PSA Peugeot Citroen: Re-Entering the United States SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of PSA Peugeot Citroen: Re-Entering the United States
In 2017, PSA Peugeot CitroA?n (PSA), the French-based automaker known for its famous Peugeot and CitroA?n brands, announced its plans to re-enter the U.S. market after having exited North America in 1991. This was not the first time the company tried to re-enter the U.S. market. In an effort to reduce its reliance on declining European markets, PSA had attempted to re-enter the United States in 2003, again in 2014 with its premium automobile range, and most recently in 2016 in a partnership with a French-based ride-sharing operator. What are PSA's strategic options for its international growth by focusing particularly on U.S. re-entry? Would re-entering the U.S. market help PSA respond to growing competitive pressures in the global automotive industry? Irina Surdu is affiliated with University of Reading. Kamel Mellahi is affiliated with University of Warwick.
Swot Analysis of "PSA Peugeot Citroen: Re-Entering the United States" written by Irina Surdu, Kamel Mellahi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Psa Peugeot facing as an external strategic factors. Some of the topics covered in PSA Peugeot Citroen: Re-Entering the United States case study are - Strategic Management Strategies, Mergers & acquisitions and Global Business.
Some of the macro environment factors that can be used to understand the PSA Peugeot Citroen: Re-Entering the United States casestudy better are - – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, technology disruption, increasing commodity prices,
cloud computing is disrupting traditional business models, geopolitical disruptions, etc
Introduction to SWOT Analysis of PSA Peugeot Citroen: Re-Entering the United States
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PSA Peugeot Citroen: Re-Entering the United States case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Psa Peugeot, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Psa Peugeot operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of PSA Peugeot Citroen: Re-Entering the United States can be done for the following purposes –
1. Strategic planning using facts provided in PSA Peugeot Citroen: Re-Entering the United States case study
2. Improving business portfolio management of Psa Peugeot
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Psa Peugeot
Strengths PSA Peugeot Citroen: Re-Entering the United States | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Psa Peugeot in PSA Peugeot Citroen: Re-Entering the United States Harvard Business Review case study are -
High switching costs
– The high switching costs that Psa Peugeot has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Global Business industry
– PSA Peugeot Citroen: Re-Entering the United States firm has clearly differentiated products in the market place. This has enabled Psa Peugeot to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Psa Peugeot to invest into research and development (R&D) and innovation.
High brand equity
– Psa Peugeot has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Psa Peugeot to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Psa Peugeot in the sector have low bargaining power. PSA Peugeot Citroen: Re-Entering the United States has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Psa Peugeot to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Psa Peugeot digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Psa Peugeot has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Psa Peugeot
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Psa Peugeot does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Psa Peugeot is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Psa Peugeot is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PSA Peugeot Citroen: Re-Entering the United States Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Psa Peugeot in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the PSA Peugeot Citroen: Re-Entering the United States Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Psa Peugeot has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study PSA Peugeot Citroen: Re-Entering the United States - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Psa Peugeot are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Psa Peugeot is one of the leading recruiters in the industry. Managers in the PSA Peugeot Citroen: Re-Entering the United States are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses PSA Peugeot Citroen: Re-Entering the United States | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PSA Peugeot Citroen: Re-Entering the United States are -
High operating costs
– Compare to the competitors, firm in the HBR case study PSA Peugeot Citroen: Re-Entering the United States has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Psa Peugeot 's lucrative customers.
Interest costs
– Compare to the competition, Psa Peugeot has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Psa Peugeot needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Psa Peugeot has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Irina Surdu, Kamel Mellahi suggests that, Psa Peugeot is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PSA Peugeot Citroen: Re-Entering the United States, is just above the industry average. Psa Peugeot needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Psa Peugeot supply chain. Even after few cautionary changes mentioned in the HBR case study - PSA Peugeot Citroen: Re-Entering the United States, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Psa Peugeot vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As PSA Peugeot Citroen: Re-Entering the United States HBR case study mentions - Psa Peugeot takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Psa Peugeot has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Psa Peugeot even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Psa Peugeot has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study PSA Peugeot Citroen: Re-Entering the United States that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case PSA Peugeot Citroen: Re-Entering the United States can leverage the sales team experience to cultivate customer relationships as Psa Peugeot is planning to shift buying processes online.
Opportunities PSA Peugeot Citroen: Re-Entering the United States | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study PSA Peugeot Citroen: Re-Entering the United States are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Psa Peugeot can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Psa Peugeot can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Psa Peugeot to increase its market reach. Psa Peugeot will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Psa Peugeot can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PSA Peugeot Citroen: Re-Entering the United States suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Psa Peugeot is facing challenges because of the dominance of functional experts in the organization. PSA Peugeot Citroen: Re-Entering the United States case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Psa Peugeot can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Psa Peugeot has opened avenues for new revenue streams for the organization in the industry. This can help Psa Peugeot to build a more holistic ecosystem as suggested in the PSA Peugeot Citroen: Re-Entering the United States case study. Psa Peugeot can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Psa Peugeot to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Psa Peugeot to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Psa Peugeot can use these opportunities to build new business models that can help the communities that Psa Peugeot operates in. Secondly it can use opportunities from government spending in Global Business sector.
Using analytics as competitive advantage
– Psa Peugeot has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study PSA Peugeot Citroen: Re-Entering the United States - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Psa Peugeot to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Psa Peugeot can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Manufacturing automation
– Psa Peugeot can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Psa Peugeot in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Threats PSA Peugeot Citroen: Re-Entering the United States External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PSA Peugeot Citroen: Re-Entering the United States are -
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Psa Peugeot can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study PSA Peugeot Citroen: Re-Entering the United States, Psa Peugeot may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Regulatory challenges
– Psa Peugeot needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Psa Peugeot demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Psa Peugeot will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Psa Peugeot business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Psa Peugeot in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Psa Peugeot in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Psa Peugeot can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Psa Peugeot with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Psa Peugeot
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Psa Peugeot.
Weighted SWOT Analysis of PSA Peugeot Citroen: Re-Entering the United States Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study PSA Peugeot Citroen: Re-Entering the United States needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study PSA Peugeot Citroen: Re-Entering the United States is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study PSA Peugeot Citroen: Re-Entering the United States is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of PSA Peugeot Citroen: Re-Entering the United States is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Psa Peugeot needs to make to build a sustainable competitive advantage.