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Impact of the Strategic Alliance Between PSA Peugeot Citroen & General Motors

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Impact of the Strategic Alliance Between PSA Peugeot Citroen & General Motors

 Impact of the Strategic Alliance Between PSA Peugeot Citroen & General Motors

Chapter 1: Introduction

1.1 Introduction

Strategic alliance is an approach wherein two companies enter into an alliance to cope with several challenges and pressures from global competition. Strategic alliance is a bit different from joint venture as in a strategic alliance the companies entering into the alliance are able to maintain their autonomy while searching for a new opportunity to take their business to new heights through the alliance and the sharing of knowledge expertise and other resources.  Organizations enter into a strategic alliance when there is a need to expand the operations of the company, when there is a need for developing a more effective process, enter a new market or develop competitive advantage over rival companies (Das & Bing-Sheng, 2005).

In this research paper the companies chosen by the researcher are General motors and PSA Company. The researcher has chosen to study the strategic alliance between these two organizations as the alliance between General motors and PSA Company helps in identifying the benefits of strategic alliance in improving the performance of both the companies after the alliance. As a strategic alliance involves two organizations sharing their operational strategies and other resources for achieving a specific mission, this research deals with the various operational strategies and the resources shared by both the companies for improving their overall performance (Glover & Wasserman, 2007).

There are many factors which encourage two or more companies to enter into a strategic alliance-

1) Companies enter into a strategic alliance to develop their operational strategies when their own operational strategies are not good enough for the organization.

2) Companies enter into a strategic alliance to share knowledge and expertise for improving their overall performance

3) Sometimes it becomes difficult for companies to carry out research and development activities on their own due to lack of resources and expertise. In such cases they enter into an alliance to develop new technology with the help of the alliance.

4) Organizations also enter into a strategic alliance when they plan to enter new markets. A strategic alliance with an organization having a good share in a new market would enable an organization to have a smooth entry into the desired market (Das, 2010).

1.2 Purpose of the study

The purpose of the study is to evaluate the importance of strategic alliance in the automotive industry. The concept of Strategic alliance is practiced by various companies to improve their performance and give their organization a competitive edge over their rival companies. With the rising global competition and demand for excellence more and more companies are trying to focus on improving their operational as well as their technical strategies and in doing so they often enter into strategic alliance with other companies that would allow them to share knowledge and expertise and thus improve their operational and technical skills while maintaining their individual autonomy. This paper has focused on the two leading automotive companies of Europe that have entered into a strategic alliance to improve their competencies in Europe. The strategic alliance that has been studied in this paper is between PSA Company and General Motors.

1.3 Aims of the research

The research aims to establish the benefits that are acquired from strategic alliance of two companies. The concept of strategic alliance is practiced in numerous industries to gain competitive advantage over rival organizations and for entry into new markets. The use of the concept of strategic alliance in different industries establishes the fact that strategic alliance is useful in achieving competitive advantage and improving the performance of organizations. Thus this paper focuses on the impact of strategic alliance in the automotive industry with a specific focus on the strategic alliance of PSA Company and General Motors.

1.4 Contribution to knowledge

 

This research helps in establishing the importance of strategic alliance in the automotive industry. Strategic alliance is entered into by companies to improve their performance and to achieve a common mission by sharing their technical knowledge and organizational resources. Strategic alliance is practiced in numerous industries and particularly in the automotive industry which is continuously faced by the challenges of introducing new technology and improving their quality. Earlier researches have been done on the benefits of strategic alliance in the automotive industry to establish the success of the strategy. This research will further contribute to the existing knowledge base and will help in understanding the benefits of the alliance in the automotive industry. 

 

References

Aulakh, P.S., Kotabe, M, and Sahay, A. (1996). ‘Trust and performance in crossborder marketing partnerships: a behavioral approach’, Journal of International Business 2(3) pp 235-248.

Axelrod, R.  (1984). The Evolution of Co-operation.  New York: Basic Books.

Bar-Tal, D. and Geva, N.  (1986). ‘A cognitive basis of international conflicts’.  In

Beamish, P., (1997). Co-operative Strategies: European perspectives.  Massachusetts.

Buckley, P.J. (1992). Studies in International Business, New York: St. Martin’s Press

Burt, R. (1992).  Structural Holes.  Cambridge: Harvard University Press.



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