Introduction to Strategic organization performance
Strategic organization performance is the global concept in which firms tries to attain their goal by utilizing their resources efficiently. Modern era is highly competitive and to sustain in such environment companies have to measure the performance from multiple criteria so that it can meet with the standards and can gain competitive advantage (Hogan and Coote, 2014).Present report is based on the Peugeot Citroen (PSA) which is the second largest auto maker firm of Europe. Currently company is facing the continuous loss and CEO is planning to change the strategies of the organization so that it can gain high profit and can sustain in the market for longer duration. Current assignment will analysis the background of the Peugeot Citroen. It will discuss the mission, goal and objectives of the cited firm. PESTLE and porters five forces analysis of cited firm will be done in this study. Furthermore, it will describe the stakeholder mapping in order to understand the satisfaction level of stakeholders (Scott and Davis, 2015). In addition, report will discuss the strategy of BCG matrix and Ansoff matrix in respect of Peugeot Citroen.
1.1 Background analysis
Peugeot Citroen is the automaker company which is well known for its blending technical innovation and french style. It was the first company that has manufactured the first petrol-powered car in the year 1890 (Gomez-Mejia, Berrone and Franco-Santos, 2014). Cited firm has captured 13% of European maker and people are satisfied with the unique designing of the products. It has strong chain and it operates globally.Peugeot Citroen has sold approx 3390000 vehicles in the year 2014 in more than 150 countries.
PSA is facing the many challenges that is creating problem for the entity. These are discussed as below:
Many models and little profit
It is one of the major issues for the Peugeot Citroen and due to this cited firm is unable to run its operation smoothly (Goetsch and Davis, 2014). Due to too many models operating cost of the organization is high whereas little profit is creating financial problem for the entity and due to this it sometimes fails to manufactured new models. It is fact that cited firm has faced net loss of 7.2bn Euros over last two years.
Reducing market share
It is another issue for the Peugeot Citroen, Dongfeng Motors which is the Chinese partner of the cited firm. Dongfeng and French government both have 14% stake in the business.That is why market share of the entity has been reduced from 25% to 14% (Dipboye and Colella, 2013).
Inexperienced staff members
PSA has employed more than 208500 employees in the organization. But when it entered in the Chinese market then cited firm has released that most of the workers of the company are not having sufficient skills hat are required to work in this industry. Even many of them have experience to manufacture the trucks and buses. Whereas, Peugeot Citroen is manufacturing the passenger cars. For that reason cited firm has to give them additional training so that they can understand the procedure and can perform their duties well (Dong and et.al, 2014). But due to this, operational cost of the entity gets increased that reduces its profitability to great extent.
Peugeot Citroen is the second largest automaker firm of Europe but due to cultural differences employees of the company are unable to communicate with the population of the Chinese and French market. Some times it creates the problem of miscommunication that create negative circumstances for the entity to great extent (Child,2015).
New CEO of the PSA has announced that company will focus on the creative power of team and it will produce the products as per the demand. It will help the cited firm in reducing its issues and entity will be able to improve its condition soon.
2.0 Mission, Vision And Objective Of Peugeot Citroen
Peugeot Citroen is the brand name in the automobile industry, it is popular for its innovative designs and models (Chen and et.al, 2014). Cited firm has good people those who are committed towards the brand, they are focusing on the basic needs of the consumers and according to this they try to manufacture the cars so that cited firm can meet the expectation of the customers in different regions.
Mission of the PSA is to manufacture high quality cars that can meet with the expectation of the target audience and can reduce operational cost of the entity (Schneider, Ehrhart and Macey, 2013).Its focus on minimizing the cost and delivery deadlines.
Vision of the Peugeot Citroen is to contribute well in the sustainable development of the nation and place the each model in top 3 categories.
Peugeot Citroen main objective is to give value to the managers and employees so that they be loyal towards the brand and perform better. It wants to develop good relationship with the clients and suppliers so that cited firm can identify their needs and can meet with their expectations (Phillips and Phillips, 2016).
2.1 Core competences and capabilities of Peugeot Citroen
Peugeot Citroen is operating in the global market, it has 13 production sites and 8 joint ventures in the United Emirate, Asia and South America. Core competencies and capabilities of the cited firm are as following:
PSA is popular for its innovative models and designs of cars. It manufactures the passenger cars and consumers appraise the designing and innovative ideas of the cited firm (Kelly, 2015). The company has 7 research and development departments which are spread across the world. They try to identify the needs of the consumers and bring creativity and innovation in order to manufacture the innovative products. Due to the strong R&D department Peugeot Citroen has become the well known brand of this industry.
Peugeot Citroen always takes support of strategic approach, it identifies the things evaluate the ideas and them implement this in the workplace. It makes good strategist so that it can sustain in the market for longer duration. This strategic approach of the entity has helped the PSA in sustaining in the market after huge loss also (Wamba and et.al., 2015).
Leadership and management
It is another core competency of the Peugeot Citroen. Cited firm takes support of democratic leadership and involve its workers in the decision making process. It helps the organization in motivating them and making them loyal towards the brand.It takes suggestion from the staff members so that they can share their feelings with the management well and can perform their work with loyalty (Knowles and et.al., 2014). In addition to this, managers of PSA are talented and they have good experience of managing the team. They identify the skills of the people and allocate them duties accordingly so that people can feel comfortable and put its best efforts in order to achieve the goal of the company.
PSA is having sufficient resources, it has number of employees those who contribute well in the success of the entity. Company also has enough technological equipment so that it can design innovative cars that can meet with the expectation of the consumers (What is the Ansoff Matrix?, 2017).
Good relationship with the suppliers
It is another core competence of the Peugeot Citroen that it has strong relationship with the suppliers. Due o this bonding, suppliers trust on the entity and they provide them good quality raw material that helps the firm in manufacturing the quality products. In addition to this, this capability of the entity helps the organization in attracting many more suppliers and they give them credit facility. This feature is supporting the corporation and due to this it is able to sustain in the market for longer duration (How to use the BCG Matrix model, 2017).
3.0 EXTERNAL ENVIRONMENT ANALYSIS
3.1 PESTLE analysis
PESTLE analysis is the tool that is used by the entity to track or evaluate the external environment of the organization. It is the framework through this, organization can monitor the external activities and can modify its business operations accordingly (Hogan and Coote, 2014). Macro environment analysis of Peugeot Citroen is as following:
Political factors: Companies have to look upon the political condition of the nation in which they are operating. Stability of government, taxation policy etc are some major political factors that impact on the overall performance of the industry. If there is restriction on import and export then company will not be able to work better. Political condition of the UK is good and due to this automobile industry is gaining the high profit and contributing well in the economics development of the nation. Cited firm is operating in China, French and many more countries so this factor impact on the overall operation of the entity to great extent (Gomez-Mejia, Berrone and Franco-Santos, 2014).
Economic factor: It is the determinate that directly impact on the overall industry and by this way company is getting affected. If there is inflation then purchasing power of the customers will be affected. In such condition PSA will not be able to make good profit thus, profitability of the cited firm will be affected. Changes in demand and supply may cause that will affect the objective of the Peugeot Citroen. Changes in exchange rates, inflation rates, foreign exchange rates, economic growth impact on the production and operation of the PSA (Gomez-Mejia, Berrone and Franco-Santos, 2014).
Social cultural factors: Europe is the country whee aging population is high, growth of middle class people inn the South America etc impact on the company. Peugeot Citroen is operating in many locations, culture and social preferences of each place are differed from each other. In such condition it is required for the company to manage the people well so that they can identify the needs of consumers of particular location and can manufacture products as per the needs (Chen and et.al, 2014). It will help the entity in meeting with expectation of the target audience of particular nation.
Technological factors: It is the major element that affect the overall quality of the production. If new technology come in the market then it is necessary for the entity to adopt it so that it can meet with the standards and can manufacture the quality products. Green technology, safety, low emission etc. are some advanced techniques which are necessary for the car market to adopt (Schneider, Ehrhart and Macey, 2013). This helps the Peugeot Citroen in gaining competitive advantage and satisfying the needs of the consumers.
Environment factor: Peugeot Citroen looks upon the environment safety and it products such products which can be Eco-friendly.
Legal factor: Safety standards, labour law, R&D legislation etc impact on the business operation and helps the Peugeot Citroen in improving its quality standard. Cited firm follows all norms so that it can run its business legally.
3.2 Porter's five forces
It is another environment analysis tool that supports the Peugeot Citroen in identifying the overall effectiveness of the business (Goetsch and Davis, 2014).
- Threat of new entrant: It is low because new company is required lots of funds to invest to come in this industry. Capital requirement, knowledge, economic scale etc are several factors due to this threat of new entrant are low.
- Threat of substitute: It is high in nature because there are many other automaker firs such as BMW, Volkswagen, Toyota those which are providing high quality products so consumers can easily turn to substitute firm.
- Customer bargaining power: It is high in nature because consumers can change their mind any time and can go towards other brand if they are not satisfied with the products of existing firm (Scott and Davis, 2015).
- Suppliers bargaining power: It is average because there are limited suppliers those who supply quality raw material.
- Competitor rivalry: It is the high because there are big players those which have strong command over the market such as Ford, Volkswagen etc (Dipboye and Colella, 2013).
4.0 STAKEHOLDER ANALYSIS
4.1 Stakeholder Mapping
It is the collaborative process that helps to analysis the stakeholders. It has four main phases, which are as following:
It is the first stage in which Peugeot Citroen identify the list of investors, stakeholders and their objective in the business. Main stakeholders of the cited firm are Dongfeng, French government, staff members, potential consumers etc. These are essential element and company needs to treat them well so that their ca feel satisfied (Chen and et.al, 2014).
One the list of stakeholder is being identified then PSA analyses them and try to find out their usefulness in the organization. Skilled engineers are useful for the company because they can contribute well in the success of the entity. If any of the stakeholder is having high power to influence the business then company pays more attention on to satisfy them (Phillips and Phillips, 2016)
It is another tool that helps the PSA is identifying the most beneficial or useful stakeholder of the organization.
It is not possible for the PSA to engage all stakeholders because it will be time consuming process. So PSA can prioritize the stakeholders and can involve them as per their priority in the business.
4.2 Satisfying the key stakeholders expectation
Employees and investors are the major stakeholders of the Peugeot Citroen. Skilled engineers support the organization in gaining success, with the help of this company can achieve its objectives. Cited firm needs to provide them incentives, accommodation facilities, recognition etc. as per the needs so that they feel satisfied and perform in the workplace with more efficiency (Wamba and et.al., 2015).
In addition, Peugeot Citroen focus more on investors, French government and Dongfeng invest amount so that company can run its business smoothly. Cited firm is required to involve them in decision making process and it should inform them about performance of the organization so that they keep faith on the entity and be connected with the organization.
5.0 POSSIBLE STRATEGIC OPTIONS
5.1 BCG matrix
The BCG matrix tool is the strategy that helps the organization in portfolio planning for improving the condition of the organization to great extent. It is the long term strategic planning tool that gives the growth opportunity to the entity so that it can develop its products and can enhance the satisfaction level of the consumers.
- Dogs: These are such products which are of low growth products.
- Question marks: The product which are having high growth with low market share.
- Cash flow: Low growth products with high market share.
- Starts: High growth market with high market share.
One of the main issue in front of PSA that it has many models and profit is very low. So cited firm is required to focus on such models which are very popular among the target audience and it should invest in such products. By this way company will be able to develop or improve its high demand products. Cited firm needs to discontinue such models which are of low growth because due to this operation cost is increasing and company is unable to gain profit on such models. This strategy will help the organization in achieving its goal.
5.2 Ansoff Matrix
It is the strategic planning strategy that provides the way to the manager of the organization so that they can devise strategies for achieving the goal of the company.
Market penetration: It is the great strategy for the entity and can help the organization in improving its performance.Peugeot Citroen has many models which are of high demand and having high market share. Company is required to exploit that products in the existing market so that its sales volume can be improved (Phillips and Phillips, 2016).
Product development: Currently PSA is acing the issue of lower profit because of low sales volume. Cited firm can develop its products and can invest the amount in new hybrid cars so that demand can be raised. By this way it will be able to meet with the expectation of the consumers and it will help in increasing profit of the entity (Wamba and et.al., 2015).
Market development: It is another strategy in which Peugeot Citroen can develop the market and can expand its cars into Asia or South American market. It can go to new geographical location when income level of the persons are good and hey like to buy the cars. By adopting this strategy cited firm will be able to expand its business and it will help in accomplishing the goal of the organization (Scott and Davis, 2015).
Diversification: It is another strategic planning framework in which PSA can sell its new products into the new market. With the help of diversification cited firm will be able to expand its business and it will increase demand as well (Goetsch and Davis, 2014).
6.0 CONCLUSION AND RECOMMENDATION
From the above report it can be concluded that PSA is the global brand it is famous for its quality vehicles. The company is facing the challenge that it has many models but profit is continuous declining. From the analysis it is found that working with too many models is creating the problem for the PSA so automaker can focus on its loop fall and can improve its operational process in order to accomplish the goal of the entity.
There are several ways through which PSA can improve its performance significantly. These are as following:
- Peugeot Citroen should manufacture the cars with the use of high technology such as green technology, low emission etc. so that it can manufacture the quality vehicles and can satisfy consumers. It will help in meeting with the expectation of the consumers well.
- Peugeot Citroen should develop its market so that it can enter into new geographical location and can enhance its sales volume by increasing number of consumers.
- PSA should utilize the resources well such as skills of the employees needs to be effectively used and financial resources must be used effectively.
These all suggestions will help the cited firm in improving its performance and by this way goal of the company will be accomplished soon.
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