Global business strategy

Résumé du document

Ranking number six worldwide and number two in Europe, PSA Peugeot Citroën has enjoyed the strongest organic growth of any carmaker in the last four years. In 2001, they sold more than three million vehicles, representing a year-on-year gain of 11.3%. Let's us firstly analyze the strategy adopted by PSA to respond to the issues it is concerned with. Then, we will critically analyze the original strategy and consider the alternatives.

Extraits

[...] Let's us firstly analyse what are the issues and the strategy adopted by PSA to respond those issues. Then, we will criticize that original strategy and consider what would have been the others alternatives. What are the major issues in the case? 1 Increasing competition The car industry is a worldwide market with many national manufacturers. Nevertheless, the buy-out fever during the past ten years reduced the number of companies and above all small manufacturers are now a subsidiary of the largest companies such as Renault, Toyota, Ford and Daimler Chrysler. [...]

[...] Coopetition relies on this simple statement: Companies are an aggregate of business units. Some of them compete with a company and other has to forge partnership with the very same company. So, competitors can sign partnerships. It is new in business history and the lack of time does not allow us to judge if it is efficient or not. In this respect, PSA Peugeot Citroën has built up renown as a carmaker with the ability to put together technical and industrial agreements: with Renault for V6 engines and automatic gearboxes, with Fiat for minivans and light commercial vehicles, with Ford for diesel engines, with Toyota for the design and production of small vehicles targeting the European market, and more recently with BMW to develop and manufacture a new family of small gasoline engines The Innovation race To maintain its leadership position, PSA Peugeot Citroën constantly develops new car concepts to provide customers with vehicles that match their expectations. [...]

[...] Indeed, this strategy, frequently criticized may be looked on as relevant in the near future. But during those three same years, the group has increased its turnover by more than to reach 44.2 billions of euros and has become one of the most important of the European car makers and of the French economy. These significant and successful figures are due to a specific choice that goes against the strategy adopted by competitors in the automobile sector. A scheme of internal growth with a platform production process and industrial agreements with other carmakers or industrial manufacturers, that permits to reach a global scale and to make scale economies without merging. [...]

[...] International expansions are not that easy a isolated group anyway. At last, PSA exposes itself to the risk of hostile takeover bid by one of the big carmaker majors, as PSA could not financially fight. For all that reasons, one should think that PSA is wrong in its solo strategy, or I tend to think that mergers, even if it is an unavoidable trend, are not the way PSA should go. As analysing financial figures, we can notice that in most cases, mergers do not result in the enrichment of the shareholders which is theoretically the first aim of a firm: the failure of the merger between BMW and Rover is the epitome of this paradox. [...]

[...] This approach is promoting the development of innovative concepts that offer strong image potential and attract customers. Examples for Citroën include the recent C6 Lignage, Pluriel and C-Crosser demonstrators, while Peugeot has showcased the Prométhée and Escapade demonstrators. D. Reducing cost and increasing flexibility = A priority To keep costs under control, PSA Peugeot Citroën is pursuing its platform strategy: three new platforms have been introduced, providing a common basis for Group vehicles. All three share certain components, totalling 60% of the cost price. [...]