Case Study: General Motors

1392 Words6 Pages
Introduction A strategic move recently in the automobile industry has seen General Motors take a 7% stake in PSA Peugeot Citroen as part of a broad strategic alliance between the two companies. According to the article the focus on the deal is "focused on sharing platforms, components and modules and on creating a global purchasing joint venture for sourcing commodities and other goods and services from suppliers." Another aspect of the deal is that Peugeot will have to raise 1 billion through a share sale (AFC, 2012). There is already talk of extending the deal to incorporate facets outside of the first deal (Ramsey, 2012). The deal should be evaluated both in the context of the deal itself and the context of the global operating environment automakers. Global Environment The global environment for automakers is challenging. Established markets are mature, meaning that there is not much room for growth, given that populations are stabilizing and the high cost of fuel in the US and Europe is driving the market towards less driving and smaller cars. There appears to be overcapacity in the industry in these markets, and that represents a challenge for all players in the industry. There remain, however, growth opportunities in developing markets. In the mature developed markets, competition is both on differentiation and on price. This necessitates firms undertaking strategies where they produce excellent vehicles at low prices in order to increase market share. This

More about Case Study: General Motors

Open Document