Strategy doesn’t have to be complicated – Lessons from a car maker

The recent May press headline of JLR (Jaguar Land Rover) British luxury car brand (potentially) being purchased by French PSA Group (Peugeot Citroen Vauxhall) just shows how quickly their respective fortunes have changed.

In 2014 JLR posted profits of £2.5B, whilst PSA was being rescued from BANKRUPTCY by new boss Carlos Tavares, and within a year PSA was back in the black.

In 2018 JLR revenues were £26B with £1.5B profits and PSA revenues £64B with £2.8B profits.

‘Peugeot Citroën DS has made significant progress for the 5th year in a row and is closing the first phase of the Push to Pass strategic plan with outstanding results. This demonstrates the ability of our Group to deliver a profitable and recurring growth. We are now entering in the second phase of the Push to Pass plan with confidence in a context of even stronger headwinds. No doubt that our agile, customer focused, and socially responsible approach will make the difference.’

Carlos Tavares, Chairman of Groupe PSA Managing Board Feb 2019

The PSA strategy is one that could be applied to almost any business:

  1. Focus on profit not sales or market share
  2. Cut the products that make little money or no money
  3. Reduce production costs by culling product variants
  4. Acquisition agility when considering new Technology
  5. Invest in collaboration rather than capex for new geographical markets
  6. Engage the workforce with purpose and profit
  7. Never forget the customer – do it for them

Business strategy doesn’t have to be complicated, but it does involve you in some tough decisions about the future shape of your business and in particular answering the key questions of what business you want to be in, how you’re going to achieve your goals and what impact it will have on your people, product and process.

“Mindful of the key changes called for by the car of the future, Groupe PSA’s strategy for 2016 to 2021 aims to make the Group a global car manufacturer on the cutting edge of efficiency and a provider of mobility services favoured by its customers. Driven by the Push to Pass profitable organic growth plan, this strategy is underpinned by three levers: The digital transformation of the Group. The internal performance culture. Corporate social responsibility.” PSA Groupe

But the real value comes from the implementation of the plan, which is another skill set entirely.

Improving the performance of your people, the profitability of your products and the productivity of your process.

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Posted in Annual Plan, business strategy, leadership, Reviewing your Business Plan, Strategic Planning
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