The long farewell: Peugeot' departure from the U.S. market

Business Horizons, May-June, 1995 by Jean-Loup Archawski, Francis W. Wolek

BUILDING A COOPERATIVE CULTURE WITH INTERNATIONAL ALLIES

Without a vision for how the U.S. was important to Peugeot as a corporation, and without a strategy or culture of cooperation with Americans, Peugeot's management was unable to justify a commitment to the United States. As long as Peugeot faced little competition for finely engineered cars, PMA could generate profits in some years. Once competitive cars were plentiful, though, Peugeot's sales collapsed.

Cooperating with International Allies

Three lessons about cooperation emerge from the Peugeot case. Each partner must (1) control its own agenda for cooperation, (2) take responsibility for its own success, and (3) make sure its allies profit from the alliance. Of these three principles, the last is the most important: Treat your allies as possessing competence and integrity and make sure they earn a profit, even if that means a loss for you! Any lesser position inspires your best allies to depart and encourages bitterness. The result of disappointing allies can be serious damage to a firm's public reputation, as shown by Jamie Kitman's (1993) emotional attack on Peugeot in the influential magazine Automobile.

A fundamental rule of cooperation is that when you advance no clear agenda, your allies will assume they should set the goals. Up to the mid-1980s, Peugeot's dealers responded to the company's lack of strategy with an array of proposed goals and policies concerning everything from advertising to warranties. With no agenda of its own, headquarters responded to these initiatives with silence, fueling an adversarial climate that publicly undermined confidence in the company, its management's integrity, and its cars.

Openness Is Based on Clarity of Identity

Peugeot entered the U.S. with fine automobiles, a proven ability to win customer loyalty, and talented dealers. All were a solid base for evolving a winning strategy and performance in the United States. However, this was only a base, and a host of adaptations were needed to develop cars and an organization for American competition. Awareness of the need for such adaptations and their detailed specification only arises from open give-and-take with allies and customers.

Open interaction between a company and others is never an easy process to manage. Nevertheless, adaptation must never be seen as a nuisance or an unwelcome infringement. Instead, global firms must welcome---even encourage-- interaction with customers and allies. Without adaptation, products and practices will not be equally effective in different cultures.

Promoting cross-cultural interaction is impossible without a clear sense of your own identity and a commitment to following through on that identity in a new culture. Peugeot knew and was proud of the fact that its cars were valued for their comfort and road handling. However, a myopic attribution of these properties to excellent engineering interfered---and still does--with grasping the fact that customers only appreciate these advantages over years of experience.(2) In other words, the knowledge of who you are must not only be from your own point of view but must also include the point of view of significant other