The Strategy of Renault SA

by: Sebastian Martin

- Table of Contents -

1.) Introduction page 3

2.) Resources and capabilities of Renault SA

2.1) Resources:

2.1.1) Tangible Resources page 3
2.1.2) Intangible Resources page 5

2.2) Capabilities: page 6

3.) Competitive strategy and advantage of Renault SA page 7

4.) Explanation why the current strategy has been adapted page 9

5.) Evaluation of the strategy in terms of its impact on the company’s recent performance, current position and likely future prospects. page 9

6.) Considered recommendations for the future strategy page 11

References page 12

Appendices page 15
 

1.) Introduction:

This assignment paper will describe Renault’s current competitive strategy and competitive advantage. It will be explained why the strategy has been adopted and which impact it has towards the companies recent performance. Moreover, recommendations for its future strategy shall be provided. Closer information concerning Renault is mentioned in the appendix.

2.) Resources and capabilities of Renault SA

2.1) Resources:

2.1.1) Tangible Resources:

Financial Resources:

Since 2000, Renault tremendously decreased its debts. (Table 1) Still 2003, Renault’s net profit amounted more than twice the net profit of Volkswagen.(Table 2) The first half of 2004, Renault achieved a operation margin of 6.1%, exceeding Volkswagen and Peugeot Citron.(Table 3) All together, Renault seems to have strong financial resources.

Table 1: Dept/ Equity ratio of Renault [table only in downloadfile]

Table 2: Net profit, in million € [table only in downloadfile]

Table 3: Operation margin [table only in downloadfile]

Physical Resources:

Renault manufactures cars in more than 30 sites world wide and is able to use facilities of other manufacturers, like Matra plants as well as the site of GM Europe in the Uk, through operative cost-sharing agreements. The 1999 formed Alliance with Nissan let Renault use additionally facilities such as in Mexico. Some suppliers even opened facilities next to some of Renault’s plants.(Renault 2004) Please see appendix 3 for more detail.

2.1.2) Intangible Resources:

Technological Resources:

The in table 4 listed awards show that Renault has decent technological resources. For example did the Espace recently achieve the “highest score ever recorded in independent crash tests by Euro NCAP” (carpages.co.uk). Between 2002 and 2003, additionally Renault’s patents increased by 18.22 per cent. Renault’s R&D Ratio decreased from 5.6% in 2001 to 4.9% in 2003. (Renault 2004, 144)

Table 4: Some awards of RENAULT cars [table only in downloadfile]

Reputation:

Beside itself as “leading brand in Western Europe in all the passenger and light commercial vehicle markets” (Deloitte Touche Tohmatsu 2004), Renault has majority shares in two other brands: Dacia and Samsung. Renault, with around 100 as well as Dacia with more than 40 years have a long tradition and reputation as car manufacturers. (glaubeaktuell.net 2004; Renault 2004) Human resource: Training, health and safety of employees are seen as important by Renault. 360° feedback as well as surveys is used to measure and improve the staff performance. (Renault 2004) Figure 1 indicates improvements in the human resource sector. The number of industrial accidents with time off decreased between 2000 and 2003.

2.2) Capabilities:

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