Programme
Cohort
MBA-Project Management
Master of Business
Administration (Financial Risk
Management)
Master of Business
Administration General
MBAPM/11/PT (Jan)
MBAFRM/11/PT (Jan)
MBAG/11/PT (Jan)
Examinations for 2011– 2012 Semester II
/ 2012 Semester I
MODULE: STRATEGIC MANAGEMENT
MODULE CODE: MGMT5310
Duration: 3 Hours
Instructions to Candidates:
1. This question paper consists of Section A and of Section B.
2.
Section A is compulsory.
3.
Answer any two questions from Section B.
4.
Always start a new question on a fresh page.
5.
Total Marks: 100.
This question paper contains 4 questions and 11 pages.
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SECTION A: COMPULSORY
QUESTION 1: (50 MARKS)
The PSA Group
Since its appointment in June 2009, the new managing board of PSA Peugeot
Citroën has defined ambitions for the Group and set priorities accordingly:
To be a step ahead in pioneering vehicles and services
Environmental performance
PSA Peugeot Citroën is a leader in low emission vehicles, which are amongst the
best in the world in terms of consumption and emissions. In order to offer a "clean
car" that suits the needs of each customer (extra-urban use / urban use / long range
with maximum flexibility), the Group will enrich its range of low emission vehicles and
technologies over the next 3 years.
In terms of other technology, the Group has deployed in 2010 the new generation
STT (Stop Start technology) across its ranges, which reduces Carbon Dioxide (CO2)
emissions up to 15%. In 2011, PSA will launch a 1 litre gasoline engine emitting less
than 99g of CO2/km in small and medium cars.
Vehicle design
PSA Peugeot Citroen is already a step ahead in vehicle design. Its new concepts and
vehicle designs are widely respected, as witnessed by the success of recent
launches like Citroën C5, Citroën C3 Picasso or Peugeot 3008.
The Group's second priority is to enhance the value proposition of the two brands in
order to increase their pricing power. The Group's objective is also to develop a clear
differentiation between Peugeot and Citroën. Having common supervision of the two
brands will help to pave the way.
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Services
To improve its performance in services, the Group has defined the following priorities.
 Catch up quickly on customer service, where the Group's performance is
below.
 Improve the Group's financial services offer, where it has a strong position with
Banque PSA Finance.
 Be at the leading edge of mobility and connectivity services to meet the
evolving requirements of customers.
With regard to connectivity, PSA Peugeot Citroën is a step ahead in
emergency call systems, with 650 000 vehicles already equipped in Europe. In
mobility, Peugeot is currently testing an innovative mobility credit system with
80 000 customers in 4 major French cities.
To be a global player
The Group's first priority is to reach critical mass in Latin America & Asia, especially
China. The Group's market shares in Latin America and Asia are currently too low to
amortise local product and network development costs. To reach critical mass, PSA
Peugeot Citroën will focus on sustaining organic growth with new model launches,
but the Group will not hesitate to also consider external opportunities.
PSA Peugeot Citroën will accelerate the adaptation of its cars to the needs of non
European customers.
In this area, the Group will benefit from the investment it is making in its R&D centres
in Shanghai & Sao Paolo. Even though 50% of the cars sold by Peugeot and Citroën
are equipped with gasoline engines, there is a need to further improve the Group's
gasoline engine offer. The Group will also expand its automatic gearbox offer. To
minimise the added cost of these developments, the Group will consider enhancing
its current co-operations. To succeed in this global development, PSA Peugeot
Citroën will also make its management teams more international.
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To be an industry benchmark for operational efficiency
In the area of operational efficiency, the Group has earmarked immediate priorities:
Focus on Group wide excellence. Where all functions should engage in programmes
similar to lean manufacturing in production. Pursue the adjustment of the Group's
capacity. Plant compacting is an efficient solution for capacity reduction and
production performance. This was completed at the Aulnay plant in 2008. The
Rennes plant is currently halving capacity and more will come.
Put relations with suppliers onto a new footing. With fifteen strategic suppliers the
Group is currently building new relations based on co-engineering.
To develop responsibly
It transposes the Group's requirements as an employer: workers' safety, of course,
but also well-being on the job, and personal growth and development. It is mainly
based on the Group's culture of social cohesion. This ambition also transposes the
ethical way PSA Peugeot Citroën must behave towards its stake-holders and its role
in society as a responsible company.
Going global
The Group’s global expansion is well under way. Sales outside Europe accounted for
39% of the total in 2010, in line with the objective of 50% for 2015.
The main development regions of PSA Peugeot Citroën today are China, Latin
America and Russia. In each of these regions, the Group is strengthening its
production capacity and R&D, as well as the sales networks of both brands.
In February 2011, the Group also announced plans to establish a business location
in India to sell Peugeot vehicles. It has already opened a head office in Mumbai and
is looking at possible locations for an industrial site.
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China is the world’s No. 1 automotive market and the second biggest market for PSA
Peugeot Citroën. Grégoire Olivier, Executive Vice-President, Asia, is a member of the
Group’s managing board. PSA Peugeot Citroën is aiming to become a key player in
China and to achieve market share of 8% by 2015-2020, through its two joint
ventures, with Dong Feng and Chang’An.
DPCA, the joint-venture set up by PSA Peugeot Citroën and Dong Feng, posted
record results in 2010. Sales rose by 38%, to almost 376,000 units. Over the next five
years, the two companies plan to invest €1.3 billion, in order to strengthen their
partnership. This will involve:
 an enhanced product plan (12 vehicles over the next five years), and the
development of the sales networks;
 the construction of a third automotive plant in Wuhan by 2013, taking longterm production capacity to 750,000 vehicles/year;
 a new energies plan (plug-in hybrid and electric).
With the market launches of the Peugeot 408 and Citroën C5, sales momentum is set
to continue in 2012. The Peugeot 508 will make its debut at virtually the same time in
Europe and China. At the same time, PSA Peugeot Citroën and the Chinese
automotive group Chang’An signed a joint-venture contract in July 2010, subject to
approval by the Chinese authorities. The joint entity, equally held by the two groups,
will launch the Citroën DS line in China, along with a new brand. The plant, based in
Shenzen, will have an initial production capacity of 200,000 vehicles (car/LCV) per
year.
In 2008, PSA Peugeot Citroën opened the China Tech Center in Shanghai. This R&D
/ styling entity, which currently groups around 450 engineers and stylists, enables the
Group to respond more effectively to the specific requirements and tastes of Chinese
customers.
PSA Peugeot Citroën has been present for many years in Latin America. It builds
vehicles locally at its plants in Porto Real (Brazil) and Palomar (Argentina). In 2010,
the Group had market share of 5.4 %, a figure it aims to increase to 7% by 2015.
Registrations surged by almost 27% on 2009 in a market that grew by 14%.
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In 2010, PSA Peugeot Citroën launched a €700 million development plan that will
involve improving plant productivity. Eight new vehicles will be launched over the next
four years, helping to renew the image of both brands in this region.
Through the Latin America Tech Center, based at 3 sites (Rio, Sao Paulo and
Buenos Aires), the Group is able to develop vehicles tailored to the specific
requirements of its customers. In 2010, it launched the Peugeot Hoggar pick-up and
Citroën C3 Aircross. These vehicles were followed by the Peugeot 408 and – soon –
the Citroën C3 Picasso.
The Kaluga plant came on line in April 2010. It started assembling the Peugeot 308
and Citroën C4 followed, in the autumn, by the Peugeot 4007 and Citroën C-Crosser.
Located 180 km south of Moscow, it is a joint-venture between PSA Peugeot Citroën
(70%) and Mitsubishi (30%). The plant assembled 23,600 vehicles in 2010. It will
reach its full production capacity (125,000 vehicles/year) in 2012.
Peugeot and Citroën will continue to develop their sales networks in Russia. Group
sales rose by 40% in 2010, for almost 60,000 registrations, in a market that grew by
30%.
The Russian market thus confirmed its recovery and strong potential for
growth.
Innovative vehicles for sustainable mobility
PSA Peugeot Citroën is European leader for sales of low-carbon vehicles. In 2010,
the Group sold almost one million vehicles emitting less than 130 g of CO 2/km. To
consolidate this leadership and keep pace with changing lifestyles, research and
innovation are a key priority. By implementing new technologies in the fields of
environmental protection, safety and telematics, the Group will be able to expand its
offering of low-carbon vehicles with technologies tailored to all requirements.
Research & Development
The objectives of “research-innovation” are part of Group strategy and its ambition to
lead the way in products and services. Research into environmental performance is
at the forefront. It is based on four key strands:
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Eco-design vehicles: using green materials
The term “green materials” covers recycled materials (non-metallic), renewable
materials such as fibres and natural products (wood, cotton, etc.), and biomaterials.
The objective is to increase the proportion of green materials used in vehicle
production to 20% of all polymers by weight in 2011, and 30% in 2015. Green
materials currently account for 6% of total polymers by weight. By making these new
materials part of a design process that promotes the recyclability of end-of-life
vehicles, PSA is seeking to market products that better respect the environment. The
Group is also contributing to the development of recycling industries.
Electric vehicles for zero-emission urban mobility
The Group was a forerunner in electric vehicles, with 10,000 vehicles sold between
1995 and 2005. At end-2010, it launched a new offering with the Peugeot iOn and
Citroen C-zero. The electric vehicle market is expected to develop, primarily through
fleets and car-sharing plans in the first instance.
The Group has signed two partnerships:
- with Venturi, to supply Peugeot Partner and Citroën Berlingo electric LCVs to the
French post office, after winning a call for tender at end-2009;
- with Mitsubishi, to market the Peugeot iOn and Citroën C-Zero, two compact electric
city cars.
Hybrid vehicles for all types of use
e-HDi: micro-hybrids for all
Pioneer of the mechanism, PSA Peugeot Citroën introduced and launched its Stop &
Start technology back in 2004.
This system cuts fuel consumption by up to 15% in the city, and CO2 emissions by up
to 5g/km. The Group plans to deploy the e-HDi system, the second-generation of this
diesel-engine technology, on all vehicles in the B, C and D segments.
Full hybrid diesel technology and HYbrid4 architecture
The innovative HYbrid4 architecture optimizes the diesel hybrid powertrain through
the installation of an electric motor at the rear. Also featuring Stop & Start and
particulate filter, it reduces fuel consumption and CO2 emissions by nearly 35%
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compared with a Diesel HDi model of equivalent power. This technology brings
drivers the advantages offered by four-wheel drive and enhanced security in the
event of poor road-holding without the usual disadvantages (extra weight and excess
fuel consumption).
In order to extend the use and accessibility of these vehicles to the general public,
the Group is working on a "plug-in", i.e.: rechargeable, hybrid vehicle that enables
exclusively electric-powered driving over a distance corresponding to the daily use of
the majority of drivers. The initial target will be to reach emissions of around 50g of
CO2/km with an all-electric range of around 20km.
The first demonstration vehicles will be available in 2012 and will be based on the
Peugeot 3008.
Increased performance and fuel efficiency for combustion engines
HDi diesels: based on the HDi Common Rail technology equipped with a particulate
filter, already in common use, the Group is continuing to improve its engines. It will
innovate to attain the thresholds required by the future Euro VI standard from 2014,
while reducing greenhouse gas emissions and maintaining the advantages of the
diesel engine.
New generation petrol engines: developed in partnership with BMW, the highperformance 1.4 l and 1.6 l engine range cuts CO2 emissions by 10%. These
powerplants can currently be found on many of the vehicles of both Peugeot (207,
308, 3008, 5008,…) and Citroën (C3, C4, C3 Picasso, C4 Picasso,…), or 75% of all
Peugeot and Citroën models. A new cooperation phase has just been embarked
upon for a new generation of petrol engines in compliance with Euro VI regulations.
A new 3-cylinder petrol engine developing between 70 and 135 bhp: PSA Peugeot
Citroën is convinced that real potential exists for cutting fuel consumption and CO2
emissions. It is therefore developing a new family of small 3-cylinder petrol engines,
1.0l and 1.2l, to be fitted from 2012 on small urban vehicles (<100 g de CO2/km) as
well as on mid-range vehicles.
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"Communicating"cars for efficient travel
PSA Peugeot Citroën is innovating by making “communicating-car” technologies
widely available. With the Autonomous Telematics Box (Citroën e-Touch et Peugeot
Connect) deployed in early 2010, customers can take advantage of the emergency
call and geolocation services without purchasing the complete system (navigation,
radio, telephone). The aim is to provide drivers with customised real-time driving
information on board their vehicles. Implementing the latest developments in mobile
telephony, the Group’s vehicles will continue to roll out new services (navigation,
mobility aid services, etc.).
PSA Peugeot Citroën is France’s leading filer of patents, with 1,152 patents
published in 2010.
Our social commitment
With over 186,000 employees worldwide, the human resources policy of PSA
Peugeot Citroën is a major asset for the growth and development of the Group. It
combines economic performance with human progress by drawing on common
values and a permanent dialogue between management and labour. To extend these
practices internationally, in 2006 the Group signed a global framework agreement on
its social responsibility.
PSA Peugeot Citroën encourages fruitful labour relations and keeps open permanent
lines of communication with trade union organizations in every country where the
Group has a presence. So it was that in 2009, 150 agreements were signed
worldwide, including 9 company agreements in France.
For PSA Peugeot Citroën, the only acceptable target is accident-free working
conditions: there can be no progress without the safety of employees in their place of
work. The safety requirement is identical in every country and in every activity.
Workforce heterogeneity is of great benefit to Group performance. The number of
women on the workforces is constantly rising. This approach reflects a proactive
labour policy, in particular with regard to guaranteeing equivalent parity levels in
terms of salaries and career paths between men and women.
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PSA has launched concrete and laudable initiatives favouring professional equality
between men and women, with, notably, a label that was confirmed in 2009 based on
the results of the comparative situation report.
PSA Peugeot Citroën chooses to recruit from a broad-based recruitment pool to
reflect society and its environment. Diversity consists in bringing together for work
and personal advancement the best talents available, irrespective of culture, creed,
nationality, gender, political or trade-union conviction, background, physical
characteristics, career path, age, state of health, or sexual orientation.
In 2007, the Group signed an agreement on management planning for jobs and
skills, the objective of which is to anticipate the effects of company changes on jobs
in the context of a highly competitive automotive industry environment. It allows
employees to obtain an overview of how jobs are developing and of the implications
of industrial and technological changes. It defines the terms and conditions of
employment with respect to training, career progress, professional ability, recruitment
and the redeployment of employees and skills.
In order to provide employees with efficient support for their personal projects, PSA
Peugeot Citroën offers a wide range of employee savings solutions. The group is
also progressively setting up, in every country, supplementary defined-contribution
pension plans and employment protection insurance plans that cover, as a minimum,
the risks associated with death, invalidity or incapacity, along with supplementary
health insurance to complement mandatory health insurance.
Question1:
(a)
Using information gathered in the text, identify and critically comment on the
strengths and core growth strategies of PSA Group.
(b)
(25 marks)
The challenge of many firms today is not how to build competitive advantage,
but rather to sustain it over time. Evaluate the capacity of PSA Group to build
and sustain competitive advantage.
(25 marks)
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SECTION B: ANSWER ANY TWO QUESTIONS
QUESTION 2: (25 MARKS)
“Performing activities differently than what rivals normally do can help companies
outclass their competitors.” Discuss.
QUESTION 3: (25 MARKS)
Explain the difference between core purpose and core ideology. Discuss how Core
ideology provides the glue that holds an organization together over time.
QUESTION 4: (25 MARKS)
Explain the six principles of positioning as per Porter (2001).
***END OF QUESTION PAPER***
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