Cross cultural management (2006)
- PSA: An analysis of the French multinational firm
- The introduction of PSA in Chinese market
- Demographical researches
- Market study
- The quality of the products
Thanks to the new communication technologies of the 20th century, big firms have moved from local or national market to international markets. Most of the important national firms have perceived foreign markets as new opportunities to increase their turnover.
A firm wants to launch its products in foreign markets when the local market has become saturated. When most of the potential customers have been touched by the product, the firm has to find some solutions to increase its revenue.
First, if the firm wants to stay in its national market, it has two main choices. It can make efforts to penetrate the market deeply, that is to say to win competitors market shares. The other solution is to develop a new product in the same market to increase the turnover via another method. Secondly, the firm can try to work in foreign markets. If the firm enters a new market with the same product, we have to create a market development strategy. Some times, foreign markets are real opportunities for firms because the groundwork has been done. In addition, as it is an emerging market, competition is not stiff Maybe there is no competition at all so, more and more profitable firms decide to export their products.
[...] The firm was very well prepared to face the cultural gap between western culture and the Chinese one. PSA was very patient and had created links with China 10 years before the creation of the very big plant in Wuhan. In addition, PSA has studied China, very well from an economic point of view, from a political point of view and from a cultural point of view. These three points represents the keys of PSA success in China. From an economic point of view, we can say that the French firm is very reactive because it has understood since the 80's that China will be the future's big emergent nation. [...]
[...] To capture the market, PSA took the choice of producing cars for China in China. Effectively, there exists in China a high protectionism with a tax of 25% on every product which enters the country. What's more, as the Chinese buying/purchasing power was still very low,it would not have been possible to be competitive on the market, with European production costs and Chinese taxes. So, PSA decided to create a plant in China, to avoid taxes and to profit from the low production costs. [...]
[...] Last but not least, from a cultural point of view, which is the most interesting topic of this demonstration, we can speak of a perfect adaptation., PSA has effectively based its development around Chinese culture. PSA has understood that the Chinese core values (what they learn before being ten years old) were too strong and too different from French one to be ignored. Instead of being a barrier, culture has become a competitive advantage for Citroën. In France, we can remember the case of Toyota with the which is made in Valenciennes, a French town from North of France. [...]