VALEO Case Study Strategic segmentation at Valeo Strategic segmentation, which involves subdividing the organization into triple marketslcompetitorsltechnologies, is not a trivial exercise. In 2005, Valeo presented itself as a supplier focused on "the design, manufacture and sale of components, integrated systems and modules for ours and trucks." The group was one of the wodd's leading suppliers and its customers included the major car manufacturers in North America, Europe and Asia. With a turnover of 9.4 billion in 2004, the group employed 68,700 people in 26 countries with 128 production sites, 65 research and development centres and 9 distribution centres. The group was present on 4 activities, comprising 10 industrial branches and 2 branches dedicated to the second monte. The 10 industrial branches had more than 185 autonomous divisions (one per product line or system): 0 Electrical-electronic activity (53% of the group's turnover): - Branch lighting signalling (headlights, turn signals, wash lamps, etc.). - Wiper systems branch (wipers, windshield washers) Switching branch and detection systems (parking radars, sensors, etc.). - Electrical systems branch (starters, alternators, etc.). - Motors and actuators branch (window lifts, lock actuators, seat adjustment motors, etc.). - Electronic branch and link systems (ECUs, cabling, etc.). - Interior safety branch (keys, locks, handles, remote controls, burglar locks, etc.). 0 Thermal activity (25% of the group's turnover): - Cabin thermal branch (air conditioning, heating, etc.). - Engine thermal branch (radiators. chillers, etc.). 0 Activity! industry transmissions: clutches, gearboxes, friction materials, etc. o Valeo Service activity (18% of the group's turnover) for independent distribution and repair (second set): - Aftermarket manufacturers, which was organized by manufacturer. - Independent distribution, which was organized by country. - These two businesses shared marketing and logistics functions but maintained separate customer interfaces. In electrical-electronic activity alone, it was possible to distinguish, depending on the sector, specic competitors: Bosch, Denso, Visteon and Hella for signalling lighting, TRW Lucas, Siemens and ZKW for electrical systems, Bosch, Delphi and Denso for the cabin safety branch, etc. The technologies used were also different between the wipers of the wiper branch, the different types of headlights of the signalling branch or the keys, locks and alarms of the interior security branch. On the other hand, for all activities, the customers were the major car manufacturers (GM, Ford, Toyota, Renault Nissan, VW, PSA, DaimlerChrysler, Fiat, BMW, Honda), except in the independent distribution branch of Valeo Services, which was aimed at specific customers, repair and maintenance networks (garages affiliated or not to manufacturers, car centres of the type NorautoIMidas, KwikFitlSpeedy, Green Light or Euromaster, automotive departments of super and hypermarkets). Clients could also be distinguished by geographic locations. Despite manufacturers' efforts to harmonize, automobiles did not require the same equipment in North America, Europe or Asia. Climatic conditions, regulations and equipment differed from one area to another. In fact, internationalization played a key role in Valeo's strategy. In order to offer manufacturers global solutions and to strengthen synergies between its various industrial branches, Valeo was also developing a new transversal approach through "areas of innovation". The four areas identied were: (1 )driving assistance, (2)propulsion efciency. (3)improved comfort and (4)electrical and electronic distribution systems. Source: adapted from valeo.com. Questions 1. Using the diagram below, propose a strategic segmentation of Valeo. Do you think this segmentation should be done at the activity level or at the branch level? 2. In your opinion, should strategic segmentation take into account the geographical dimension? 3. Do you think that the domain approach can serve as a basis for a new strategic segmentation of Valeo? What are the criteria that would justify this segmentation? The strategic segmentation criteria A Strategic Business Area (DAS) or Strategic Segment is a group of homogeneous businesses generally made up of productlmarket pairs that share the same technology, markets, functions. A DAS can be a product, brand, or set of related products that meet a market need