Instructions
nstructions
Read the following case study:
“A Break from the Past: Volvo and its Malcontents” P 309-331.
Answer the following question:
1)What were the main design principles affecting process design at Volvo’s Uddevalla plant?
2) 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?
3)What were the differences between the Volvo and Ford volume/variety strategies?
4) Which operation strategy should Geely pursue to valorise Volvo’s production
technology and brand and what they could learn from the Fiat experience with the
Melfi plant in the 1990s?
(Please use Operation Management theory and concepts from lecture PDF files that i will provide in addition to that please use the relevant article to the case study that I will also provide)
Case Study Paper
Operations Management: The Volvo Productive Model Case Study
The Volvo began its independent operations in 1935. The company first specialised in the production of the engine of the boats and trucks. Later, it diversified and began the production of the cars. Ford rescued Volvo from the financial crisis. The company largely benefited from the use of the platforms of the Ford and got the capability to provide more varieties to the customers. Thereafter, the company had to take a noble step to enhance the professionalism and encourage the development of the employees.
Main design principles
Labour empowerment
Major improvements were made in the production and the process design of the Volvo in the year 1970s. The company wanted to make huge developments in the company. The management was conceptualising on how the process of the vehicle production would be enhanced with the establishment of a new plant in Uddevalla. Majorly, the adoption of the lean production model facilitated the development of the workers by encouraging cooperation, flow of the information and the application of the scripting. The procedures performed in scripting assisted in the development of the workers knowledge from tacit to explicit (Holweg & Pil, 2009, p. 358). The development of the employees is important in the ensuring the efficiency in the business organisation. Lamoreaux et al. (2002, p. 1) stated that the firms should not only be motivated to increase the domination in the industry but also in all the diversified areas of the economy.
Teamwork
The work at the Uddevalla plant was characterised by the high level of teamwork. The company highly utilised the specialisation. Workers were involved in the long work cycles where a worker had to be involved in the task in a minimum of three hours. The workers skills were high developed and the knowledge of each worker increased extensively. The workers were required to work in the groups that would ensure all the parts of the vehicle have been assembled successfully (Holweg & Pil, 2009, p. 357).
Economy
After the integration of the company with Ford, it had an opportunity to share the costs with the Ford. It was easy to increase the variety vehicles offered by the company and increase leverages directed to improve the platforms. The company had earlier faced difficulties associated with the currency fluctuations and the lack of the resources to increase the products lines.
Standardisation
The long cycle process used in the Uddevalla plant was later changed, and the company adopted the shorter processes. The adoption of the shorter cycle times was due to the desire for the standardisation process. The adoption of the shorter process enabled the learning of the workers and the diligent accomplishment of the procedures in an organisation.
Cohen and Levinthal (1990, p. 3) noted the significance of transferring and sharing of the knowledge. The organisations have to ensure that the generation of the knowledge. Thereafter the knowledge would be used in the organisation development. The knowledge acquired through the organisation is used in the business development. The success of the organisation is dependent on the capabilities of the members (Cohen & Levinthal, 1990, p. 3). The decision by the Volvo to embrace the use of the short cycle processes is important for the company especially because it promotes learning. The learning in the company would help in the innovation, adoption of the required technology and the improvements in the competitive advantage of the company.
Quality
Volvo has witnessed the increased investment in technology in its plant located in Uddevalla. The company has been committed to increasing the worker motivations when they are carrying out their tasks. Moreover, the company has embraced a balance between the social and the technical characteristics of the project. Largely, the company has also increased the cooperation between the workers. The cooperation collectively helps the workers to attain the desired objectives. The crucial objectives of the company increase the efficiency of the production process through increasing positive relationship between workers (Holweg & Pil, 2009, p. 358). It was noted that the systems of the operation applied to the Uddevalla assembly enabled the manufacture and the delivery of the specials parts, adequate management of the activities as well as the training of the employees (Holweg & Pil, 2009, p. 357).
Relationship
The major process designs discussed in the lectures include the batch processes and the mass lines. The batch process is important in the manufacture of higher volumes and a large variety of the products. The method is conducive to the production of standard products. It is where there is a repetition of the purchase. The method is also adaptive to the development of the special demands. Moreover, the workers process requires highly specialised in the manufacture or the production.
The second process discussed in the lectures is the mass processes. The process can make higher productions than the batch process. Notably, the method is highly applicable where the customers are highly repetitive and the goods produced are standardised. The mass process requires very minimal and the narrow skills.
There is a fundamental relationship between the process designs and the development of the customer-oriented and the build-to-order orientations of the manufacturing. First, the development of the customer-oriented productions at the firm was due to the desire to induce the customer responsiveness created in the product. In the customer-oriented approach, the manufacturing process is made to satisfy the needs of the customers. Therefore, the company must produce the quality products intended to meet the customer’s needs at various market segments. In the customer-oriented approach, the goods intended to meet the important needs were forecasted. Therefore, the batch processes have the capability to meet special needs. Moreover, it is important where there is high specialisation to meet the needs of the customers.
Hippel (1989, p. 413) noted that the management is required to be a concept of the problem solving in the practical process of the innovation. The crucial management process should lead to the improvements in the marketing and the innovation process. Mostly, the process designs developed by the business organisation have to be developed on a daily continuously. The goal towards problem-solving in the distribution led to the improvements on the manufacturing approach of the Volvo. The build-to-order approach was not developed in the Uddevalla plant but grew to all the other plants of the Volvo from the Torslanda plant. It emerged accidentally at the Torslanda plant. The method was developed from the challenges of meeting the different needs of the customers. Both the batch process and the line processes never met the needs of the customers adequately (Holweg & Pil, 2009, p. 362).
Differences
The Volvo plants of the manufacturing located in the Torslanda and Ghent has witnessed the improvement in the variety compared to other manufacturing facilities of the Ford. The Volvo has largely provided a variety of vehicles in the both plants. Notably, the vehicles produced by the company are very different when the architecture artefacts and the components of the vehicles are considered. The Volvo has the capabilities to use its platforms as well as the platforms of the Ford to increase the varieties of the products offered to the customers.
When the production level is given consideration, most Ford plants operate at the same level with the Volvo plants in Ghent and Torslanda. Compared to other competitors, the Ghent plant is at the equal position with them but the Torslanda lies little behind.
Selection operation strategy
Geely made crucial efforts in the acquisition of the Volvo business. The chairperson of the Geely has vitally acquired experience in the management of the business competitiveness. More importantly, the chairman can build brands with the international recognition. Li believes that the selling of the affordable cars is the significant factor of the consideration in building the competitive advantages of the companies. Li notes that the country that produces the cars does not need to be largely competitive for the companies realise the increased sales. The company would rather concentrate on the sale of the affordable cars rather than build a car brand based in China (Cohen & Levinthal, 1990, p. 3).
The customer-driven strategy is important in meeting the needs desired by the Geely in China. The strategy is directed towards meeting the crucial needs of the customers in the market segment selected. The use of the method requires the company to identify the core competencies that will help to meet the needs of the customers. The crucial aim of the company’s decisions to make the acquisition of the Volvo is to help the company sell cars that can easily be afforded by the people living in China. Notably, the goal of the Geely is to investigate the environment and integrate the operations of the Volvo into the strategy its strategy (Cohen & Levinthal, 1990, p. 2). The acquisition of the Volvo was uncertain since the Ford that had acquired it was facing operation challenges. Nevertheless, Geely believes that the Volvo forms as a small percentage of the Ford. The Ford has largely ignored the significance of the Volvo in its global strategy. In contrast, Geely will view the Volvo to be very significant in the realisation of the company’s global strategy. The Company would highly utilise Volvo in entering the markets in China, a significant component that has been ignored by Ford (Cohen & Levinthal, 1990, p. 4).
There is an important lesson that could be learnt from the Fiat experience after the acquisition of the Lancia. The firm faced troubles after the acquisition of the Lancia. It led to the operation difficulties. The company was troubled after it was realised that is had to consider the review design of the processes and the products (Maielli, 2015, p. 15). Maielli (2007, p. 289) noted that the Fiat would have adopted a better strategy in the 1990s rather than changing the company structure and the long-term strategies. The company would have concentrated on making efforts to increase the profit through the specialisation. The expansions made by the Fiat were unreasonable and increased the debts of the company. The Fiat company had experienced financial problems, and the rivalry with the workers prompted the government to intervene that increased the complications of the activities.
The Fiat had to evaluate the decisions to acquire Volvo extensively. The company would also need to invest further since Volvo high relied on the Fords process and design of the productions. For instance, the company had won the right to produce the s40 but is had to compete with the Ford. It relied on the design of the Mazda and Ford since the sharing of the platforms had increased. Volvo faced the challenge to make the efforts to align its productions strategy with that of the Mazda and the Ford.
Nevertheless, Ford had failed to utilise the capabilities of the Volvo. The estimated production levels of the Volvo could not be attained. The Ford had increased the strategies that would allow the production of more units compared to Volvo. The production efficiency at the Ford was more efficient than that of the Volvo. It was evident that Volvo would take twice the hours that Ford tto manufacture the vehicle. Despite the ability to share the platforms, the company has faced difficulties regarding the flexibility. Majorly, the markets of the Volvo are located in a single place in Belgium, Sweden and other neighbouring countries.
It is evident that Volvo was strategically fit for acquisition by Geely. However, Ford had hampered the operation of the Volvo. Ford had ignored its strategic significance and failed to include the company in its long-term strategies. Geely has to evaluate the significance of the company as well as its weaknesses.
Bibliography
Cohen, W. M., & Levinthal, D. A. 1990. Absorptive capacity: a new perspective on learning and innovation. Administrative science quarterly, 128-152.
Hippel, E. V. 1989. Task partitioning: an innovation process variable.
Holweg, M, & Pil, F 2009, ‘A break from the past : Volvo and its malcontents’, The second automobile revolution : trajectories of the world carmakers in the 21st century pp. 353-365
Lamoreaux, N. R., Raff, D. M., & Temin, P. 2002. Beyond markets and hierarchies: Toward a new synthesis of American business history (No. w9029). National Bureau of Economic Research.
Maielli, G. 2007. Counterfactuals, superfactuals and the problematic relationship between business management and the past. Management & Organizational History, 2(4), 275-294.
Maielli, G. 2015. Path-dependent product development and Fiat’s takeover of Lancia in 1969: meta-routines for design selection between synergies and brand autonomy. Business History, 1-20.
Russo et al. 2009. An Inorganic Approach to Globalization: The marriage of Geely and Volvo. Booz & Company Inc.
