Category: Volvo

Insight into Volvos Production Model

What were the main design principles affecting process design at Volvos Uddevalla plant?

In the 1970s, Volvo embarked on redesigning its production process in order to improve its competitiveness. This led to the establishment of Volvos Uddevalla manufacturing plant where workers played a key role in the production of cars. Volvo revolutionized the process of manufacturing cars by introducing the holistic or the reflective production model at its Uddevalla plant (Holweg & Pil 2009, pp. 353-365).

The model upheld the principles of craftsmanship by relying on workers who utilized their expertise to produce high quality cars. In order to implement the new system, production processes were redesigned based on the following principles.

To begin with, the company adopted a craft production system in which employees worked in teams to produce an entire car. Thus, the Uddevalla production plant did not have an assembly line where various parts could be assembled sequentially to produce a complete car (Holweg & Pil 2009, pp. 353-365).

Unlike the assembly system where cars are moved from one station to another during production, the Uddevalla plant had docking stations where cars were built without being moved.

Skill development and professionalism was an integral aspect of the holistic production model. The Uddevalla plant had low levels of automation since it focused on craftsmanship (Holweg & Pil 2009, pp. 353-365). As a result, human involvement in the production process was high.

The employees had to acquire excellent skills and to demonstrate high standards of professionalism in order to produce high quality cars. In this regard, extensive on-the-job training programs were used to improve the employees skills and their understanding of the holistic approach to car production.

Natural assembly work was vital for the success of the holistic approach to production (Holweg & Pil 2009, pp. 353-365). The company established groups of employees who performed various production tasks. The teams were supported by a special parts delivery and order system that ensured timely delivery of supplies.

The company also ensured that the production tasks were ergonomically sound to minimize discomfort and fatigue among workers (Holweg & Pil 2009, pp. 353-365). The production levels were variable to enable the workers to respond effectively to variations in demand. Additionally, the production process was characterized with long cycle times to enable each team to complete its work.

In order to improve productivity, the company allowed each team to be autonomous (Holweg & Pil 2009, pp. 353-365). Each team worked independently by managing its production tasks. Promoting autonomy in each team had the following advantages. First, it promoted individual innovation in each team.

The, employees were likely to focus on product and process innovation if they were allowed to work independently and to make their own production decisions. Second, autonomy promoted individual motivation (Holweg & Pil 2009, pp. 353-365).

Workers were likely to be motivated if they were allowed to employ their creativity and independence to complete the tasks assigned to them. Finally, it facilitated adaptability and created opportunities to leverage unique abilities.

Despite their potential to improve product quality, the principles used at Uddevalla plant did not promote knowledge transfer within the company.

Lack of knowledge transfer was undesirable because it limited organizational learning, which in turn reduced the possibility of creating competitive advantages (Henderson & Clark 1990, pp. 9-30). Additionally, the holistic approach did not improve efficiency because it was labor-intensive and lacked economies of scale.

What is the relationship between process design at Volvos Uddevalla plant and the emergence of customer-oriented and built-to-order approaches to car manufacturing?

Apart from adopting a new production model at Uddevalla, Volvo focused on improving its distribution system. This involved introducing the customer-oriented production (COP) system in 1992. The main objective of the COP system was to bolster Volvos responsiveness to customer needs (Holweg & Pil 2009, pp. 353-365).

The introduction of the holistic approach to car production led to long cycle time, thereby limiting Volvos ability to fulfill customers orders in time. For instance, the Uddevalla plant required fifty hours to produce a car, whereas the Ghent plant required only twenty-five hours to produce a car (Holweg & Pil 2009, pp. 353-365). In this regard, it was important to improve the distribution system in order to prevent further delays.

Therefore, Volvo introduced the build-to-order (BTO) system to address its distribution challenges. Under the BTO system, Volvo produced cars according to the level of confirmed orders (Holweg & Pil 2009, pp. 353-365). Moreover, it enabled the company to focus on the production of customized cars that met specific customer needs.

A company that intends to implement a BTO system must be able to ensure flexibility in all aspects of its value chain. Specifically, there must be flexibility in production processes, product offering, and production volume. At Volvo, the emergence of the BTO system can be attributed to various process design factors at the Uddevalla plant.

To begin with, the holistic model facilitated variation of production levels (Holweg & Pil 2009, pp. 353-365). Consequently, it was possible to increase output in response to rising demand and vice-versa. In this context, flexibility in production facilitated the implementation of the BTO system by enabling the company to align its production schedules to changes in demand.

The introduction of specialized parts delivery and improved order processing systems made it possible to match production to confirmed orders (Holweg & Pil 2009, pp. 353-365).

Specifically, specialized parts delivery systems ensured that the production plants had adequate car parts to produce the vehicles ordered by customers. The improved order processing system, on the other hand, enhanced the efficiency of the supply chain by improving the order booking process and delivery of confirmed orders.

The Uddevalla plant was characterized with small-scale production because of low automation and the use of teams of workers that required long cycle time to complete their work (Holweg & Pil 2009, pp. 353-365). Operating the Uddevalla plant was likely to be uneconomical due to its lack of economies of scale.

In this regard, the company had to improve the competitiveness of the plant through cost reduction measures such as reducing inventory, reducing cycle times in fulfilling orders and eliminating discounts. Since the BTO system facilitates achievement of the aforementioned requirements, it was adopted to enable the company to operate profitably.

The focus on craftsmanship improved workers skills and professionalism (Holweg & Pil 2009, pp. 353-365). As a result, they were able to ensure flexibility in product offering by customizing the cars according to customers needs.

In order to leverage this capability, the company had to implement a production and order processing system that could enable it to meet customers needs in terms of product specification and quantities. This led to the emergence of the customer-oriented production model that focused on satisfaction of market needs.

What are the differences between the volume/ variety strategies pursued by Volvo and Ford?

The main difference between the volume strategies adopted by the two companies is that Volvo focused on lean production and distribution, whereas Ford focused on mass production of cars (Holweg & Pil 2009, pp. 353-365). Volvo had positioned itself as a luxury car producer in Europe. Moreover, Volvo lacked adequate capital to expand its output and to introduce new car models.

Thus, it focused on producing small quantities of high quality cars in order to keep its brand promise. Given the decline in demand in the 1990s, Volvo was likely to make losses by embarking on mass production of luxury cars.

Thus, the company adopted the BTO system to avoid the costs associated with holding excess stock of cars (Holweg & Pil 2009, pp. 353-365). Generally, Volvos volume strategy was to produce cars that just satisfied the existing demand in Europe. However, it served its export markets from stock rather than the BTO system.

Fords volume strategy, on the other hand, focused on mass production of standardized cars. The aim of this strategy was to achieve economies of scale in production (Holweg & Pil 2009, pp. 353-365). The resulting reduction in the overall costs of production was expected to improve the competitiveness of Fords cars. In this regard, Ford expected to achieve high sales, thereby improving its profits.

The variety strategies pursued by Ford and Volvo were also different. Before the takeover by Ford, Volvo focused on producing only a limited range of luxury cars. These included medium to luxury sedans and estate cars. By contrast, Ford hard a wide range of models, which included luxury cars, SUV, and medium sized cars (Holweg & Pil 2009, pp. 353-365).

After the takeover, the competitiveness of Ford and Volvo decreased because of the differences in the volume/ variety strategies that they pursed. Fords focus on mass production limited Volvos ability to continue pursuing the BTO distribution system.

The resulting increase in the stock of cars forced Volvo to provide discounts to eliminate the excess stock, thereby reducing its profit margins. Similarly, Ford was not able to improve its earnings by increasing Volvos output.

Which operation strategies should Geely pursue to volarise Volvos production technology and brand?

Geely should pursue the following strategies in order to leverage Volvos technology and brand. First, the company should ensure that its governance and business model is strategically aligned to that of Volvo (Russo, Ke & Tse 2010, pp. 1-8).

This can be achieved by integrating the core business functions of the two companies so that they can achieve synergies by sharing product platforms, development costs, and production technologies. Integrating core business functions will also facilitate technological transfer from Volvo to Geely.

In this regard, the core business functions that should be integrated include finance, production and distribution, as well as, research and development. Second, Geely should address the differences between its organizational culture and that of Volvo. In particular, the company must clearly define the objectives that it intends to achieve by acquiring Volvo.

Furthermore, Geely must address the elements of organizational culture such as language barrier that may cause resistance to change after the acquisition (Russo, Ke & Tse 2010, pp. 1-8).

This can be achieved through diversity programs that focus on integrating the employees from the two companies. Generally, reducing cultural conflicts will help the two companies to pursue compatible strategies that will enable them to achieve their objectives effectively.

Third, Geely should develop a comprehensive staff retention strategy to avoid losing the top management of Volvo (Russo, Ke & Tse 2010, pp. 1-8). The rationale of retaining Volvos top leadership is to avoid reduction of staff morale that is likely to arise as top managers leave the company. Volvos employees are likely to continue working for it after the acquisition by Geely if they have high morale.

Thus, Geely will avoid the risks of losing the talented employees who promote innovation and technological advancements at Volvo. Retaining Volvos employees is also central to the achievement of Geelys objective of learning from Volvo. Specifically, it will facilitate technological transfer by enabling Geelys employees to learn from their counterparts who work for Volvo (Maielli 2007, pp. 275-294).

Technological transfer is important to Geely since it will enable it to maintain the brand image of Volvo and to improve the quality of its own brands. This will bolster the ability of the cars produced by the two companies to penetrate the global market.

Undoubtedly, retaining Volvos employees will eliminate the staff acquisition costs that Geely is likely to incur in order to replace those who will leave the company. The funds saved through staff retention can be used for skill development in the two companies.

Fourth, Geely should reposition Volvos cars to serve the mass market. Currently, Volvo serves the high-end segment of the market that consists of customers who are interested in luxury cars. However, Geely lacks experience in this market since it focuses on serving the mass market.

Consequently, it might not be able to leverage Volvos brand if the companys top leadership leave after the acquisition. This challenge is exacerbated by the fact that the Chinese luxury car market is already dominated by established brands such as Audi and BMW (Russo, Ke & Tse 2010, pp. 1-8).

Although repositioning Volvo is likely to boost sales, it is also likely to create new challenges. For instance, Volvo might lose its global market share if its important attributes such as safety are lost after the acquisition. Besides, brand conflicts are likely to arise as Geely tries to reposition Volvos brands. These challenges can be addressed by clearly defining Volvos brand attributes that will be retained after the acquisition.

Finally, Geely should implement cost reduction measures to improve the competitiveness of Volvos cars (Russo, Ke & Tse 2010, pp. 1-8). Geely should restructure Volvos business model by improving its economies of scale. This will involve shifting Volvos supply base from Europe to China where it is building a new production plant. The resulting decrease in the cost of procuring supplies will reduce the cost of production.

Moreover, the efficiency of Volvos distribution system should be improved to prevent accumulation of excess stock. Reducing production costs will enable Geely to sell Volvos cars at competitive prices in order to penetrate the market in China and other parts of the world.

References

Henderson, R & Clark, K 1990, Architectural innovation: The recognition of existing product technologies and the failure of established firms, Administrative Science Quarterly, vol. 35 no. 9, pp. 9-30.

Holweg, M & Pil, F 2009, A break from the past: Volvo and its malcontents, in M Freyssenet (eds), The second automobile revolution: Trajectories of the world carmakers in the 21^st century, Palgrave Macmillan, New York, pp. 353-365.

Maielli, G 2007, Counterfactuals, superfactuals and the problematic relationship between business management and the past, Management and Organizational History, vol. 2 no. 4, pp. 275-294.

Russo, B, Ke, T & Tse, E 2010, An inorganic approach to globalization: The marriage of Geely and Volvo. Web.

Analysis of the Problem

The problem of Volvo’s crushing blow started with the lawsuit that the Texas’ Attorney General, James Mattox filed against the Corporation on their “Bear Foot” promotion (Green, 1990). Mattox argued that the company’s advertisement came after the production personnel did reinforcement of the Volvos; therefore, the practice was not ethical.

In addition, he termed the ads as a deception and a trick. His intention was not clear as to whether the charges he pressed against the corporation resulted from the public outcry or was simply a personal interest.

In a quick and sharp reaction, the company withdrew the advertisement and started running others as a corrective measures. By agreeing to withdraw the advertisement and refund the $316,250 legal fee and investigation costs, to the office of the attorney general, it meant something was wrong with the advertisement (Green, 1990). Basically, the modifications, which were made on the filmed cars, were fictitious and misleading.

In essence, there was an ethical deception through making alterations, which signified the strength of the Volvo car. Literally, the main problem was that the alterations were made without consultation, because even the officials of the advertising agency were not aware that certain alterations could be made to communicate a contentious impression.

The other controversy involved the person who was to be responsible for the impression. Basically, the corporation had no intention to produce such misleading advertisement. Scali also did not deserve bearing the responsibility, because the advertisement was done by a different production company that they hired (Green, 1990). The claim that Scali knew the fake modification was unethical, because there were no evidence brought to implicate the agency for having knowledge of the alterations, before the release.

Recommendations

Considering the advertisement, there are recommendations for both the attorney, Volvo Corporation and the Advertisement Agency should do about the matter. First, the Attorney General should consider conducting another fresh investigation to determine the reality concerning the matter, before making the charges against the corporation (Howel, 2010).

Here, He should obtain clear and convincing evidence about the person, who made the misleading alterations and the official, who authorized the same. Legally, it was a breach of business ethics for the advertisement producer to manipulate the public opinion to believe that Volvo was actually superior (Crane & Matten, 2010).

Second, Volvo Corporation should apologize to the public for deceptive information, which was communicated unduly in favor of the company. It is beyond the logics and ethics in business to assume dominance of the brand, through cheating (Crane & Matten, 2010).

Despite some consumers acknowledging that Volvo is, indeed a wonderful car, it was not enough to assume that all the consumers are satisfied with the products. While the consumer’s comments on the quality of the car were within the business ethics, the advertisement manipulation, to convey the information is actually unethical and illogical (Crane & Matten, 2010).

Third, Scali agency should investigate the malpractice that went behind their back. Claiming that the manipulations were done at their back, indicated that, they threw the blame on the Perretti Production for the modifications. Since they were contracted by the company to make the advertisements, they had the responsibility to make sure that it obeyed the rules and was done based on ethical considerations (Howel, 2010).

Perhaps, Perretti Productions is the most reliable company for the modifications. Therefore, they had to be clear on the reasons for modifying the advertisement. In case they were acting under an authority, they are obliged to tell the truth so that the stalemate could be resolved.

Implications of the recommendations

The recommendations will create far reaching impacts in the operations within the organization. As well, there would be short-term and possibly long-term effects, which might need management restructuring, and procedural changes on their tendering process.

Some of the short-term implications include making some urgent and stringent guidelines, especially on sub contraction, launching new campaigns, launching advertisements, and management’s responsibility. On sub contraction, the agencies to be hired for other technical duties have to prove their reliability. This would mean that the company has to take more time in selecting the suitable agency to perform such tasks.

Before launching the new campaign, the company has to be versed with the content and its impacts. Besides, they have to pre-empt the reactions from the public, the experts and other legal implications of the campaign. In addition, prior to launching a new advertisement, the company has to be aware of the content, meaning that they have to conduct a pre-launch test to make sure that the right information is contained in the advertisement.

Alternatively, the long-tern implications include altering the company policy to ensure accountability. The company would be forced to adjust the tendering process, in a manner that guarantees the quality of the output. In addition, the company would be compelled to make changes on the management to increase their interaction with the stakeholders.

This implies that the role of the management will change significantly, as a way of creating an avenue for the desired results. Therefore, there might be increase in the supervisory duties for the company management.

References

Crane, A. & Matten, D. (2010). Business Ethics. Oxford: Oxford University Press.

Green, R. M. (1990). “Volvo’s Crushing Blow.” Communication in Business. (Case Study).

Howel, R. (2010). “Choosing Ethical Theories and Principles.” International Journal of Transdisciplinary Research. 5 (1):1-28.

Introduction Organizations are part and parcel of every society. This is because human beings are involved in the process of forming organizations with the aim of attaining certain objectives. In essence, human beings are social animals who have the tendency of organizing and ensuring that their affairs are managed within their anticipated objectives.

This is usually done in light of the complex and dynamic environment. For organizations to function there is need to have management. Management is the ability to plan and set down goals and objectives with the goal of ensuring that the set standards are realized within the available resources and opportunities. Organizational change

Change is a complex process. This is because it is more complex than human behavior. Thus, there cannot be a single specified approach which can be regarded as the solution to managing these changes. In essence, a change technique which is applicable in one organization may not necessarily be applicable in another organization.

Organizations are different in many aspects these aspects include the work culture, management and leadership styles, structure and design, employees and their expectations not forgetting the customers who are served within these organizations.

These factors which are dynamic in nature define the entire organizational platform. Thus, for a change to be implemented effectively, one should ensure that the set approaches with regard to the changes are congruent with the dynamics, complexity and the uniqueness of the organization.

What is change?

There is a common statement which holds the belief that there is nothing as constant as change. In this regard, there is need to establish what change means. From one perspective, change may imply dissatisfaction with what may considered to be the old and belief in the new.

Dissatisfaction arises from many aspects or sectors. These dissatisfactions may be associated with the perceived deficiency in the approaches which are in use within a given organization.

In this case, deficiency implies the inability of a system to respond to environmental pressures and the technological impacts. Consequently, change underlies a qualitatively different way of perceiving, thinking and behaving and to improve over the past and the present.

Essentially, change may be perceived in two ways. First, change may be conceived as a continuous and intrinsic to an organization. This means that the changes which are observed within an organization are minute though they are continuous over a given period of time as the organization grows and develops.

In this case, an organization is viewed as state of flux where the elements of its systems and subsystems are always undergoing subtle changes. These changes are minute though they account for major organizational changes which are observed after a given duration of time.

Secondly, change may be viewed as extrinsic and discontinuous. In this case, organizations are viewed as normatively stable structures and change perceived as disruptive, forcing organizations to modify, restructure or reconfigure.

In this case, certain changes occur abruptly and quickly while others take time to occur. In this case they are slow and can be anticipated. In this regard, organizations just like human beings have got certain thresholds for these changes.

Situations where the impacting forces are extremely forceful for organizations present cases where the organizations need to adjust. This is because when these forces are beyond the tolerance level of the organization then progress is usually at the mercy of these forces.

Some organizations are usually not able to adapt to these changes, while others are usually able to maneuver through these changes and come out strong. This is usually a consequence of the creative and drastic changes which are normally taking place.

Managing change

In order to survive and eventually prosper, organizations must have the mechanisms which monitor and evaluate the environmental dynamics which are playing out. This is a proactive measure which is based on the fact that there are times when these changes could be abrupt and forceful that the organization may not be in a position of adjusting to them in good time.

Thus, the ability to monitor and adjust to these changes in time is an important aspect which needs to be put in place in order to ensure that the objectives of the organization are realized. In essence, successful organizations are not organizations which believe in change per se, but rather they are organizations which are proactive when looming changes are observed.

Past success are important, however, what is more important is the aspect whereby the organization is privy to the fact that past success may not guarantee future progress or even success. Healthy organizations are organizations which are able to link up the past to the present, and the future with the present in dealing with change.

Continuity without change leads to stagnation, boredom and frustrations. Furthermore, stagnation is often associated with the decreased level or ability to adapt to environmental changes, ultimately leading to organizational crisis.

Being able to strike a balance with regard to the prevailing environment is a crucial aspect with regard to managing the changes which are desired. The process of managing change is known as coping with change. This process is not easy within any given organization.

This is until the process is characterized by change consciousness among the stakeholders within the organization. Change consciousness in this case focuses on focus, speed, boundarylesseness and goal elasticity.

Change consciousness is usually the understanding of the need or necessity for change. The fact that it is a continuous process entails retooling of strategy, process and people. This is usually done in light of rethinking about the process of having core competencies which are in line with the organization at hand.

Focus refers to the promptness with which the organization responds to internal and external demands and contingencies at all levels. In this case it represents speed in reaching customers, in being motivated and innovative to be able to meet the dynamics which are associated with the changes at hand.

Forces of change

Organizations can be termed as systems which exist within a certain context. In this case these systems exist within the context of an external environment which is characterized by a dependent relationship where they interact in order to grow and survive.

Any factor in the environment that interferes with the organization’s ability to attract the human, financial and material resources it needs, or to produce and market its services or products becomes a force of change. Internal to itself, a number of forces operate in the organization that could facilitate or hinder its functions, processes and actions.

Organizations as systems are usually subject to two types of forces these include the external forces and the internal forces. External forces are forces which affect the organization from the outside. These include political, social, economic and competitive environment. On the other hand the internal forces are those which affect the organization from within. External forces

Political forces; politics plays a key role when it comes to the formulation of policies which inform the operation of an organization. In this case, a political faction might not hold ideologies which favor a certain trend of affairs while another might hold views which uphold and sustain a given trend of affairs.

In this case, when a political approach is taken it depends on the views of the political class. For instance, the laws which are passed are usually influenced by the politics of the day. Thus this ends playing a key role regarding the politics of the day.

Economic forces; economy is a major cause of change. Present and the perceived future changes influence the decisions and choices which are made within an organization.

For example, fluctuating interest rates, declining productivity, uncertainties arising from inflation or deflation, low capital investments, the fluctuating price of oil, recessions and the lowering of consumer confidence have a marked impact on different economies, therefore, on organizations.

Technological forces; the global changes are usually driven by the technological advancements. This century has witnessed dramatic changes which have revolutionalized the approaches which are taken. The world is presently characterized by dynamic and dramatic technological shifts.

The technological shifts and changes particularly in the communication and the information and technology sector have played a key role in organizational changes.

The work place has changed and thus the organizations have also changed. This has resulted in having a different set of affairs with regard to the services which are offered. It is also worth mentioning that advances in technology have contributed to the development of economies.

Government forces; governments play a major role when it comes to changes which are being witnessed within any sector. Governmental interventions in the form of regulations also lead to change. Some of the influences which the government has include deregulations which are put in place by the government.

Deregulation is the lessening of the government rules and the process of increasing decentralization of economic intervention at the level of the state. Foreign laws always play a major role. Foreign exchange affects international trades which in turn affects organizations which are involved in these kinds of trade.

Volvo’s Management Revolt

Does the proposed merger between Volvo and Renault discussed in the case represent planned change or unplanned change? Briefly explain

In essence to change is to move from one state to another. In addition, to change is to move from the present to the future, from a known state to a relatively unknown state. In the case, of Volvo, the change is to move from the state of independence to a state of dependence.

This would come as a result of a merger between Volvo and Renault companies. There are different types of change. Planned change or developmental change is change which is usually undertaken to improve the current ways of operation.

It is usually arrived at as a consequence of a calculated change. It is aimed at achieving a certain desired output or performance and to make the organization more responsive to the internal and external demands. In the case of Volvo’s merger, it was a form of unplanned change.

This is because despite the fact that the change was based on the realization that the organization was realizing the objectives which it had set in terms of car production and sales.

The change was reactionary and it was intended to avert the challenge that Volvo was facing regarding the sale of cars. The main aim of this change was for the survival of the organization. This eventually led to giving the long term objectives of the organization secondary considerations which were not embraced by most of the stakeholders within the company.

What were the major personal and organizational barriers to organizational change which led Volvo to back out of the merger?

There are many factors which influence the process of change within an organization. In this case, there are some aspects which hindered the process from taking place. The major factor that hindered this process was the prevailing market conditions that were observed.

The employees who were against the merger leaked documents which indicated that Renault did not have a steady intention of a merger. In addition, the prevailing conditions within the Renault Company were not appealing. As an organization, Renault was facing harsh economic times as compared to Volvo. Thus, most felt that joining hands with Renault would not be a wise move.

Secondly, technological advancement was also an issue that arose from the merger. The technological ambitions of these two companies were not in tandem. This was characterized by consistent disagreements when it came to the joint work which was being done by these companies.

Thus, some stakeholders within the Volvo ranks felt that there was something lacking which hindered the process which was being done. Thirdly, there was government interference whereby the French government was not clear whether the company would be privatized on not.

Thus the Volvo group felt that not all issues were being tabled and this hindered the process which was under consideration. The decision to cancel the merger with Renault left deep division in Volvo and some accusations of betrayal and duplicity. What could Volvo have done differently to avoid some of the bitterness that resulted?

Communication is fundamental for any process of change to take place. In this case, communication channels were deficient. Communication was not clear and not everyone was privy to the process thus it was treated with a lot of suspicion. In essence, the leadership of Volvo could have carried out a survey from all the stakeholders to identify the major reasons and challenges which were being faced by this organization.

This would enable everyone to give their views and suggestions which would have paved way for a more inclusive approach in the decision which would have been made. Eventually, the process would have taken place based on mutual understanding.

Based on the information presented in the case study, what can we infer about the organizational culture at Volvo?

What comes out regarding the organizational culture at Volvo is that this is a company where communication is limited. In addition, not everyone is given an opportunity to air out their views reading the future of the organization.

As a consequence there is strife when it comes to make major changes within the organization. What can be inferred from this case study is that communication and consultation are invaluable assets when it comes to running a successful organization. Thus, in everything that is done within any organization, one should always seek to create an atmosphere which favors consultation towards a given objective.

References

Cummings, T. G., & Worley, C. G. (2008). Organization development & change. California: Cengage Learning.

Elsbach, K. D. (2006). Organizational Perception Management. New York: Routledge.

Harigopal, K. (2006). Management of organizational change:leveraging transformation. New York: SAGE.

Jackson, J. C. (2006). Organization development:the human and social dynamics of organizational change. New York: University Press of America.

Kotter, J. P. (1996). Leading change. New York: Harvard Business Press.

McLean, G. N. (2005). Organization Development:Principles, Processes, Performance. London: Berrett-Koehler Publishers.

Human resources management is a rather complicated matter of studying, but every student of this course realizes the importance of the knowledge got during it for the further development of his or her future career. The state in which the resources management is in a certain company predetermines the success and the level of the market competitiveness of this company, that is why companies all over the world are interested in the recruitment of skillful staff managers who can improve their work (Bennet, p. 49).

The current paper is discussing the experience of the Volvo Plant in Uddevalla, Sweden as the brightest example of how the improved management can take the company’s competitiveness in the market to a higher level. We are going to discuss the main principles used in the work of the Volvo Plant, see how effective they were and if they are possible to implement at other companies in the sphere of car assembly.

To begin with, let us state that the experiences of the Uddevalla Volvo Plant have taught many lessons to the management of the Volvo Company itself, other car-producing companies, and scientists that deal with the questions of people’s behavior and motivation. One of the greatest lessons was the ability of a skillful manager to change the situation in an enterprise that seemed to be embraced by stagnation.

In the late 1980s – early 1990s, the plant in Uddevalla was experiencing problems with the competitiveness of its goods in the market and with the efficiency of the production process and the management established the team system that was developed to overcome the crisis. It seemed to give results only at the initial stages of its implementation, but by 1992, the stagnation showed that the chosen program was not effective (Sloan, p. 37).

Only after this, the Volvo management appointed the new manager for that plant who showed how to improve the situation. He changed the organization of the production process and the whole hierarchy of the plant to make it less complicated and more understandable for the staff.

Thus, the best lesson in people’s motivation was taught as far as at once after the new plan implementation, the staff expressed their support to the new manager and his policies: “Previously, we had only felt pressure from management to reach our targets. Now we really got support and did many things, often small improvements we had never bothered to do” (Sloan, p. 37).

The lessons that can be studied from the practices of the Uddevalla plant are numerous and mainly display the importance of motivation for the increase of work efficiency in routine work. The manager of the plant under consideration managed to make the work interesting and useful for the workers themselves as they not only fulfilled their functions but also could develop their k knowledge and skills in the field of car assembly using working with different partners from different teams and exchanging the experience they had (Ozaki, p. 37).

Another important lesson to be studied from the Volvo example is that the productivity of the work is dependant upon the relations between the management and the staff of the company. If the staff feel the support and cooperation from the side of the management, the work becomes more efficient (Meyer, p. 63).

All this proves the effectiveness of the holistic and reflective principles used by the new management of the Uddevalla Volvo Plant (Sikula, p. 419). The essence of these principles must also be considered as a useful lesson in people’s motivation, as far as the holistic idea is based upon the importance of the whole but focuses on the interdependence of its integral constituents, while the reflective principles are the ideas that formulate the skills of a worker as the combination of his or her mental and manual abilities.

Thus, one more lesson in motivation is that attention should be paid to the needs and likes of the staff to motivate people showing them that the company is interested in them (Sloan, p. 37).

Nevertheless, the success of the plan implemented at the Volvo plant is not sure to succeed in some large-scale companies such as Ford, Chrysler, or General Motors. This doubt can be explained by the fact that the Swedish experience was tested only at a single plant with its limited number of employees and certain funding that were easy to control (Ford, p. 61).

If the same plan would be put into mass practice at numerous plants of the above-mentioned companies, the special standard of control should be implemented that will allow saying that in all plants the plan is carried out properly (Capelli, p. 205).

Besides, it would be difficult to change the structure of the company like Ford or Chrysler, as far as the company is international and its organization was formed during long years, while its changes can lead to instability in the company’s work (Jo, p. 165).

For instance, if General Motors would like to implement the idea invented by the manager of the Uddevalla plant, they would have to find the person whom they can undoubtedly trust with the assignment but there is no guarantee that one person is physically able to control in his or her scope the events at numerous plants all over the world (Cimini, p. 41). That is why I consider that the Volvo experiences can be implemented at the larger companies but not at the modern level of their development.

Moreover, the Uddevalla Plant itself was closed in 1993 as the result of Volvo’s decision to concentrate all the production of cars in the largest plant in Gothenburg. But many analysts said that the reason for that was that the executive management of Volvo was not satisfied with the policies of the new director of the Uddevalla plant even despite the evident increase in the efficiency of the production process and market competitiveness of the plant products.

Analysts also supposed that if the old team system together with the use of scientific data and modern technology were implemented, then the plant would be still working. I do not support this point of view because it is not typical of large and ambitious companies to stop their progress by themselves. Volvo executive management might have considered that one plant would be enough for the funding that was available for that moment. So, I do not think that the plant would still be at work if the changes were not made by its new management (Strach, p. 4).

Neither the design of jobs could be the cause of the closure of the plant. While historically the work in the sphere assembly is considered to be routine, at the Uddevalla plant the job was organized in a way that allowed making it as less routine as possible.

Using the variables of scope and depth of the job, the work at the Uddevalla plant can be characterized as skillful work that demanded considerable qualification and learning skills. Workers at the plant were not limited by the need to only fulfill their direct functions; they worked in different teams that allowed them to develop their skills and preserve the interest in the work by learning and implementing the new methods of their new co-workers (Sloan, p. 37).

To conclude, we managed to see the experience of the Volvo Uddevalla Plant, consider its causes and effects, as well the possibility of the same system being implemented at the companies of a larger scale. The case study that we have considered provided us with substantial information that allows us to assess the practice of Volvo as positive, but as the one that is currently impossible to implement in other companies.

References

Bennett, David, and Ulf Karlsson. 1992. Work Organization as a Basis for Competition: The Transition of Car Assembly in Sweden. International Studies of Management & Organization 22, no. 4: 49+.

Cappelli, Peter, and Nikolai Rogovsky. 1994. New Work Systems and Skill Requirements. International Labour Review 133, no. 2: 205+.

Cimini, Michael H. 1991. General Motors-Electronics Workers. Monthly Labor Review 114, no. 2: 41.

Ford, Nelson M. 2007. Transforming Resource Management to Support an Army at War: The Army’s Chief Financial Officer Examines Three Priorities for Best Use of the Nation’s Money. The Public Manager 36, no. 4: 61+.

Jo, Michael. 2005. David Farber. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors. Michigan Historical Review 31, no. 2: 165+.

Meyer, Steve. 2002. “An Economic ‘Frankenstein’”: UAW Workers’ Responses to Automation at the Ford Brook Park Plant in the 1950s. Michigan Historical Review 28, no. 1: 63+.

Ozaki, Muneto. 1996. Labor Relations and Work Organization in Industrialized Countries. International Labour Review 135, no. 1: 37+.

Sikula Sr., Andrew. 2001. The Five Biggest HRM Lies. Public Personnel Management 30, no. 3: 419.

Sloan Management Review, 1994, v. 35, no. 2, p. 37(9).

Strach, Pavel, and Andre M. Everett. 2004. Is There Anything Left to Learn from Japanese Companies?. SAM Advanced Management Journal 69, no. 3: 4+.

After the acquisition of Volvo international car industry and a well-known brand, the issues of integration to the local market, raising profitability, and brand positioning became topical. The analysis of the case could help develop a better understanding of the car market and reveal the strategies Volvo and Geely used to make the most of their new status.

Integration with Local Market

The access to Chinese car market is complicated mostly due to the unfair competitive environment. With the state-owned car companies (SOE) given the privilege in the key sphere of the Chinese economy, foreign companies need to establish a partnership with Chinese companies to introduce their products, which bears additional costs. Another issue undermining the financial health of Volvo in China was an elaborate system of intellectual property for technological solutions. It is also obstructed the plans of Geely to enhance their products with Volvo’s knowledge. However, a histogram of private car sales shows a 25% growth, which inspires hope for finding and occupying a niche.

The bad news is that around 90% of the market is taken by Chinese original equipment manufacturers (OEMs). To win over even the smallest share of a market seems to be a tough challenge. The situation is also worsened by the unpredictable market changes that are the result of frequent ruling party interventions. The gradual change in the quality of the local production is narrowing the gap between foreign and Chinese manufacturers. Nowadays, the quality guarantee and low-complaint performance do not apply solely to international brands, so Volvo cannot use that as a marketing strategy too.

Raising Profitability

Chinese Market sales of Volvo cars in 2009 showed that locals are mostly interested in mid-class mid-price family vehicles such as crossovers or lengthened sedans. The latter were developed in 2010 exclusively for the Chinese market and turned out to be successful showing a 35% increase in comparison to the previous year. For Volvo, 2010 became the year of a substantial increase in profits with a 19% growth of combined sales in China. This growth was mostly due to good sales of crossovers and XC 60 in particular, which constituted roughly 40% of the gross sales. Thereby, the strategy to expand the range of products assimilating and developing new models to suit the market needs appeared to be a success. In addition, the statistics indicated the demand of Chinese buyers for crossovers, which determines the further path of the company. Due to the relative success in the market, Volvo could allow itself to experiment with the new models.

Brand Positioning

Buying Volvo, the owner of Geely stressed his desire to preserve the brand name and uniqueness. Volvo became a fully autonomous company under the Geely holding with all of its staff policies remained intact after the acquisition. This probably gave Volvo a breath of fresh air and the much-needed market space in China. In 2011, Volvo announced its plans to expand in the Chinese market. It was probably the unanticipated success in China that inspired Volvo board of directors to face towards Asian markets almost doubling the plans for the number of outlets, R&D and manufacture facilities in China, while their primary rivals compete for the US and Europe. Globally, Volvo occupies a middle segment of the market oriented towards people who prioritize durability and comfort over style. The Same strategy seems to apply in China, where Volvo will establish itself as a top-quality seller.

Insight into Volvo’s Production Model

What were the main design principles affecting process design at Volvo’s Uddevalla plant?

In the 1970s, Volvo embarked on redesigning its production process in order to improve its competitiveness. This led to the establishment of Volvo’s Uddevalla manufacturing plant where workers played a key role in the production of cars. Volvo revolutionized the process of manufacturing cars by introducing the holistic or the reflective production model at its Uddevalla plant (Holweg & Pil 2009, pp. 353-365).

The model upheld the principles of craftsmanship by relying on workers who utilized their expertise to produce high quality cars. In order to implement the new system, production processes were redesigned based on the following principles.

To begin with, the company adopted a craft production system in which employees worked in teams to produce an entire car. Thus, the Uddevalla production plant did not have an assembly line where various parts could be assembled sequentially to produce a complete car (Holweg & Pil 2009, pp. 353-365).

Unlike the assembly system where cars are moved from one station to another during production, the Uddevalla plant had docking stations where cars were built without being moved.

Skill development and professionalism was an integral aspect of the holistic production model. The Uddevalla plant had low levels of automation since it focused on craftsmanship (Holweg & Pil 2009, pp. 353-365). As a result, human involvement in the production process was high.

The employees had to acquire excellent skills and to demonstrate high standards of professionalism in order to produce high quality cars. In this regard, extensive on-the-job training programs were used to improve the employees’ skills and their understanding of the holistic approach to car production.

Natural assembly work was vital for the success of the holistic approach to production (Holweg & Pil 2009, pp. 353-365). The company established groups of employees who performed various production tasks. The teams were supported by a special parts delivery and order system that ensured timely delivery of supplies.

The company also ensured that the production tasks were ergonomically sound to minimize discomfort and fatigue among workers (Holweg & Pil 2009, pp. 353-365). The production levels were variable to enable the workers to respond effectively to variations in demand. Additionally, the production process was characterized with long cycle times to enable each team to complete its work.

In order to improve productivity, the company allowed each team to be autonomous (Holweg & Pil 2009, pp. 353-365). Each team worked independently by managing its production tasks. Promoting autonomy in each team had the following advantages. First, it promoted individual innovation in each team.

The, employees were likely to focus on product and process innovation if they were allowed to work independently and to make their own production decisions. Second, autonomy promoted individual motivation (Holweg & Pil 2009, pp. 353-365).

Workers were likely to be motivated if they were allowed to employ their creativity and independence to complete the tasks assigned to them. Finally, it facilitated adaptability and created opportunities to leverage unique abilities.

Despite their potential to improve product quality, the principles used at Uddevalla plant did not promote knowledge transfer within the company.

Lack of knowledge transfer was undesirable because it limited organizational learning, which in turn reduced the possibility of creating competitive advantages (Henderson & Clark 1990, pp. 9-30). Additionally, the holistic approach did not improve efficiency because it was labor-intensive and lacked economies of scale.

What is the relationship between process design at Volvo’s Uddevalla plant and the emergence of customer-oriented and built-to-order approaches to car manufacturing?

Apart from adopting a new production model at Uddevalla, Volvo focused on improving its distribution system. This involved introducing the customer-oriented production (COP) system in 1992. The main objective of the COP system was to bolster Volvo’s responsiveness to customer needs (Holweg & Pil 2009, pp. 353-365).

The introduction of the holistic approach to car production led to long cycle time, thereby limiting Volvo’s ability to fulfill customers’ orders in time. For instance, the Uddevalla plant required fifty hours to produce a car, whereas the Ghent plant required only twenty-five hours to produce a car (Holweg & Pil 2009, pp. 353-365). In this regard, it was important to improve the distribution system in order to prevent further delays.

Therefore, Volvo introduced the build-to-order (BTO) system to address its distribution challenges. Under the BTO system, Volvo produced cars according to the level of confirmed orders (Holweg & Pil 2009, pp. 353-365). Moreover, it enabled the company to focus on the production of customized cars that met specific customer needs.

A company that intends to implement a BTO system must be able to ensure flexibility in all aspects of its value chain. Specifically, there must be flexibility in production processes, product offering, and production volume. At Volvo, the emergence of the BTO system can be attributed to various process design factors at the Uddevalla plant.

To begin with, the holistic model facilitated variation of production levels (Holweg & Pil 2009, pp. 353-365). Consequently, it was possible to increase output in response to rising demand and vice-versa. In this context, flexibility in production facilitated the implementation of the BTO system by enabling the company to align its production schedules to changes in demand.

The introduction of specialized parts delivery and improved order processing systems made it possible to match production to confirmed orders (Holweg & Pil 2009, pp. 353-365).

Specifically, specialized parts delivery systems ensured that the production plants had adequate car parts to produce the vehicles ordered by customers. The improved order processing system, on the other hand, enhanced the efficiency of the supply chain by improving the order booking process and delivery of confirmed orders.

The Uddevalla plant was characterized with small-scale production because of low automation and the use of teams of workers that required long cycle time to complete their work (Holweg & Pil 2009, pp. 353-365). Operating the Uddevalla plant was likely to be uneconomical due to its lack of economies of scale.

In this regard, the company had to improve the competitiveness of the plant through cost reduction measures such as reducing inventory, reducing cycle times in fulfilling orders and eliminating discounts. Since the BTO system facilitates achievement of the aforementioned requirements, it was adopted to enable the company to operate profitably.

The focus on craftsmanship improved workers’ skills and professionalism (Holweg & Pil 2009, pp. 353-365). As a result, they were able to ensure flexibility in product offering by customizing the cars according to customers’ needs.

In order to leverage this capability, the company had to implement a production and order processing system that could enable it to meet customers’ needs in terms of product specification and quantities. This led to the emergence of the customer-oriented production model that focused on satisfaction of market needs.

What are the differences between the volume/ variety strategies pursued by Volvo and Ford?

The main difference between the volume strategies adopted by the two companies is that Volvo focused on lean production and distribution, whereas Ford focused on mass production of cars (Holweg & Pil 2009, pp. 353-365). Volvo had positioned itself as a luxury car producer in Europe. Moreover, Volvo lacked adequate capital to expand its output and to introduce new car models.

Thus, it focused on producing small quantities of high quality cars in order to keep its brand promise. Given the decline in demand in the 1990s, Volvo was likely to make losses by embarking on mass production of luxury cars.

Thus, the company adopted the BTO system to avoid the costs associated with holding excess stock of cars (Holweg & Pil 2009, pp. 353-365). Generally, Volvo’s volume strategy was to produce cars that just satisfied the existing demand in Europe. However, it served its export markets from stock rather than the BTO system.

Ford’s volume strategy, on the other hand, focused on mass production of standardized cars. The aim of this strategy was to achieve economies of scale in production (Holweg & Pil 2009, pp. 353-365). The resulting reduction in the overall costs of production was expected to improve the competitiveness of Ford’s cars. In this regard, Ford expected to achieve high sales, thereby improving its profits.

The variety strategies pursued by Ford and Volvo were also different. Before the takeover by Ford, Volvo focused on producing only a limited range of luxury cars. These included medium to luxury sedans and estate cars. By contrast, Ford hard a wide range of models, which included luxury cars, SUV, and medium sized cars (Holweg & Pil 2009, pp. 353-365).

After the takeover, the competitiveness of Ford and Volvo decreased because of the differences in the volume/ variety strategies that they pursed. Ford’s focus on mass production limited Volvo’s ability to continue pursuing the BTO distribution system.

The resulting increase in the stock of cars forced Volvo to provide discounts to eliminate the excess stock, thereby reducing its profit margins. Similarly, Ford was not able to improve its earnings by increasing Volvo’s output.

Which operation strategies should Geely pursue to volarise Volvo’s production technology and brand?

Geely should pursue the following strategies in order to leverage Volvo’s technology and brand. First, the company should ensure that its governance and business model is strategically aligned to that of Volvo (Russo, Ke & Tse 2010, pp. 1-8).

This can be achieved by integrating the core business functions of the two companies so that they can achieve synergies by sharing product platforms, development costs, and production technologies. Integrating core business functions will also facilitate technological transfer from Volvo to Geely.

In this regard, the core business functions that should be integrated include finance, production and distribution, as well as, research and development. Second, Geely should address the differences between its organizational culture and that of Volvo. In particular, the company must clearly define the objectives that it intends to achieve by acquiring Volvo.

Furthermore, Geely must address the elements of organizational culture such as language barrier that may cause resistance to change after the acquisition (Russo, Ke & Tse 2010, pp. 1-8).

This can be achieved through diversity programs that focus on integrating the employees from the two companies. Generally, reducing cultural conflicts will help the two companies to pursue compatible strategies that will enable them to achieve their objectives effectively.

Third, Geely should develop a comprehensive staff retention strategy to avoid losing the top management of Volvo (Russo, Ke & Tse 2010, pp. 1-8). The rationale of retaining Volvo’s top leadership is to avoid reduction of staff morale that is likely to arise as top managers leave the company. Volvo’s employees are likely to continue working for it after the acquisition by Geely if they have high morale.

Thus, Geely will avoid the risks of losing the talented employees who promote innovation and technological advancements at Volvo. Retaining Volvo’s employees is also central to the achievement of Geely’s objective of learning from Volvo. Specifically, it will facilitate technological transfer by enabling Geely’s employees to learn from their counterparts who work for Volvo (Maielli 2007, pp. 275-294).

Technological transfer is important to Geely since it will enable it to maintain the brand image of Volvo and to improve the quality of its own brands. This will bolster the ability of the cars produced by the two companies to penetrate the global market.

Undoubtedly, retaining Volvo’s employees will eliminate the staff acquisition costs that Geely is likely to incur in order to replace those who will leave the company. The funds saved through staff retention can be used for skill development in the two companies.

Fourth, Geely should reposition Volvo’s cars to serve the mass market. Currently, Volvo serves the high-end segment of the market that consists of customers who are interested in luxury cars. However, Geely lacks experience in this market since it focuses on serving the mass market.

Consequently, it might not be able to leverage Volvo’s brand if the company’s top leadership leave after the acquisition. This challenge is exacerbated by the fact that the Chinese luxury car market is already dominated by established brands such as Audi and BMW (Russo, Ke & Tse 2010, pp. 1-8).

Although repositioning Volvo is likely to boost sales, it is also likely to create new challenges. For instance, Volvo might lose its global market share if its important attributes such as safety are lost after the acquisition. Besides, brand conflicts are likely to arise as Geely tries to reposition Volvo’s brands. These challenges can be addressed by clearly defining Volvo’s brand attributes that will be retained after the acquisition.

Finally, Geely should implement cost reduction measures to improve the competitiveness of Volvo’s cars (Russo, Ke & Tse 2010, pp. 1-8). Geely should restructure Volvo’s business model by improving its economies of scale. This will involve shifting Volvo’s supply base from Europe to China where it is building a new production plant. The resulting decrease in the cost of procuring supplies will reduce the cost of production.

Moreover, the efficiency of Volvo’s distribution system should be improved to prevent accumulation of excess stock. Reducing production costs will enable Geely to sell Volvo’s cars at competitive prices in order to penetrate the market in China and other parts of the world.

References

Henderson, R & Clark, K 1990, Architectural innovation: The recognition of existing product technologies and the failure of established firms, Administrative Science Quarterly, vol. 35 no. 9, pp. 9-30.

Holweg, M & Pil, F 2009, ‘A break from the past: Volvo and its malcontents’, in M Freyssenet (eds), The second automobile revolution: Trajectories of the world carmakers in the 21^st century, Palgrave Macmillan, New York, pp. 353-365.

Maielli, G 2007, Counterfactuals, superfactuals and the problematic relationship between business management and the past, Management and Organizational History, vol. 2 no. 4, pp. 275-294.

Russo, B, Ke, T & Tse, E 2010, An inorganic approach to globalization: The marriage of Geely and Volvo. Web.