EC

The company has continued to make huge sales of electric cars as a result of the increased emphasis of non-emission cars and environmental conservation. In February, the group’s total car sales had risen by 22 %. This was contributed by 187% month-to-month jump for its recharge models with 19% of the total sales made up by the sale of fully electric cars. Advancement in technology is a key factor that is influencing the growth of sales for electric and recharge car models within the global market.

Implications for practice

Winners

1. The global automotive industry stands a high chance of increased revenue and growth as a result of the prevalent trends. There is increased demand for cars and overall automotive machinery that are compatible with the current environmental and economic standards. With the potential growth, there is a higher chance of new entrants that are also likely to generate huge sales and revenue as a result of high demand for products.

2. Volvo Company stands a high chance of global market growth and economies of scale following the high level of demand for its products. As reported in the article, the company has already generated an increase in profits within the first quarter of the accounting year. This is an indication of good performance provided the company adjusts to the needs and preferences of target customers.

3. Technology has contributed much to the growth of companies participating in the global automotive market. For instance, through updated manufacturing technology and plants, there is emergence of smart technology that stimulate low-cost production of key equipment and machinery thus enabling producers to realize high profit mark-ups.

4. Geely Holding, a China-based Holding Company is likely to realize high profitability which in turn increases the company’s value through shareholder’s wealth maximization. If the company invests more resources on the highly-demanded Volvo cars, there will be increase in sales revenue resulting into maximum growth.

5. Sweden can gain more national income as a result of increased exports coming from the sale of Volvo cars to the global market. When there is an increase in exports, the country reports an increased gross domestic output through realized surplus in the balance of payment.

6. Currency exchange and overall exchange rates can favor Sweden and countries that export valuable products into the global market. This is because there are increased transactions involving Swedish currency from the sale of Volvo cars manufactured within the country. A favorable currency exchange contributes to the value of the currency involved.

Losers

1. Companies that have not adjusted to the prevalent market trends such as electric cars and recharge models will lose sales as more customers prefer buying modern electric and recharge car models. This will result into losses reported in their financial statements.

2. The Swedish Government is struggling on how to adjust duties and taxes charged on local companies such as Volvo that export more. This is as a result of fluctuations in sales made to the global market. The government has to ensure the duties paid do not discourage local manufacturers as a result of high cost of exports.

3. People employed in traditional manufacturing plants such as emission cars will be laid –off following a decline in the manufacturing of high emission cars. Lay-offs mean loss of income for many households and overall decline in economic growth.

4. European local companies and automotive start-up companies can lose local market as a result of increased imports from foreign companies such as Volvo that import their products to Europe.

5. Countries whose automotive industries have not yet established them enough to compete in the global market will experience decline in national output. The decline in output is as a result of low demand for exported cars following high level of competition in the global market.

6. Exchange rates of major currencies stand a higher chance of loss as a result of decline in number of transactions involving them. This is caused by domination of certain currencies from which the highly-demanded cars come from.

Implications for theory

1. Globalization increases demand for foreign products. This is because people from different country can easily transact and interact with each other.

2. Global economic growth contributes to the growth of global market and industries such as automotive industry. This is evident with the growth of automotive industry in which Volvo participates in.

3. Foreign domestic investments are evident in the article where a China-based Holding Company invests the majority stock of a Sweden-based company. The FDI improves the economic development of China as well with the growth and expansion of Volvo Company.

4. Technology advancement as evident through the emergence and growth of electric and recharge model cars is a crucial factor in global market development. It is through innovations that there has been an increase in electric cars demanded and flow of information and customer data across the world.

5. International trade forms the main theme of the article. It is through international trade that a company can manufacture products and sell the products to other foreign countries.

6. Exchange rates apply to the article as it involves interaction among currencies. For instance, Volvo has to involve other foreign currencies such as euros in exporting its products to European countries.

Future Direction

There is a high chance of increased sales of Volvo electric cars in the recent future. This is because there has been consistent advocacy on the need to conserve the environment through the use of non-emission machinery and automotive. This creates an opportunity for electric cars as they do not involve emissions. Also, technology will create an edge on competitive companies by offering additional benefits to recharge models and electric cars such as AI self-drive thus appealing to more customers. In addition, the sales reported by companies such as Volvo will increase as more markets emerge particularly in developing countries.