Strategic Mgmt & Org Policy
Edison State College
The Chinese automaker Geely had completed the purchase of the Ford Motor Volvo unit for USD 1,800 million ( 1,380 million of euros) , topping China 's biggest acquisition of a foreign manufacturer .
The deal, is the acquisition of Volvo by the parent company of Geely Automobile a privately owned company, this in many ways also reflects the rapid growth of China on the world stage of automobiles, after passing the United States to become the main auto market.
After closing the deal , the real challenge for Gelly is in the future when trying to restore Volvo long term gains. The Volvo car unit posted earnings of U.S. $ 12,400 million in 2009 by selling 334,000 cars, but recorded a loss before tax of U.S. $ 653 million .
Geely plans include using Swedish identification brand to produce luxury brands in China, while maintaining its operations in Europe to supply the international market.
One of the most common factors when analyzing failures in the acquisition of businesses is the inability to perform an effective integration of the two companies. First, this could interfered with current business management procedures or their everyday vehicle production in Europe. make changes to the management team of the Swedish company could create some conflicy and confusion .
Seconf Carrying Volvo to China , will establish a production plant in the Chinese territory of 300,000 units per year , but volvo sales in China totaled just 30,000 units in 2009 . Growth in sales of 270,000 units over a period of two years seems quite optimistic , even considering that the car industry is booming in China and an increase in annual sales in the premium sector is expected above 100 % . and third geely has decided to integrate the style of production of Volvo and its technology in their own vehicles. But this technology is patented.
In the automobile sector the most significant costs reductionl is the one that can be performed in the…