Strategic Analysis of Psa
PSA Case Study
Q1 – Critically assess the strategic environment and the impact on the organisation.
The strategic environment that exists in the motor industry is one of extreme volatility and uncertainty. Since the economic crash affected global car sales in 2008 by $0.4 billion dollars and by 33% in Europe and the US, there have been numerous strategies employed by the main players to turn around their fortunes.
There has been a strong element of overproduction in the car industry for years presumably to take advantage of economies of scale and to maintain production capacities. However, with the reduction in cars being purchased, car manufacturers are looking at alternative ways to protect their business.
The main detractors for car manufacturers have been the global recession, the price of fuel and the move/ desire for greener transport from customers. This has created a necessity for sustained innovation and a determined focus on research and development. Many companies are looking to reduce their cost base and are using joint ventures/ alliances/ associations to improve economies of scale and scope and to leverage their R&D capabilities. For example, VW have strategic JV’s in China which has lead to them having a majority share in that market. They have also bought into Suzuki as a means to enter the Indian market via Suzuki’s established network.
As a direct comparison to PSA Peugeot – Citroen, Renault has partnered with Nissan very successfully which has completely reversed their fortunes. From this strategic alliance, Renault have managed to maintain its presence in France which is a key success factor for them as a European producer as well as being able to draw upon the knowledge of Nissan in developing an electric car, which many believe is the future in the car industry. Ghosn, Renaults CEO, is CEO of Nissan also and has been successful at developing a culture of innovation and cooperation through economies of scope – they share common parts and
Q1 – Critically assess the strategic environment and the impact on the organisation.
The strategic environment that exists in the motor industry is one of extreme volatility and uncertainty. Since the economic crash affected global car sales in 2008 by $0.4 billion dollars and by 33% in Europe and the US, there have been numerous strategies employed by the main players to turn around their fortunes.
There has been a strong element of overproduction in the car industry for years presumably to take advantage of economies of scale and to maintain production capacities. However, with the reduction in cars being purchased, car manufacturers are looking at alternative ways to protect their business.
The main detractors for car manufacturers have been the global recession, the price of fuel and the move/ desire for greener transport from customers. This has created a necessity for sustained innovation and a determined focus on research and development. Many companies are looking to reduce their cost base and are using joint ventures/ alliances/ associations to improve economies of scale and scope and to leverage their R&D capabilities. For example, VW have strategic JV’s in China which has lead to them having a majority share in that market. They have also bought into Suzuki as a means to enter the Indian market via Suzuki’s established network.
As a direct comparison to PSA Peugeot – Citroen, Renault has partnered with Nissan very successfully which has completely reversed their fortunes. From this strategic alliance, Renault have managed to maintain its presence in France which is a key success factor for them as a European producer as well as being able to draw upon the knowledge of Nissan in developing an electric car, which many believe is the future in the car industry. Ghosn, Renaults CEO, is CEO of Nissan also and has been successful at developing a culture of innovation and cooperation through economies of scope – they share common parts and