Peugeot and GM Alliance Analysis - Capstone Project Example

For instance, this will increase the opportunity for the two firms to widen their horizons when it comes to acquiring sources of their supplies for raw materials for their product offerings. Nowadays, manufacturers like Peugeot and GM, are trying to generate competitive advantage by simply ensuring they could generate supplies and even acquire them at a lower cost.The availability of supplies is necessary because this would ensure a continuing operation on the part of a manufacturing firm. If firms could continue their operations, opportunities could be maximized to the full, allowing on-time delivery of services and creating higher value for target customers or users (Barnes, 2001).

The alliance between GM and Peugeot has a great chance to experience this because the two firms would be able to ensure the availability of supplies if they would combine their respective sources of raw materials. They are trying to create a big entity in their industry as one big giant company, a result of their move to combine forces.On the other hand, as stated in the case, this could also help them minimize costs as they could combine costs in purchasing activity. The bottom line of this move is to guarantee sustainable profitability amid a challenging economy by which competition has also become so tough.

This could substantially depict what Porter recommends as overall cost leadership (Porter, 1980). Although the two firms don't need to will sell their product at a highly competitive price by making it relatively lower than the competitors’, the idea of overall cost leadership is a significant barrier to entry as GM and Peugeot would have the chance to take hold of the economies of scale. For this reason, their competitive advantage could be guaranteed at a substantial level because of the associated benefits of the economies of scale (Porter, 2008).

There are many things to learn from this alliance and aspects for development to consider. First, GM and Peugeot should learn to understand each organization’s individual and prevailing culture. There are many cases from those firms which took the idea of a merger but substantially failed because of their inability to create a new unified culture to work for them.