THE STRATEGIC ALLIANCE BETWEEN VOLVO AND RENAULT
Volvo AB of Sweden has had a strategic alliance in effect with Renault of France since 1990 (Ozaroff, 1993, p. 112). At some point in 1994, this strategic alliance is scheduled to end when the two international firms are merged into a single firm. When all of the dust surrounding the merger settles, Volvo will be the largest shareholder in the new Renault-Volvo Company, with a 35 percent ownership share (Ozaroff, 1993, p. 112). While the government of France will initially own a 65 percent share of the new firm as a consequence of its ownership of Renault, a condition of the merger agreement is that France must privatize Renault, leaving Volvo as the largest single shareholder in the new firm (Ozaroff, 1993, p. 112).
This research examines the strategic alliance between Volvo and Renault that became effective in 1990 and that will remain in effect until some point in 1994. This examination focuses on Volvo AB as the multinational corporation with a strategic alliance with a company in a second country. Renault of France is the alliance partner.
Volvo is a major worldwide automobile manufacturer, and it is Sweden's largest company (Ozaroff, 1993, p. 112). Sweden is a Scandinavian country with a population approximating 8.5 million (Hunter, 1993, p. 1141). As an industrialized country, Sweden is second behind Switzerland with respect to per capita gross national product globally (The World Bank, 1993, p. 141).
Technically, Sweden is a kingdom. As head of state, however, the monarch is not permitted under the Swedish constitution to participate in government (Hunter, 1993, p. 1143). Under its constitution, Sweden is a representative and parliamentary democracy. The executive power of the country is vested in the Government, which is responsible to and selected by the parliament. Thus, Volvo must be prepared to function within the econ...