Volvo 2006 Annual Report Download - page 62

“Nova Bus”. AB Volvo owns or otherwise has
rights to a number of patents and brands that
refer to the products the Company manufac-
tures. These patents and brands, acquired over
a number of years, have been valuable as the
Volvo Group’s operations expanded and may
continue to be valuable in the future. Volvo does
not consider that any of the Group’s operations
are heavily dependent on any single patent or
group of patents.
Through Volvo Trademark Holding AB, AB
Volvo and Volvo Car Coporation jointly own the
brand ”Volvo”. AB Volvo has the exclusive right
to use the ”Volvo” name and trademark for its
products and services. Similarly, Volvo
Personvagnar AB has the exclusive right to use
the name and trademark ”Volvo” for its prod-
ucts and services. To protect these rights and
avoid any weakening of the brand, AB Volvo and
Volvo Personvagnar AB jointly introduced a
control function to govern the use of the brand
name and to prevent others from taking unfair
advantage of it.
Similar control functions apply to the use of
the “Mack” brand name, which is owned by AB
Volvo. The Volvo Group’s rights to use the
”Renault” brand are restricted to the truck
industry only and are regulated by a license
from Renault SA, which owns the “Renault”
brand.
Complaints and legal actions by custom-
ers and other third parties
The Volvo Group could be the target of com-
plaints and legal actions initiated by customers,
employees and other third parties alleging
health, environmental, safety or business
related issues, or failure to comply with applic-
able legislation and regulations. Even if such
disputes were to be resolved successfully,
without having adverse financial conse-
quences, they could negatively impact the
Group’s reputation and take up finance and
management resources that could be used for
other purposes.
Volvo continuously reviews its manufactur-
ing and administrative processes with the aim
of ensuring that Volvo products and operations
meet applicable legal and other regulatory
requirements. Volvo also has insurance cover-
age in certain areas, for example product liabil-
ity, business interruption and property.
Risk related to human capital
A decisive factor for the realization of the Volvo
Group’s vision is our employees and their
knowledge and competence. Future develop-
ment depends on the company’s ability to
maintain its position as an attractive employer.
To this end, we strive for a work environment in
which energy, passion and respect for the indi-
vidual are guiding principles. Every year a
Group-wide survey is conducted, according to
which the number of satisfied employees is
continually increasing.
competitive in established markets and to be
able to expand into additional markets and/or
product segments.
Many of our products take a long time to
develop from initial idea to finished product. It
is important to involve customers in the early
stages of the development process to ensure
the success of new products. It is just as import-
ant to be at the forefront in the research and
development of new technologies that are
i mport ant to the development of successful
products.
The Volvo Group relies on suppliers
Volvo purchases raw materials, parts and com-
ponents from numerous outside suppliers. A
significant part of the Group’s requirements for
raw materials and supplies is filled by single-
source suppliers. The effects of delivery inter-
ruptions vary depending on the item or compon-
ent. Certain items are standard throughout the
industry, whereas others are internally devel-
oped and require unique tools that are time-
consuming to replace. A supplier’s inability to
deliver could have negative consequences for
production at certain Volvo Group manufac-
turing sites.
The Volvo Group’s costs for raw materials and
components can vary significantly over a busi-
ness cycle. Cost variations may be caused by
changes in world market prices for raw materials
or by an inability of our suppliers to deliver.
The companies in the Volvo Group and their
suppliers work closely together to manage
material flows by monitoring suppliers’ financial
stability, quality-control systems and produc-
tion flexibility.
Volvo Group is reliant on the proper
protection and maintenance of its
intangible assets
The Volvo Group’s products are primarily sold
under the brand names “Volvo”, “Volvo Penta”,
“Volvo Aero”, “Renault”, “Mack”, “Prévost” and
58 Board of Directors’ Report 2006