Renault's Business Microenvironment: A Strategic Analysis

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BS7114 Contemporary Business Strategy

Contents
Introduction......................................................................................................................................3
Critically assessing the business microenvironment (industry) within which Renault operates.....3
Trends/drivers of changes (opportunities and threats) in the business microenvironment that
might affect the competitive position of Renault in the next 10 years............................................5
Scenarios (four) that could help Renault define and implement its strategy over the next 10 years
to build a sustainable competitive advantage..................................................................................7
How can the key partners (Nissan and Mitsubishi) help Renault with its strategic priorities?.......7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
Appendix........................................................................................................................................10
List of Figures
Figure 1: Porter's Five Force model.............................................................................................10
Figure 2: Competitors of Renault..................................................................................................11
Figure 3: Supplier of Renault........................................................................................................12
Figure 4: Distribution of Renault..................................................................................................13

Introduction
The business environment is the assembly of external and internal factors that effectively
influence the business. The impact of factors is not static, they are dynamic and changes with
time and trend. The changing needs of customers and innovation play a significant role in the
business environment and performance of the business (Burattin, 2015). Renault is a French
Automotive company that manufactures a variety of cars, vans, trucks, tanks and other vehicles
at a multinational level. The company wants to explore the business with the help of business
strategies that benefit the company in increasing productivity and sales. The assignment will help
the organization in understanding the features and core functions of the company, and the
competitive advantage of strategies that contribute in reducing the competition and increment in
progress with the aid of microenvironment factors (Renault, 2019).
Critically assessing the business microenvironment (industry) within which
Renault operates
The business microenvironment is the combination of elements or factors within the
organization's area of operation that impact the decision making and performance of the
company. The microenvironment does not impact all the organization in the same way as the
size, capability, capacity and strategies are different, the micro environment includes factors such
as customers, competitors, suppliers, distributers and public (Ursini-Siegel and Beauchemin, N.
2016). Renault emerges as one of the widest automobile company in the world that works with
the core strategy of manufacturing and selling the products on the finance and insurance basis
that benefit the company in profit and success. Porter’s five force model will benefit in
understanding the impact of the microenvironment on the business of Renault (Renault, 2019).
Porters Five Force Model
Porters five force model is used as a business strategic tool for analyzing the business situation
that benefits the company in developing and adopting a strategic plan for business profit. The
model consists of five factors that contribute to analyzing and evaluating market demand and
power (Vitasek, 2016; ref Appendix 1).

Competitive Rivalry
BMW and Suzuki are one of the biggest competitors of Renault in are of innovation and finance.
The market value of BMW and Suzuki as per the graph is 53.5$ and 26.2$ which is greater in
comparison to Renault. The competitors are increasing the competition in the automobile
industry and force Renault to adopt a strategic plan for business growth (Vitasek, 2016; ref
Appendix 2).
Threat of Buyers
The customer plays a significant role in the progress and success of the business as the
consumers has the power to success and fails the business. Renault is a multinational car
manufacturing company and has several customers that are buying the products of Renault. The
customers of Renault are increasing day by day that benefits the company is expanding the core
business (Harding, 2017).
Threat of Suppliers
Nissan and Mitsubishi Motors are one of the biggest suppliers for car parts to Renault. The
supplier will help Renault in enhancing the manufacturing and productivity of the business that
benefits the company in increasing the core business and profit in business. For the growth and
success Renault needs to maintain good relation with the Nissan and Mitsubishi motors
(Harding, 2017; ref Appendix 3).
New entrants
The emerging Automobile companies in the automobile industry are one of the biggest
competitors and threats for Renault. The entry of new competitors with variety of products
increase the competition for Renault and benefit the company in adopting new strategy and plan
for growth (Harding, 2017).
Substitutes

Substitution relates with the entrance on new products in market that decrease the popularity of
other brand and attracts the customers towards the substitution. The new launching from other
companies such as Tata Motors, Suzuki, and Audi increase the competition and contributes in
decreasing the popularity of Renault. For gaining attraction and popularity Renault needs to
adopt effective strategy that helps in replacing the substitutes (Vitasek, 2016; ref Appendix 4).
Trends/drivers of changes (opportunities and threats) in the business
microenvironment that might affect the competitive position of Renault in the
next 10 years
As mentioned above with the diverse market forces and company’s core advantageous factors
that makes it driving successfully, there are some more factors that forces them positively as well
as negatively in their business. These are the drivers for change or trends that occur in the
industry and hence they have to deal with them. The Groupe Renault experiences some major
trends and drivers that affects their competitive positioning in the markets and are:
Technology disruption and innovation
The rate of disruption of technologies is increasing with the increasing innovation because of the
needs and demands in markets, similarly in automobile industry, the need for green cars,
environmental sustainability and many more areas forces major changes in technology at a firm
like Nissan (Serafino and Nussbaum, 2018). Renault-Nissan-Mitsubishi is working in technology
leadership on future cars with their strategic alliances for future sustainability and sold more than
598,000 zero emission cars globally (Renault-Nissan-Mitsubishi, 2019). Addition to this, the
increasing demand of automation and artificial intelligence makes the industry more competitive
as all are working on similar technologies.
The groupe has announced that they will invest up to $1 billion to support open innovation over
the next five years (Groupe Renault, 2017). Recently, the Renault F1 team announced that they
will strengthen their technology department so that they can become the leader in formula 1
racing with their current success flow (Renault F1 Team, 2019). So, overall it can be stated that
with the changing technologies and traditional methods, Renault is also working on
strengthening it rather by working on new technologies and innovation, sustainability, waste

management and corporate citizenship; they are growing by making it as a positive driver for
change (Nissan Motor Corporation, 2019).
Market Competition
One of the most important drivers for change in any organisation is the market competition.
Likewise, for Renault, the increasing market competition has forced them to reconsider their
business strategies and decisions. This is a key relevant driver of change as it creates threats for
the firm as well as opportunities if one sees them with proper decision making and leadership
skills. Recently, according to an article and company reports, the Renault-Nissan-Mitsubishi has
become the world leader carmakers by beating Volkswagen Group which can be seen as their
effectiveness in operations and notion to success in future years with their increasing rate of
competition (Groupe Renault Facts & Figures, 2018; The Economist, 2018).
According to Automakers News Europe (2019), they have also upgraded their Zoe electric car as
the competition in the sector intensifies. Company has also been rethinking innovation and
design for emerging markets with their frugal innovation ideas under Renault Kwid Project in
competitive markets (Midler, et al. 2017). They are searching for the best places to establish and
operate with blue ocean strategies and market analysis so that they can enhance their share and
attain additional profits in near future for business sustainability. At last, the strategic merger
between Renault and Nissan has gave them supplementary potential in finance structure,
organisation design and with their aim to attain autonomy by both (Barmeyer and Mayrhofer,
2016). These relevant changes made them more dominant and potent for coming years on global
platforms with intensified competitive markets.

Scenarios (four) that could help Renault define and implement its strategy
over the next 10 years to build a sustainable competitive advantage
How can the key partners (Nissan and Mitsubishi) help Renault with its
strategic priorities?
Conclusion

References
Automakers News Europe, 2019. Renault upgrades Zoe electric car as competition intensifies,
(online) available at https://europe.autonews.com/automakers/renault-upgrades-zoe-
electric-car-competition-intensifies last accessed on 15th August 2019.
Barmeyer, C. and Mayrhofer, U., 2016. Strategic Alliances and Intercultural Organizational
Change: The Renault–Nissan Case. Intercultural Management. A Case-Based Approach
to Achieving Complementarity and Synergy, pp.317-332.
Buratti, A., 2015. Process mining techniques in business environments. In volume 207 of Lecture
Notes in Business Information Processing. Springer International Publishing.
GROUPE RENAULT FACTS & FIGURES, 2018, (online) available at
https://group.renault.com/wp-content/uploads/2018/03/facts-figures-march-2018-
edition.pdf last accessed on 15th August 2019.
Groupe Renault, 2017. Drive The Future 2017-2022: New strategic plan builds on record results,
targets sustainable, profitable growth, (online) available at
https://media.group.renault.com/global/en-gb/groupe-renault/media/pressreleases/
21197704/drive-the-future-2017-2022-le-nouveau-plan-strategique-sappuie-sur-des-
resultats-records-et-vise-une last accessed on 15th August 2019.
Harding, S., 2017. MBA management models. Routledge.
Midler, C., Jullien, B. and Lung, Y., 2017. Rethinking Innovation and Design for Emerging
Markets: Inside the Renault Kwid Project. Auerbach Publications.
Nissan Motor Corporation, 2019. Alliance 2022, (online) available at https://www.nissan-
global.com/EN/SUSTAINABILITY/REPORT/ALLIANCE/ last accessed on 15th August
2019.
Renault F1 Team, 2019. Renault announce organisational changes to strengthen technical
department, (online) available at https://www.formula1.com/en/latest/article.renault-
strengthen-technical-department.FJrjvWK092yZ3hs47hC4i.html last accessed on 15th
August 2019.
Renault, 2019. Renault. (Online) Available at; https://www.renault.co.uk (Accessed on 19th
August 2019).
Renault-Nissan-Mitsubishi, 2019. Sustainability, (online) available at https://www.nissan-
global.com/EN/SOCIALCONTRIBUTION/ last accessed on 15th August 2019.
Serafino, P. and Nussbaum, A., 2018. What You Need to Know About a Renault-Nissan
Merger, (online) available at
https://www.bloomberg.com/news/articles/2018-03-29/renault-nissan-deal-would-
untangle-20-year-pact-for-shift-to-ev last accessed on 15th August 2019.

The Economist, 2018. Renault-Nissan-Mitsubishi has become the world’s biggest carmaker,
(online) available at https://www.economist.com/business/2018/03/17/renault-nissan-
mitsubishi-has-become-the-worlds-biggest-carmaker last accessed on 15th August 2019.
Ursini-Siegel, J. and Beauchemin, N. eds., 2016. The tumour microenvironment: methods and
protocols. Humana Press.
Vitasek, K., 2016. Strategic sourcing business models. Strategic Outsourcing: An International
Journal, 9(2), pp.126-138.

Appendix
Appendix 1
Figure 1: Porter's Five Force model
Source: [https://www.slideshare.net/leannerice2008/renault-presentation]

Appendix 2
Figure 2: Rivalry
Source: [https://europe.autonews.com/article/19980202/ANE/802020802/renault-to-choose-150-
global-suppliers]

Appendix 3
Figure 3: Supplier of Renault
Source: [https://www.kbc.co.ke/nissan-renault-mitsubishi-to-share-electric-car-platform-nikkei/]