Strategic Analysis Report on Fiat Chrysler and Peugeot Merger

Applied Corporate
Strategy Assessment:
Strategic Analysis
Report

Table of Contents
1. INTRODUCTION..................................................................................................................3
2. MAIN BODY.........................................................................................................................3
2.1 Identify the issues and concluded as on opportunity and threats along with assessing
industry attractiveness............................................................................................................3
2.1.2 Porter five force Model.................................................................................................4
a) Threat of new entrant (low)...............................................................................................5
b) Bargaining power of buyers (moderate)............................................................................5
c) Threat of new substitute (high):.........................................................................................5
d) Bargaining power of suppliers (high)................................................................................6
e) Competitive rivalry (high).................................................................................................6
2.2 Performing internal analysis and determine the core competence and resource of a firm
................................................................................................................................................7
2.2.1 Strength.........................................................................................................................7
2.2.2 Weaknesses:..................................................................................................................7
2.2.3 Opportunities.................................................................................................................7
2.2.4 Threats...........................................................................................................................8
2.2.3 Resources......................................................................................................................8
Value chain.............................................................................................................................9
VRIO analysis.....................................................................................................................10
Evaluating the strategy of a firm using SAFE analysis........................................................11
CONCLUSION........................................................................................................................12
REFERENCES.........................................................................................................................15

1. INTRODUCTION
Strategic analysis is that process which involves research on organization’s business
environment in which the firm is operates. Therefore, it is an essential to formulate the
strategic planning which assist in smooth running and make better decision. The present
study main aim is to examine the selected strategy is better for the firm or not. The report is
based upon Fiat Chrysler and Peugeot (PSA) who deal in automobile industry and the merger
agreement help to attract range of customers towards it. For that, the report will carry out an
external analysis in order to identify a set of opportunities as well as threats. Further the study
will also assess industry attractiveness by using model and then analyse the resource and key
competences of a firm in order to determine the strength and weakness as well as core
competence. Lastly by using the SAFe criteria, study will evaluate the given strategy.
2. MAIN BODY
2.1 Identify the issues and concluded as on opportunity and threats along with assessing
industry attractiveness.
Peugeot and Fiat Chrysler both working in an automobile industry and a deal between
two car makers would create a business within a high market values of nearly $50bn. So there
are many issues which concluded as opportunities and threats. These are as mention below:
 Fiat Chrysler and Peugeot (PSA) get a biggest opportunity with a merger in the
context of innovation. It is so because both the companies are working behind
technologies like electrification and safety features (Warter and Warter, 2020). Hence
with a tie-up, company increase its innovative skills and offer new cars to customers
by complying technological aspects. That is why, it is consider as an opportunity for
the firm.
 Fiat Chrysler faces issue with their employees but with a merger, it could be an
opportunity to develop a better relationship with United Auto Worker because the
workers are suffering from corruption scandal (bribery). So with a merger, companies
need to reduce its domestic workforce which in turn create an opportunity for the firm
to solve this issue.
 Fiat Chrysler and Peugeot (PSA) merger faces issue of competition and this issues is
consider as an opportunity. It is so because there are range of companies who deal in
this industry and that is why both company faces tough competition. But, regulators

from European are worried the dealmay also reduce competition in market and the
same was performed after the merger.
 A small fluctuation in the economy of the country is also affect the overall
performance of a business. As Fiat also faces issue of bribery with United Auto
Worker and loss huge amount as well (Maya and Montes, 2020). Therefore, the
company faces threat that by fall in economy will lead a negative impact upon the
business and that is why, there is a need to make an agreement of merger with
Peugeots.
 Both companies are focused upon technology advancement and makes effective
planning for future. This in turn assist the firmto fight from intense competition within
market and Fiat have stronger foothold in US whereas Peugeot has strong position in
Europe. Therefore, this merger provide an opportunity to offer range of products in
other developing countries like China which assist to strengthen the financial market.
 Increasing pollution is consider the biggest issue in automobile industry and that is
why, companies face threat to manufacturing cars accordingly. Therefore, the merger
will increase the innovation and that is why, Fiat Chrysler and Peugeot (PSA) start
offering electrification cars which do not polluted environment and did not depend
upon fuel as well.
2.1.2 Porter five force Model
Industry attractiveness is consider by using Porter five force model and this helps to
determine the competitive analysis of an industry. By using five key aspects, it is easy to
understand the competition within automobile industry. These are as mentioned below: