Business Management Report: Evaluating PSA Group's Strategic Resources

This report provides a comprehensive analysis of PSA Group's internal resources and capabilities, focusing on their strategic competitiveness. The report utilizes the resource-based view (RBV) and McKinsey's 7S model to evaluate PSA Group's strengths and weaknesses. The RBV analysis examines the tangibility, heterogeneity, and immobility of PSA Group's resources, while the VRIO framework assesses their value, rarity, imitability, and organizational capabilities. The McKinsey 7S model evaluates strategy, structure, systems, shared values, style, staff, and skills within the organization. The report identifies key resources and capabilities, such as human resources, intellectual property, physical assets, and brand identity, and assesses their contribution to PSA Group's competitive advantages. It also discusses how these internal factors can be leveraged for business expansion and development.

Running head: BUSINESS MANAGEMENT
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Introduction
Analyzing the internal resources and capabilities is important for the contemporary
business entities due to the reason that internal competitiveness is important in staying viable in
the market. The current business state of affairs is highly competitive in nature and it is
important for the entities to be effective and efficient in terms of their resources and capabilities1.
Hence, the effectiveness and efficiencies of the internal resources and capabilities will determine
the extent to which the competitive advantages can be gained. There are number of models and
frameworks being used for analyzing the resources and capabilities, which will be used for PSA
group.
PSA group is the fourth largest automobile manufacturer in the world with having the
operations and business mainly in the European region. They have number globally known car
brands under their sleeve including Citroen, Peugeot, DS, Opel and Vauxhall. In the recent time,
the comeback strategy taken by PSA group is most famous and successful story. However, on
the other hand, it should also be noted that PSA group is witnessing huge competition from other
car brands and thus it is required for them to review their internal effectiveness in order to gain
competitive advantages2. This report will discuss about the internal resources and capabilities of
PSA group based on the resource based view and McKinsey’s 7s model. VRIO framework will
be used to identify the elements for PSA group in gaining competitive advantages. Based on the
identified factors, a few steps and strategies will be discussed in terms of expanding and
developing the business.
1 Lin, Yini, and Lei-Yu Wu. "Exploring the role of dynamic capabilities in firm performance under the resource-
based view framework." Journal of business research 67.3 (2014): 407-413.
2 Castillod, Juan José. Teamwork in the Automobile Industry: Radical Change or Passing Fashion?. Springer, 2016.

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Resource based view analysis
According to resource based view, resources and internal capabilities of the firm are the
key in gaining competitive advantages for the business entities and the evident resources of the
firm area analyzed. The following section will compare the internal competencies of PSA group
on the basis of resource based view.
Resource based view model
The first element of this model is the determination of the tangibility of the identified
resources. In the case of PSA group, the major tangible resources identified are the physical
assets such as their manufacturing and operational facilities, capital, machinery and human
resources3. On the other hand, the major intangible resources of PSA group are the brand
3 Bromiley, Philip, and Devaki Rau. "Operations management and the resource based view: Another view." Journal
of Operations Management 41 (2016): 95-106.

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trademarks, identity and value and other intellectual properties. The next step involved is to
determine the extent to which these resources are heterogeneous and immobile. This is due to the
reason that resources should meet both these criterions in order to have competitiveness.
Heterogeneous
The resources available for PSA group should be different and distinctive with that of
their competitors. This will create competitiveness for PSA group over their competitors. It is
identified that few resources such as human resources, intellectual properties and machinery are
heterogeneous in nature and are different with their key competitors. This is due to the reason
that the skills and expertise of the human resources of PSA group are different to that of other
human resources in competing firms4. In addition, this should also be noted that PSA group is
having distinctive and unique human resource management process that also helps in managing
the distinctive skill sets of the employees and other internal stakeholders. It is also identified that
intellectual properties of PSA group are also heterogeneous in nature as the logo and other
elements being used by them are unique and the key differentiating factor for PSA group. For
example, the respective brand logos being used by Citroen, Peugeot and DS are unique and is the
key identity factor. Hence, the intellectual properties of PSA group can be considered as
heterogeneous. Operational facilities and machinery can also be considered as heterogeneous due
to the reason that usages and types of technologies in the process are different and distinctive5.
The technologies being patented by PSA group are enabling them to continue with their unique
4 Wiengarten, Frank, et al. "Exploring the important role of organizational factors in IT business value: Taking a
contingency perspective on the resource‐based view." International Journal of Management Reviews 15.1 (2013):
30-46.
5 Sodhi, ManMohan S. "Conceptualizing social responsibility in operations via stakeholder resource‐based
view." Production and Operations Management 24.9 (2015): 1375-1389.

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competencies. Apart from these resources, no other resources of PSA group can be considered as
heterogeneous.
Immobile
Immobile refers to the extent to which the resources or competencies of one brand cannot
be replicated by their competitors. In the case of PSA group, the brand value, intellectual
properties and knowledge management process cannot be replicated by their competing firms.
This refers to the point that PSA group is having the access to number of competing resources.
VRIO analysis
The criterions of heterogeneous and immobile are important in creating competitive
advantages over the competitors but they are not enough. There are number of other factors that
should also be considered in determining the competitiveness of the resources. The following
sections will discuss about the different competitive factors evident in the process of PSA group.
Valuable Rarity Inimitability Organizational
capability
Human
resources
  
Intellectual
properties
  
Physical assets   
Technology    
Brand identity    

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Question of value
It is identified that most of the resources identified for PSA group are adding value for
them due to the reason that each of them is helping in increasing the value for the organization as
well as for the external stakeholders. For instance, human resources are being considered as
valuable due to the reason that the skills and expertise of the human resources is the key in
adding value to the process. The internal effectiveness of the brand is dependent on the skill sets
being possessed by the employees. In addition, it is also identified that intellectual properties are
also adding value for PSA group in terms of creating brand distinctiveness in the market. The
trademarks of PSA group are helping in tapping the customers by creating unique value
propositions6. Physical assets are also adding value due to the reason that facilities and buildings
are helping in maintaining the seamless flow of production process. In addition, the strategic
locations of the physical assets are also adding value for PSA group. Patented technologies are
enabling PSA group in regulating their cost of operation and increasing efficiencies. Thus, the
entire process of PSA group is getting enhanced with the help of the improved technologies
being used by them.
Question of rarity
It is identified that only physical assets, technology and brand identity of PSA group can
be considered as rare. This is due to the reason that the extensive physical assets being possessed
by PSA group are not available with all their competitors. Extensive physical assets are also
enabling PSA group in tapping the global markets, which are not accessible to some other
competitors. Thus, it is rare and creating competitive advantages for PSA group. On the other
6 Hinterhuber, Andreas. "Can competitive advantage be predicted? Towards a predictive definition of competitive
advantage in the resource-based view of the firm." Management Decision 51.4 (2013): 795-812.

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hand, it is also identified that technology possessed by PSA group is also rare due to the reason
that patents are not well available and cannot be accessed by everyone. Extensive research and
development process is available with PSA group that is further enabling them to initiate new
patents in terms of new technology7. Hence, technology is another source for PSA group in
gaining competitive advantages. Brand identity enjoyed by PSA group is also rare because not
every other car brands can have the same level of identity and brand value across the world.
Moreover, few other car companies are having the capability in matching the global brand
identity of PSA group.
Question of inimitability
It is identified that skills and expertise of the human resource is inimitable in nature due
to the reason that each of the human resources posses distinctive sets of effectiveness. Thus, that
cannot be imitated. Intellectual properties also should be earned and is distinctive in nature. Even
if the competing firms are competent enough in gaining the same level of intellectual properties,
then also the particular elements with the PSA group will stay unique. Hence, this is another
source of gaining competitive advantages for PSA group. Technology of PSA group is also not
imitable because they are patented and are not available for open source usages.
Question of organizational capability
Each of the resources discussed in this framework is well organized by PSA group. This
is due to the fact that proper mechanism is being followed in managing all the available
resources. For instance, PSA group is having effective human resource management process that
is further helping them to maximize the productivity of the employees and ensuring their highest
7 Pee, Loo Geok, and Atreyi Kankanhalli. "Interactions among factors influencing knowledge management in
public-sector organizations: A resource-based view." Government Information Quarterly 33.1 (2016): 188-199.

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level of production. On the other hand, proper management and coordination across the facilities
in different regions is proving the point that PSA group is capable enough in managing all their
available resources8.
McKinsey’s 7s framework analysis
Apart from the resource based view, McKinsey’s framework will also be used to have the
understanding about the internal process and practices of PSA group. According to this model,
there are seven elements that should be considered in determining the internal effectiveness OF
PSA group. The following sections will discuss about each of these elements.
Strategy
Strategy refers to the organization’s plan of managing their competitive advantages. In
the case of PSA group, they are having centralized management approach of involving all the
business factors. Hence, all the resources of PSA group are managed in well coordinated
approach9. For example, the human resource management strategy is similar across all the
operations of PSA group. Hence, it can be concluded that coordinated approach of management
is helping PSA group in gaining competitive advantages.
Structure
PSA group is having vertical organizational structure with having different hierarchy
levels. This is due to the reason that PSA group is having their operations across the world and
the high level of hierarchy is required to oversee the different functions. It is identified that
8 Kull, Alexander J., Jeannette A. Mena, and Daniel Korschun. "A resource-based view of stakeholder
marketing." Journal of Business Research 69.12 (2016): 5553-5560.
9 Singh, Ashu. "A study of role of McKinsey's 7S framework in achieving organizational excellence." Organization
Development Journal 31.3 (2013): 39.

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departmentalization is being initiated on the basis of functions10. Thus, it is helping them in
managing each of the functions under the expertise of the respective functionary body. The more
will be the effectiveness in managing the different functions, the more will be the probability of
gaining the competitiveness from the process.
Systems
Being a global manufacturing firm, PSA group is having the access to different processes
and practices. The employees and other internal stakeholders are included in the common
communication portal that helps in identifying the issues of any along with their feedback. Thus,
getting a job done is easier and effective in PSA group because all the associated stakeholders
are involved in the particular process.
Shared values
It is identified that PSA group is following uniform organizational culture and value
across their operations. Clan culture is being followed by them, which involves the equal
feedback and participation of the internal stakeholders in the decision making process. Hence,
the managers and supervisors are having the larger number of options and mitigation strategies
against any issues11. Moreover, the initiation of the uniform values is also helping in reviewing
the internal performance.
Style
10 Ravanfar, Mohammad Mehdi. "Analyzing Organizational Structure based on 7s model of McKinsey." Global
Journal of Management And Business Research (2015).
11 Baishya, Bishwajit. "McKinsey 7s Framework in Corporate Planning and Policy." International Journal of
Interdisciplinary Research in Science Society and Culture (IJIRSSC) 1.1 (2015): 165-168.

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It is identified that situational style of leadership is being followed in PSA group. This is
due to the fact that they are having their operations across different countries with different sets
of cultural and social backgrounds12. Hence, different situation based leadership styles are being
followed by PSA group. The major competitive advantage that is being gained by them is the
maximization of the operational effectiveness across all the operations.
Staff
Geocentric approach of staffing is being followed by PSA group due to reason that they
are having diverse sets of workforces. Moreover, the employees of PSA group are belonging
from different social backgrounds that are further getting contributed due to the geocentric
staffing. This is ensuring that PSA group is having the access to different cultural preferences
and is evident in offering of different product types in different markets.
Skills
Skills of the human resources are being managed and enhanced by the effective process
of the human resource management. The human resource management in PSA group is also
being customized according to the different social factors. Training and development process is
also included in the skills management of the employees. The recruitment and selection process
of PSA group is also included in this step due to the reason that employment of the employees
with proper skill sets can helps in gaining the competitive advantages in terms of the internal
management.
Recommended steps
12 Shaqrah, Amin A. "Analyzing business intelligence systems based on 7s model of McKinsey." International
Journal of Business Intelligence Research (IJBIR) 9.1 (2018): 53-63.

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From the above analysis, there are number of factors being identified and based on these
identified factors, a few recommended steps will be discussed. These recommended steps will
help PSA group in developing and expanding their business. Each of these steps and strategies
will be discussed and analyzed in the following section.
New market development
It is recommended that PSA group should initiate the process of new market development
due to the reason that the more will be the market size, the more will be the business revenue and
sales volume. From the above analysis, it is identified that intellectual properties are one of the
major sources of gaining competitive advantages for PSA group. Hence, they should leverage
more on their intellectual properties in targeting the new countries. It is noted that there are
number of potential countries majorly in the South Asian and South East Asian regions where
PSA group is still not having their presence. However, the brand identity of PSA group is
favorable and penetrated in this region due to the participation in different motorsports. Hence, it
will be a viable option for PSA group in tapping in these regions and leveraging their intellectual
property. Already, PSA group is enjoying a good run in their existing markets and entering in the
new markets will not be difficult for them considering their global reach of their branding.
Hence, this will be a major available option for PSA group in developing their business.
New product development
Apart from the development of new markets, it is also recommended that PSA group
should also initiate new product development process. This is due to the reason that new market
regions will require products according to the local market trends. For instance, the new markets
in the Asian regions to be targeted cannot be catered based on the existing product portfolio of

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PSA group as because the preferences of the market are different. In this case, it should be noted
that PSA group is gaining competitive advantages in terms of their extensive operational
facilities as well as technologies. Thus, the patented technologies should be leveraged by them in
meeting the local market requirements in the new regions. New and patented technologies will
be beneficial for PSA group in developing the new products from the new markets in the more
cost effective manner. The strategic advantages will also get increased for PSA group in
initiating this strategy. This is due to the reason that PSA group is already operating across the
world and is having their manufacturing facilities in different countries. Hence, with the adding
of new countries, they will further increase their global presence and strategic location advantage
can be gained. This should be noted that South and South East Asian counties are known for
cheaper resources that can be leveraged by PSA group in reducing their cost of production.
Existing market penetration
The existing markets where PSA group is already operating are also profitable for them,
which is evident from the recent turnaround incident of their sub brand Vauxhall. Thus, the
existing markets of them should be focused more and markets should be penetrated. For instance,
under the brand name of PSA group, Peugeot is catering to the affordable segments, Citroen is
catering to the D class segment and DS is for the premium segment, while sub brands such as
Opel and Vauxhall are catering to the urban requirements. However, not any of the brands of
PSA group are having expertise in building super affordable and mini cars, which can be offered
to the segment below what Peugeot is currently catering. Thus, it is recommended that smaller,
fuel efficient and affordable cars should be made. Moreover, it is also recommended that SUVs
should be more promoted over any other vehicle types. This is due to the reason that in the
current scenario of the automobile market, SUVs are highly preferred. However, as per the

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current product portfolio of PSA group, hatchbacks and crossovers are the major offerings. Thus,
it is recommended that product variety should be increased in order to further penetrate in the
existing market.
Decentralization approach
It is also recommended that foreign market operations of PSA group should be designed
as the strategic business units. This is due to the reason that initiation of the strategic business
units will be beneficial in managing the business according to the local market situation and also
the decision making process will get more effective in terms of swiftness. In the current system,
PSA group is following centralized approach, which is more time consuming in initiating the
decision making process. Moreover, it is also difficult for the centralized approach to cater to the
difference and diversity across the world and offer products accordingly. Hence, with the
strategic business units in place, each of the foreign business operation will be considered as the
separate entity. Each of them will be responsible and accountable for the business performance
in respective regions. This strategy will be more effective in meeting the diverse needs and
requirements of the global customers and PSA group will be able to target the larger customer
numbers.
Conclusion
This is to be concluded that PSA group is having number of sources for gaining
competitive advantages. Resource based view and McKinsey’s 7s framework is being used to
determine the internal resources and capabilities of PSA group. A few relevant factors are
identified and based on these factors, different strategies are recommended in this report. It is
recommended that PSA group should initiate market development, penetration and product

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development process in order to further improve their business. Moreover, it is also
recommended that PSA group should decentralize their international business and strategic
business units should be initiated. Effective implementation of these strategies will help PSA
group in developing their long term business potentiality and revenues.

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Reference
Baishya, Bishwajit. "McKinsey 7s Framework in Corporate Planning and Policy." International
Journal of Interdisciplinary Research in Science Society and Culture (IJIRSSC) 1.1 (2015): 165-
168.
Bromiley, Philip, and Devaki Rau. "Operations management and the resource based view:
Another view." Journal of Operations Management 41 (2016): 95-106.
Castillod, Juan José. Teamwork in the Automobile Industry: Radical Change or Passing
Fashion?. Springer, 2016.
Hinterhuber, Andreas. "Can competitive advantage be predicted? Towards a predictive definition
of competitive advantage in the resource-based view of the firm." Management Decision 51.4
(2013): 795-812.
Kull, Alexander J., Jeannette A. Mena, and Daniel Korschun. "A resource-based view of
stakeholder marketing." Journal of Business Research 69.12 (2016): 5553-5560.
Lin, Yini, and Lei-Yu Wu. "Exploring the role of dynamic capabilities in firm performance
under the resource-based view framework." Journal of business research 67.3 (2014): 407-413.
Pee, Loo Geok, and Atreyi Kankanhalli. "Interactions among factors influencing knowledge
management in public-sector organizations: A resource-based view." Government Information
Quarterly 33.1 (2016): 188-199.
Ravanfar, Mohammad Mehdi. "Analyzing Organizational Structure based on 7s model of
McKinsey." Global Journal of Management And Business Research (2015).

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Shaqrah, Amin A. "Analyzing business intelligence systems based on 7s model of
McKinsey." International Journal of Business Intelligence Research (IJBIR) 9.1 (2018): 53-63.
Singh, Ashu. "A study of role of McKinsey's 7S framework in achieving organizational
excellence." Organization Development Journal 31.3 (2013): 39.
Sodhi, ManMohan S. "Conceptualizing social responsibility in operations via stakeholder
resource‐based view." Production and Operations Management 24.9 (2015): 1375-1389.
Wiengarten, Frank, et al. "Exploring the important role of organizational factors in IT business
value: Taking a contingency perspective on the resource‐based view." International Journal of
Management Reviews 15.1 (2013): 30-46.