Volvo's Product Development Practices: Focus on Safety

            
 
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Case Details:

Case Code : OPER042
Case Length : 18 Pages
Period : 1991 - 2004
Organization : Volvo Car Corporation
Pub Date : 2004
Teaching Note :Not Available
Countries : Sweden
Industry : Automobile

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"When we asked people around the world what Volvo stood for, they would say: 'Safety.' That was good. For years, the industry said safety did not sell. I was convinced it would. It was always extremely gratifying when customers wrote to tell us about how they had survived accidents in a Volvo."1

- Pehr Gyllenhammar, Former CEO, Volvo.

"Cars are driven by people. The guiding principle behind everything we make at Volvo, therefore, is and must remain, safety."2

- Assar Gabrielsson and Gustaf Larson, Founders of Volvo.

Introduction

In January 2004, at the North American International Auto Show held in Detroit, the Swedish car manufacturer - Volvo Car Corporation (VCC)3 - unveiled two new safety systems for its automobiles - Adaptive Cruise Control and Warning System with Break Support. Industry analysts pointed out that these state-of-the-art safety technologies reaffirmed Volvo's top position in the field of automobile safety and contributed towards better accident prevention in Volvo cars. Commenting on the systems, Lex Kerssemakers, Vice-president, Global Marketing, and Head, Product Planning, at Volvo Cars said, "We see these advanced systems as vital in our ongoing strategy of remaining world leaders in the field of safety."4

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Since it began making cars in 1924, Volvo has always been at the forefront in conducting R & D for safety technologies, which were way ahead of the times.

By doing so, the company enhanced its brand image to such an extent that the name, 'Volvo' became a synonym for safety. The company was credited with introducing several path breaking safety technologies during its eight-decade history. For instance, the three-point seat belt, which Volvo introduced in 1958, was later made mandatory for automobiles across the world.

Volvo also introduced the side impact protection system in 1992, five years before they were made compulsory in the US (Refer Exhibit I for Volvo Safety Firsts). Analysts felt that Volvo's constant emphasis on safety research played a major role in developing advanced safety technologies.

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1]  Weernink, Wim Oude, "Gyllenhammar proved that safety could sell," Automotive News, June 21, 1999.

2] www.volvocars.co.uk.

3] VCC was acquired by Ford Motor Company in March 1999 for $6.45 bn. Since then, VCC is operating as a wholly owned subsidiary of Ford. The Volvo brand is owned jointly by VCC and AB Volvo through Volvo Trademark Holding AB.

4] "Volvo debuts world first safety technology," www.autoweb.com.au, January 06, 2004.

 

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