GROUPE PSA CASE SUBMISSION

Q1. Was an acquisition the only option for PSA with respect to Opel & Vauxhall? : Why not an
alliance?
Solution: To determine if an acquisition was the only option for PSA with respect to Opel and
Vauxhall, we can use several frameworks to evaluate the feasibility and suitability of an alliance
versus an acquisition.
PORTER’S FIVE FORCES Analysis of the Automotive industry:
 Threat of new entrants: Moderate to high - High capital requirements and regulation
provide barriers to entry.
 Bargaining power of suppliers: Moderate - Large number of suppliers and diversified
supply chain.
 Bargaining power of buyers: High - Buyers have a range of options and significant
negotiating power.
 Threat of substitutes: Moderate to high - Alternative modes of transportation and
technology are emerging.
 Rivalry among existing competitors: High - Large number of established players with
similar products and services.
SWOT Analysis:
To check which option is better between alliance and acquisition, SWOT analysis are performed.
ALLIANCE
Strengths: Weaknesses:

 Cost savings through shared resources  Limited control over partners'

and expertise.
 Risk and cost sharing with partners.
 Access to new markets and customers.
operations.
 Difficulty in aligning strategies and
objectives.
 Limited access to partners' technology
and intellectual property.

Opportunities: Threats:

 Strategic partnerships with  Loss of competitive advantage.

complementary strengths.  Conflict and disagreements with
 Increased market share and partners.
competitiveness.  Misaligned goals and objectives.
 Innovation through collaboration.

AQUISITION
 Strengths: Weaknesses:

 Full control and integration of  High acquisition costs and risk.

operations.  Potential cultural and operational
 Access to new technology and challenges.
intellectual property.  Resistance from employees and
 Increased market share and stakeholders.
competitiveness.

Opportunities:  Threats:

 Synergies and cost savings through  Integration challenges.

integration.
 Diversification of product offerings.
 Increased innovation through access to
new technology and intellectual
property.
 Failure to realize expected synergies
and cost savings.
 Overstretching of resources.

Based on these analyses, an acquisition is the most suitable option for PSA with respect to Opel
and Vauxhall. An acquisition would provide PSA with full control and integration of the
companies' operations, which would allow for the realization of cost savings and synergies.
Additionally, an acquisition would provide access to new technology and intellectual property,
which would enhance PSA's product offerings and competitiveness. An alliance may have
provided some benefits, but the limited control and access to partners' resources may have
limited the potential benefits and success of the partnership.
Groupe PSA acquired Opel and Vauxhall to enter European markets. It decided to utilize the
“German Brand” image while working on addressing the quality issues within the subsidiaries. It
decided to let the companies retain their existing structures and operate autonomously. It decided
to let the companies retain their existing structures and operate autonomously. While it
maintained the existing organizational structure in the subsidiaries, it pushed for strategic
interdependence. Further, it introduced not just resource-sharing capabilities but also skills and
workforce transfers. Aligning the operations of both firms will push for profit and will result in a
net market share increase. This situation of high need for an autonomous organization albeit with
a high interdependence need gets classified as Symbiosis in Haspeslagh and Jemison matrix.