Volvo: Finding True Value in the Electric Bus Market

by: Andrew Hoffman

Publication Date: April 21, 2016
Length: 12 pages
Product ID#: 1-430-480

Core Disciplines: Entrepreneurship & Innovation, International Business, Leadership/Organizational Behavior, Social Impact, Strategy & Management, Sustainability

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Teaching Note

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Description

Birgit Skarsgard, head of sustainability and public affairs at Volvo Group, has successfully taken part in the ElectriCity cooperative experiment to integrate electric buses into Sweden’s market using KPMG’s True Value methodology. This methodology is employed by firms to understand future earnings at risk due to internalization of externalities. As part of the pilot program, Volvo’s hometown of Gothenburg, Sweden has accepted electric buses with delight. The question is: Can the company scale the program to the Chinese market where the real opportunity lies? Students are asked how Volvo can leverage the True Value methodology to enter this market.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe the current state of China’s industrialization and its impact on transportation, quality of life, and environmental conditions, especially in urban areas.
  • Apply an understanding of the externalities of China’s industrialization to identify opportunities and risks to transitioning to electric bus use in urban markets for both domestic and foreign producers.
  • Apply the True Value methodology to the Chinese urban market to identify which parameters would best help Volvo make the business case for its electric buses.
  • Employ a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to examine how the True Value methodology does or does not fulfill the opportunities and strengths of the Chinese urban market.
  • Assess the risks of translating methodologies and their metrics to new markets where the incorporation of cultural, geographic, and economic factors must be appropriately weighed.