1. Overdependence on alliances ( bargaining power of customers) Matra is overly dependent /has a too narrow focus on costly alliances with major automakers (p.3, par.3; p.4, pars.2-3) rather than alternative strategies (e.g. M&A) to overcome problems 2 and 3. This issue is the most important because of its multifaceted nature: (i) it impacts Matra’s long-term ability to adapt to change and survive in the long term (ii) there are unnecessary costs, as have occurred in the past: prototype competitions and long negotiations with Renault (“seven months” p.4 par.5; p.8 par.7; p.9, par.2; p.12, par.1; p.13, par.2); (iii) there are opportunity costs (foregone economies of scale, lost brand recognition, lost experience); (iv) Matra has limited bargaining power to negotiate favourable terms due to its size and limited offer (p.2, par.4; p.3, par.3); 2. Manufacturing proposal no longer attractive (Threat of substitutes) Originally, their reduced size and craftsmanlike manufacturing capability had enabled them to be agile (p.5, par.1) and to produce low volumes with low capital expenditure (p.8, par.8). At present, the advent of “platforms” and “modules” (p.14, par.4) has made constructing cars in-house more flexible and less capital intensive thus greatly diminishing the attractiveness of Matra’s manufacturing proposal (p.14, par.3). This is the second most important issue because though it is not as complex as issue 1, Matra cannot easily adapt its installations to serve new demand. The only foreseeable options are to change the production (uncertainty of risk and cost) or to divest this branch of the company. 3. Matra’s dual offer is misaligned with market demand (bargaining power of customers) It is now common for car engineering to be subcontracted to smaller firms that “rent out” services and are paid for on a per-task basis (p.14, Par.4). This clashes with Matra’s