Swot Analysis Peugeot in China and in India

1. Internal Peugeot GroupStrengths* Quantitative performance:* Over 3 million cars sold worldwide in 2009.* Over 1 million cars sold outside Europe in 2009.* World market share of 5%, Europe 13,8%.* Sales increased 52% from 2008 to 2009 in China.* Committed to increase market share in China to 8% in 2015-16.

* Double digit growth expected for sales in China this year, objective to sell 320,000 cars, the double of 2008 figure.

* Qualitative performance:

* Second largest car maker in Europe.* Strategy well defined for the next years, emphasis in emerging countries: China, Russia and Latin America countries. * Agreement signed to build new joint venture in China – Chang’an Strong strategy and investment in R&D.

* Long experience in China, since 1985.* Well established with 2 facilities in China, a third one is being considered. Also a R&D and style center in China.

* Resources:* Company supported by financing houses – Banque PSA Finance.

* Strong structure – 15 engineering plants and foundries, 4 research centers.

* Brand Image:* More than 100 years of tradition.* More than 160 models in the history.* Present in over 150 countries.* Good positions in the European Car of the Year award.

* Wide range of products.* Valued company values: Confidence, passion and inspiration.

Weaknesses* Quantitative performance:* Vulnerable against crisis, losses of 343 Million euro in 2008.

* Europe car market expected decrease 7% in 2010.* Market share in China of 4%, while VW has 17% and GM 10%.

* Qualitative performance:* High price comparing with competitors* Peugeot had already to leave from China once.* Peugeot was unsuccessful in India.* Resources:* ????* Brand Image:* Bad image in India due the way it had to leave from the country. 2.1 External – China


Macro- environment:

* Economic factors:* 2nd biggest economy of the world.* Estimated to be the biggest economy of the world in early 2030.

* Average growth rates of circa 10% for the past 30 years.

* Largest exporter and second largest importer country.

* Low poverty rate of 15% in 2005 compared with 85% in 1981.

* Demographic factors:

* Biggest population of the world with circa 1,3 billion people. * Largest potential market.* Largest labour force, estimated in 791 Million people. * Low labour cost.* Institutional factors:* Economic activities supported by the government.* Government present – Economic Stimulus Plan.* Strong government pressures for workers to stay in line. * Ecological factors:* Abundance of resources: coal, honey, ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, lead, zinc, molybdenum, magnetite, aluminum, uranium and hydropower. * Technological factors:

* High priority for transportation infrastructure.* High regard for science and technological modernization. * Cooperative relationship with developed countries.* Social-cultural factors:* Strong family network


* Market size and structure:* Biggest car market and car maker of the world.* Strong demand even during the crisis.* Fastest-annual-growing car market, circa 22% from 1998 to 2006 * Enormous potential for growth: 6 car owner per 100 people, while in U.S. it is 90. * Small cars represents circa two thirds of the sales. * Forecast of being twice the size of U.S. car market by 2020 – GM. * Competitors:

* ????* Customers Behavior:* Foreign brands more valued by customers.* Distributors* Infrastructure favorable.


Macro- environment:

* Economic factors:* Communist system.* Considerable part of population still below the poverty line. * Demographic factors:* Lower population growth rate than other emerging countries. * Growing inequality.* Institutional factors:* Extensive consultation and negotiation for policy-making process* Economy highly supervised and regulated.* Unreliable legal system.* Policies aimed at encouraging local companies and their brands. * Ecological factors:* Increasing pollution and degradation of natural resources. * Technological factors:* Transportation infrastructure still not fully developed. * Social-cultural factors:* Potential social unrest.


* Market size and structure:* Increasing market share of Chinese brands, 14% in 2004 to 30% in 2009, forecast of 40% in 2017. * Joint ventures well-established between local and multinational companies. * Competitors:

* Environment highly competitive.* Rising quality of Chinese brands.* Strength growth of Chinese brands.* Customers Behavior:* ????

2.2 External – India


Macro- environment:

* Economic factors:* 11th economy of the world, with PPP method it is the 4th. * Average annual GDP growth of 5,8% in the past two decades. * Declining poverty: from 42% in 1981 to 24% in 2005.* Burgeoning middle class: ten-fold growth expectative by 2015. * 60-70 million new households able to afford a car by 2014-15. *Market well positioned for growth.* Declining interest costs, favorable rates for the consumers. * Demographic factors:* Second largest labour force, with 516 million people, estimated to reach 882 million in 2020. * Low labour cost.* Domestic demand and export opportunities.* Institutional factors:* Offer of land to the establishment by the local government. * Policy of the government aimed to promote an integrated, phased and self-sustained growth of the industry, in 2002. * Low entry barrier.

* Lower duties and taxes.* Ecological factors:* World`s fifth largest gas vehicle fleet.* Concern for emission (world`s standards).* Abundance of resources: coal, iron ore, manganese, mica, bauxite, chromite, thorium, limestone, barite, titanium ore, diamonds, crude oil. * Technological factors:* Incentives for in-house R&D.* Social-cultural factors:* ????


* Market size and structure:* Compact car segment is the largest by volume.* Steadily growth of exports of passenger’s vehicles. * Vehicle finance penetration rising steadily over years. * Production of passengers vehicles growing approximately 17% per year over the last 5 years, significantly more than two wheels and commercial vehicles. * Competitors:

* Passenger’s vehicles have only 16,4% of the market share. * Three major players in the passenger`s vehicle market. * Customers Behavior:* ?????* Distributors* Large shore, favorable to exports.


Macro- environment:

* Economic factors:* 41,6% of the population is below of the new poverty line of $1,25 per day. * Reversal of trends of the financial aspects during 2008-09 due to the crisis. The previous level still hasn`t been reached. * Worldwide economic situation, investors are more cautious * Institutional factors:

* Complex law system.* Social-cultural factors:* Caste social system.* Ecological factors:* Raw material prices are shooting high day-by-day.


* Market size and structure:* Two wheels vehicles still dominate the market share. * Competitors:* Strong and well positioned competitors like Suzuki, Hyundai and Tata. * Customers Behavior:* Key driver in choice is the price* Distributors* Infra-structure problems.


* Fighting Poverty: Findings and Lessons from China’s Success (World Bank). Retrieved August 10, 2006.

* “Average W age of On-Duty Staff and Workers in Urban Areas Jumped in the First Three Quarters”. National Bureau of Statistics of China. 2007-10-29, 1

* www.chinaknowledge.com

* http://www.thetruthaboutcars.com/2010/10/new-trend-in-china-chinese-cars/


* http://www.siliconindia.com/shownews/World_Bank_criticizes_India%E2%80%99s_labor_laws_-nid-29498.html

* http://www.fibre2fashion.com/industry-article/18/1792/china-vs-india-comparative-analysis-of-their-strengths1.asp

* The automotive industry in India, Mr. Rahul Sanyal – http://www.teknikforetagen.se/upload/eng/automotive_industry_in_india.pdf

* IBEF – India Brand Equity Foundation BY Gabriel V. Junqueira