Psa Peugeot Citroen

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Stockholm University 12/09/2008 Strategic Management School of Business Sara Värlander Case 3 PSA Peugeot Citroën: Strategic Alliances for Competitive Advantage Group 16 Maria Raychuk Marina Oliveira Nuno Luis Patrik Pålsson Sébastien Argoullon Contents 1. Introduction 3 2. Reasons for to form alliances 4 3. Advantages and disadvantages when forming alliances 5 4. Transferability of PSA’s strategic alliance recipe 7 5. Trade-off between outsourcing and in-house production 8 6. Future challenges and how to tackle them 9 7. References 12 1. Introduction In 1970’s Europe, contrary to the USA where the Big Three (GM, Ford and Chrysler) had a quasi oligopoly situation, there were many car makers who fought each other to gain bigger market shares. This competition between the German (Volkswagen, BMW, Mercedes…), Italian (Fiat), French (Renault, Peugeot, Citroën), Spanish (Seat) and Swedish (Volvo) or even US (Ford, GM-Opel, Chrysler Europe) car makers was intense. Because of different products, tariffs, nationalism, cultures and local taxes, no one represented more than 10-12 percent of the whole European market. In that time, Peugeot was a symbol of capitalization, “à la française”. Peugeot used to be a family owned firm, making low-risk strategic choices. The firm was known for each year having one of the best financial results of the industry. However, this was not enough for the French company and if it wanted to continue to be competitive in the European mass market, Peugeot had to look for economies of scale. Meanwhile, Citroën who belonged to Michelin faced a disastrous crisis due to a lack of modern and economic cars and the non-utilisation of diesel motors (a highly demanded feature following the 1973 energy crisis). Michelin, looking for a worldwide

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