SAMSUNG SDI-VOLVO GROUP STRATEGIC ALLIANCE 2

Samsung SDI – Volvo Group Strategic Alliance
Part One: Posting of Article

AftermarketNews (July 18, 2019). Volvo Group, Samsung SDI Enter Strategic Alliance For
Electromobility
https://www.aftermarketnews.com/volvo-group-samsung-sdi-enter-strategic-alliance-for-
electromobility/
Volvo Group and Samsung SDI have entered into a strategic alliance to develop battery packs
for Volvo Group’s electric trucks. Working together with Samsung SDI, Volvo Group aims to
accelerate the speed of development and strengthen the long-term capabilities and assets within
electromobility, to benefit its customers in different truck segments and markets.

The alliance will cover joint development of battery packs specifically designed for Volvo
Group’s truck applications. Samsung SDI will provide battery cells and modules to meet the
demand for the Volvo Group’s electric trucks. The intention is that Volvo Group will utilize
Samsung SDI’s battery pack technology for assembly in Volvo Group’s manufacturing
operations. 

Part 2: Explanation of the Article

The article is about Samsung SDI entering a strategic alliance with Volvo Group.
Formed in 1970, Samsung SDI is a leading manufacturer of electronics and motor vehicle
components, particularly lithium ion batteries. It is based in South Korea. Volvo Group, on the
other hand, is one of the biggest companies in Sweden. It is a manufacturer of buses and
trucks, among other products. It is the second biggest manufacturer of heavy duty trucks in the

SAMSUNG SDI-VOLVO GROUP STRATEGIC ALLIANCE 3
world. According to the article, the strategic alliance will allow Samsung SDI to develop
battery packs specifically designed for use by electric trucks manufactured by Volvo.
As explained by Griffin & Pustay (2015, chapter 13, p. 391), one major objective of
strategic alliance is to share knowledge and expertise. Firms enter strategic alliance with other
firms with the goal of gaining knowledge and expertise that they themselves lack. In this
Samsung SDI- Volvo Group strategic alliance, Volvo Group wants to get a foothold into the
emerging market of electric cars. However, it lacks the expertise required to produce batteries
to power its electric trucks for long. That is why it needs the expertise of Samsung SDI.
Samsung SDI has long experience and expertise of producing reliable lithium ion batteries
which are used for powering electric vehicles. The strategic alliance, therefore, allows Volvo
Group to use high quality batteries specifically designed for its electric trucks, something that
it lacks the expertise to produce. Samsung SDI, on the other hand, gets a guaranteed market
for its products.

Part 3: Personal Opinion of the Article

In my opinion, the strategic alliance between Samsung SDI and Volvo Group is
certainly a mutually beneficial one. Samsung SDI gets access to a reliable market for its
lithium ion batteries while Volvo Group. Volvo Group also benefits because it gets to have
very high quality batteries for its electric trucks. With such batteries, it may get some
competitive advantage over its rivals. However, as Griffin & Pustay (2015, chapter 13, p. 403)
notes, such a strategic alliance has some risks for the firms involved. In particular, such firms
risk losing their autonomy. The partnership between Volvo Group and Samsung SDI certainly
limits the autonomy of both companies. For Volvo Group, it is going to have to use only
Samsung SDI batteries specifically designed for its trucks. It cannot use batteries from another

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company. So, even if better lithium ion batteries emerge in the market, Volvo Group will not
use them for its electric trucks unless it terminates its contract with Samsung SDI. Samsung
SDI also loses some autonomy as it will be making lithium ion batteries specifically for
electric trucks made by Volvo. Apart from losing autonomy, the alliance ties Samsung SDI’s
fortunes to those of Volvo Group’s electric trucks. If demand for the trucks dips, Samsung
SDI’s lithium ion battery business will be adversely affected.
Taking the loss of autonomy and the other risks into consideration, it may seem that
perhaps Samsung SDI would be better off selling its lithium ion batteries to whoever may be
interested in them instead of being tied to one company. The same logic applies to Volvo
Group. However, this loss of autonomy is bearable because of the immense benefits of the
strategic alliance. The strategic alliance is, therefore, the best option for the two companies.

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References

Griffin, R. W., & Pustay, M. W. (2015). International Business: A Managerial Perspective.
Pearson,.