The acquisition of Volvo is the biggest but not the first cross-border deal for Geely. In 2006, the partnership between Geely and Manganese Bronze took place for the production of components for assembling London Taxi vehicles. The idea behind this acquisition is to minimize the gap between Volvo’s traditional European management mode and Geely’s mode of conventional business. The current business structure of Vovlo makes it difficult for Geely to attain the maximum benefits of the localization considering the future plans of Geely for setting a plant in China. It is in the best interest of Geely to subsidize the Volvo global operation while keeping the margins low for Geely’s local business operations that may pose a serious threat to Geely’s working capital management in future (Russo 2010).
The integration process for Geely was very important when it comes to Volvo. Geely’s approach focused on different areas of its global strategy such as learning the eco system of Volvo by getting into a global game. Moreover, Geely used this opportunity to carry its name worldwide, managing a business of high-end car manufacturing, capitalizing on the brand equity of Volvo, cultural integration, research and development in European markets, international business relationships, using Volvo’s management team for post-acquisition management and knowing the labor unions (Russo, Ke, Tse, 2010).
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