A Look at Several Different Carmarkers' Interlinked Trajectories

The misfortunes that the two self-professed champions of globalisation, Ford and DaimlerChrysler (DCX) have had to endure over the past two months have given the specialised economic press some food for thought. With its ìFord 2000î project, the American group was planning on merging its European and North American activities, focusing them on global platforms that were meant to allow Ford to add to its range of adapted regional variants sharing a number of main systems and components (a.k.a. a commonalisation strategy). With the merger between Daimler and Chrysler, transatlantic integration had taken on another form, one that was embodied by the idea of strategic alliances. In both cases, the globalisation aspect was to be extended through an association with a Japanese partner (Mazda and Mitsubishi respectively) who had been given the task of structuring each groupís presence in Asia.

The fall has been all the harder to bear because earlier hopes had been so high. Fordís global strategy has manifestly failed - witness its never-ending losses in Europe, and indeed the problems that it has suffered with all of its activities outside of the United States (sanctioned by the abandonment of the idea of a global platform in favour of the launch of a new Mondeo). Chrysler has started losing money again and DCXís shares plunged by nearly 50% (to 49.80 Euros, on 17 November 2000), causing its CEO, Jurgen Schremp, to announce that he would henceforth be devoting 25% of his time to his relationships with his shareholders! In the United States, Chryslerís specific resources are being depleted with the hemorrhage of top American managers fleeing from German control. Another manifestation is a renewed criticism of the companyís partnerial relationships with its suppliers and components makers. As for the two groupsí Japanese partners, they seem to be doing rather poorly, despite their having taken drastic rationalisation measures.

However, these problems do not signify that all internationalisation strategies are necessarily doomed to fail, even if the experiences of Ford and DCX augur poorly for this orientation. As Robert Boyer and Michel Freyssenet pointed out in the analytical matrix they devised, a given outcome does not always stem from a single cause. This matrix, which has been widely explained and diffused within our network (notably as a result of its inclusion in the ìLetter from GERPISAî), has been made accessible to the entire French-speaking public following the authorsí recent publication of an essay entitled Productive Models (Editions La Découverte, collection ìRepèresî). The authors emphasise the two conditions that determine a firmís profitability: (1) the relevance of its profit strategy to its socio-economic environment, and (2) the coherency of its productive model, which should place the firm in a position where it can set up a governance compromise that is adapted to its strategy. Fordís universalist bias has caused it (and has repeatedly done so, ever since the Model Tís misfortunes in England) to act far too prematurely in anticipating market homogenisation. Indeed, it is the inappropriateness of Fordís globalisation strategy to its surrounding environment that explain its difficulties in markets outside of the United States. As for the problems that DaimlerChrysler has encountered, the explanation lies mainly in the Chrysler- Mercedes merger, and is linked to the aforementioned second condition of profitability.

Inversely, the year 2000 will have been very rewarding for French carmakers Renault and PSA; in an index compiled by Automotive News Europe and PricewaterhouseCoopers, they were declared champions for three years running in shareholder value creation. Yet the two firms appear to have embarked on trajectories that are in many respects quite divergent.

Renault has thrown itself headfirst into the globalisation race. It has concluded multiple alliances (Nissan, Dacia, Samsung for cars; Volvo AB for trucks) and has been refocusing on a co-ordinatorís function in that it has been withdrawing from components production (externalisation). The companyís shareholder communication efforts, starting with its CEO Louis Schweitzer, have been remarkable. The positive results that it has achieved in France and in Japan, with Nissanís spectacular and rapid recovery, have been encouraging, even if the integration of the Japanese firm remains a long-term effort that will require some time before it will be able to give birth to some original organisational configurations.

Renaultís French rival, PSA, represents the other side of the coin; it has been seeking to act as a local player, remaining family-controlled, reinforcing its upstream presence in the components making industry (with Faureciaís takeover of Sommer-Allibert) and demonstrating remarkable economic performance both in terms of product innovation (witness the success of its Peugeot 204,406 and 607 models, of Citroënís Xsara Picasso, and of its diesel engines) and also in terms of profitability all of which has been quite attractive to institutional investors.

In sum, a number of profitable internationalisation strategies can in fact co-exist, even if such strategies are still at an experimental rather than at a consolidated stage. Companies should also be rebuilding those types of governance compromises that can enable them to implement these strategies. GERPISAís new programme will attempt to extend this analysis by drawing upon knowledge acquired during preceding programmes. The upcoming CoCKEAS seminars, organised in Bordeaux, Lyon and London for spring 2001, will contribute to this process. These seminars will be open to all members of the GERPISA network.

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