Volvo 2015 Annual Report Download - page 24

A GLOBAL GROUP STRATEGY
STRATEGY
STRATEGY FOCUSING ON PROFITABILITY
THROUGH CUSTOMER VALUE
AND EFFICIENCY
Following more than a decade with an active acquisition strategy to build the scale needed to
becompetitive in commercial vehicles and diesel engines, the Volvo Group is in a phase focused
on improved efficiency, increased profitability and creating customer value.
During the period 1999–2011 the Volvo Group’s strategy was pri-
marily targeted at growth particularly through acquisitions while
at the same time focusing the business on commercial vehicles.
On the truck side, acquisitions included Renault Trucks, Mack
and Nissan Diesel (now UD Trucks), the joint venture with Eicher
Motors in India and, in 2015, the strategic alliance with a 45%
ownership in DFCV in China.
Volvo Construction Equipment bought a 70% ownership in the
Chinese wheel loader manufacturer Lingong (SDLG), Ingersoll
Rand Road Development and the hauler business from Terex
(2014).
The acquisitions along with organic growth have enabled the
Volvo Group to reach the position as the world’s second largest
manufacturer of heavy-duty trucks, one of the world’s largest
manu facturers of construction equipment, buses and heavy-duty
diesel engines as well as a leading independent supplier of marine
and industrial engines. These positions provide for economies of
scale in product development, production, distribution and service.
The streamlining to commercial vehicles has also involved the
divestment of non-core operations such as Volvo Aero.
ECONOMIES OF SCALE ACHIEVED AFTER GROWTH PERIOD
Many of the Volvo Group’s products have a common architecture
and shared technology (CAST) based on a modularized concept
and standard interfaces. CAST is the common base around which
brand unique products are developed.
At the center of this strategy are the Volvo Group’s heavy-duty
and medium-duty engine platforms. There is also a high degree of
commonality within electronics and transmissions while at the
same time maintaining brand-specific attributes.
This approach provides for a critical volume base on which to
invest in the development of technology and solutions at the fore-
front of the industry.
COMMON ARCHITECTURE AND SHARED TECHNOLOGY CREATING SYNERGIES AND COST EFFICIENCY
Renault Trucks
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