Groupe PSA: Re-Entering India
(10 pages of text)
Case (Pub Mat)
In January 2017, Groupe PSA (PSA), the France-based automobile manufacturer known for its brands Peugeot, Citroën, and DS Automobiles, announced its partnership with the Indian conglomerate CK Birla Group, which would enable the company to re-enter India after having left in 2012. PSA had entered India twice before, through a joint venture with Premier Automobile Limited in 1994 and again in 2011, but both times had been unsuccessful due to production losses, labour unrest, and pressures related to the financial crisis in Europe. The Indian automobile industry was one of the largest in the world. It contributed 7.1 per cent of India's gross domestic product in 2017 and was expected to contribute 12 per cent by 2026. All major automobile manufacturers had set up base in India, and to be truly global, PSA also needed a presence in India. In its previous attempts, PSA had suffered and failed to build its brand. The re-entry decision therefore raised many questions: Was a joint venture the right entry method, or would an Indian subsidiary have been better? Which segments should PSA target? What should it do with the Ambassador brand it had acquired from CK Birla Group in 2017?
This case is intended for use at the end of a graduate-level course or in a post-graduate level course on strategic management. It can also be taught as a part of an international business course, although students are assumed to have knowledge of strategic management concepts. The case is particularly useful for highlighting the complexities of international expansion and growth and for addressing the challenges that emerge when entering competitive industries. After working through the case and assignment questions, students will be able to do the following:
- Describe the challenges global automobile companies face in continuing and managing international expansion.
- Analyze foreign market entry and re-entry strategies as key strategic options for attaining international growth.
- Define the joint venture and wholly owned subsidiary entry modes and their underlying principles.
- Identify the challenges of implementing strategies to fit the needs of a new market after re-entry.
- Discuss the effectiveness of revitalizing an acquired local brand to gain a foothold in a foreign market.
India, Large, 2017
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