PSA the share price around €22 when revenues go

PSA groups is the
French multinational automobile manufacturer which was established in 1976. Its
headquarters lies in Paris. It has become the second largest car
manufacturer having the market share of 17% in the European car market after
Volkswagen Group as
the purchase of Opel and Vauxhall is completed in 2017. (PSA group 2017) Now PSA
group has strong iconic brands i.e. Peugeot, Citroen, Opel, Vauxhall. PSA group
has sold more than 3 million vehicles in 2016. It has €54 billion revenue in
2016. PSA group is the European leader for low carbon emission (102.4 g) CO2/km.
On the other hand there are some challenges for PSA group regarding Opel’s
emission strategy which PSA group felt being cheated by General motors. (Saarinen, 2017) Similarly, PSA group
may face legal challenge by the government regarding diesel taxes and the third
challenges would be the guarantee of job security of Opel and Vauxhall group. (Saarinen, 2017) PSA group has
followed a costumer driven transformation with the push to pass strategic plan
in 2016 which makes the PSA group provide mobility services favored by its
costumer. Because of this strategy, PSA group has increased its sales for the
third consecutive year since 2014-2016 increasing the sales by 5.8%. (Annual
report 2016)

While analyzing the financial performance of PSA group in
the given chart, the price of its ordinary shares has experiences a mixed
performance since the last 10 years. The global economic crisis hit France
desperately in 2008/2009 leading its share price decreased to a low of €8.20 when PSA groups share
has fallen by 10%. Whereas in 2010, PSA group made a strong recovery gaining
the share price around €22 when
revenues go up by 15.8%. This was a turnaround in automotive profitability
recurring income of €689 million(Annual report 2010) During the beginning of
2011 to 2012 again PSA groups share price decreased dramatically leading share
price fell to the lowest of all time €3.64 because of Eurozone debt crisis.
After the alliance with the General Motors in 2012, which leverage both
companies to combine the strength and capabilities for profitability of both
partners improving their status in Europe. By 2014, PSA group again came “back
in race” recurring positive group operating free cash flow. It had made an
effective control over various risks associated with the business. By the end
of 2017, the groups share price has risen by €19.75. PSA group is now
profoundly changing the business environment in terms of technology, modes of
consumptions, and new entrants in the automotive industry.(Annual report 2016)

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Task 3

Costumer centric behavior and use of modern technology on
production has led PSA group perform better in this competitive environment.
PSA group has aimed to be an excellent plant as a technology focused company where
most of the activities are done with the help of robotized machines and
innovative technology. For the instant customized solution, costumer expectation
is responded in bespoke manner. Innovative automation solutions help to improve
the working environment and safety of the  employees. PSA production system mainly
incorporated with safety management ,quality ,cost ,environment and time period
for the production. The Factories are extended to the suppliers and integrated
with the excellent supply chain. PSA group manufacturing system is enhanced
through several criteria: a load rate optimized by
compacting; continuous change through the experiment as the demand of the
customers; management autonomy which allows them to decide the best way to
achieve the goals and   maximize process
improvements; and the full integration of suppliers in the supply chain to run the production system smoothly. .(PSA
group 2017)

Similarly PSA group is focusing on the streamlined platform
production .It helps in operational cost reduction and maximum optimization of
outputs .Currently The group has two global platform; EMP2 and CMP The EMP2 is
the car platform for compact and middle size car  with front wheel drive or four wheel drive
.This platform was used in 2013 by PSA group with alliance to general motors.
This helps to reduce the material cost by 70 KG and fuel consumptions by 22 % .The
CMP(common modular platform) developed by PSA group with its Chinese partners
Dongfeng Motors for entry level compact car model with combustion engine and
battery electric car. The CMP platform enabled PSA group to offer electric
vehicle to its customers. .(PSA group 2017)

The PSA group is giving much more focus on the excellence.
Through the 16 production center and 15 powertrain sites  it is focusing on continuous improvement
through experiment. Group PSA is consecutively using Patents for nine years
with French government by using innovative technology to reduce the environmental
pollution by its vehicles.By using downsize petrol engine and new generation
diesel engine ,PSA group is the pioneer leader in Europe to cut carbon emission.The
group is mainly prioritizing to produce plug in hybrid and electric vehicles.(PSA
group 2017)

In order to develop the commercial relationship eternally
with the customers ,Group PSA have used variety of communication channels and
programs for the customers. by enlarging the global network of dealership and
repairing center, the group can develop good costumer relationship. Incorporating
with its all brands, PSA group is providing financial services and insurance
products for its customers through Banque PSA finance. customers can easily get
the replacement parts through Europe car service network and Group brand
service point. Similarly, PSA group has started second hand vehicle business
based on B2B sales which helps the customers get the brand in cheap price,

Quality is the first pillar of strategic plan of PSA group.
Customer satisfaction is the best way to protect the business over the medium
and long term. Generally, quality is measured in terms of products and services.
In terms of product, Cars are reliable, no abnormal operation and no breakdown
throughout the life of car.(PSA group 2017) The PSA group is committed to
provide high  quality products and after
sales services to meet the costumers requirement and reliability upon the
brands. The strategy of 2016 Push to pass plan is directly linked to customer satisfaction.
(PSA group 2017)


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