, boasting of 38 plants and 13,300 outlets. Major markets exist in France, brazil, Russia, Argentina, and Germany. Renault group is headed by CEO Carlos Ghosn, Renault is divided into 4 sections; Renault, Dacia, Renault Samsung Motors, and AvtoVAZ. The analysis of the research data revealed 7 themes categorized into two sections, namely, pre-alliance and post-alliance issues.
On selection of partners by the firms, the analysis revealed that both firms understood what they stand to gain from each other in the alliance. Alliance with Renault seemed like a very viable deal to Volvo, they hope to gain in terms of financial capital and technical know-how in the production of cars since Volvo specializes more in truck production. Volvo had small output and a small range of products, this effectively barred them from competing in the global market, an alliance with a more prominent firm was the only feasible solution, and since Renault had shares in Volvo already, the decision was effortless for Volvo. On the part of Renault, it hoped to exploit to their advantage the engineering capabilities of Volvo and its renowned reputation for safety.
At that very point in time, the alliance between Renault and Volvo will lead to the creation of the sixth largest car manufacturer, and the second largest manufacturer of trucks worldwide, some of the noted objectives for the alliance as documented in the data include;
a. The partnership was initiated because of what the two firms stand to gain in terms of production power, financial power, and quality engineering capability.
b. Volvo was adversely affected by the recession and demand for automobiles was desperately increasing, there was a desperate need for Volvo to partner with a firm that would sustain them financially and provide a financial backing that would motivate the creation of new innovations and new product development.
c. however, the data revealed that there was an undercover plan for Renault to acquire Volvo and not a partnership.
Volvo’s contribution is geared more towards the development of efficient engines, while Renault produced the manpower needed for production, furthermore, on the use of technology, as at that point in time Volvo has adopted the use of CAD (Computer Aided Design) in creating its designs, while Renault is still into the use of papers and woods.
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