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Corporate Strategy Case Study Group B
ETH Zurich, 28.November 2011
Reto Kurmann - Stephan Henggeler - Samuel Mettler - Cyril Hollenstein Jrg Gurtner
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Case Study - Group B
Agenda
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Case Study - Group B
1. Introduction Bombardier Case
History of the company Bombardier
1937 B7 Snowmobile launched
1959 A brand new industry: Snowmobiling
1967 New company name: Bombardier Limited 1969 The company went public
1971 Acquisition of Lohnerwerke GmbH
1971 - 2001 Several acquisitions in rail transportation
(become one of the leading suppliers of rail cars)
1986 Acquisition of Canadair
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Recreational Products
Transportation
Aerospace
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Case Study - Group B
1. Introduction Bombardier Case
Revenue and Profit development of Bombardier
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CAGR=18
.1%
Revenue last 6 years PBT last 6 years
CAGR=26
.7%
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1. Introduction Bombardier Case
Revenue by Region of Bombardier
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Case Study - Group B
1. Introduction Bombardier Case
History of the company Adtranz
1990 ABB Verkehrssysteme
1995 ABB Daimler Benz Transportation
1999 DaimlerChrysler Rail Systems 2001 Adtranz
Adtranz as a company was twice the size of Bombardier
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Agenda
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2. Questions
Should Adtranz be absorbed or preserved ?
What organisational structure would you propose if the merger
succeeds?
Where would you put headquarters?
What other possible challengers do you foresee after the merger?
How can they be avoided/minimized?
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Agenda
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Case Study - Group B
3. Organizational Structure
Bombardier Structures:
five geographically-based operating units
one market/functional unit
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NorthAmerica
AtlanticEurope
ContinentalEurope
Mexico China
Total TransitSystem
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3. Organizational Structure
Adtranz Structures:
product segments
functions
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ProductSegment
Functions
high speed trains
cars subway trams
bogies
drives car bodies
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Case Study - Group B
3. Organizational Structure - Should Adtranz be absorbed or preserved?
Merger orAquisition ?
An acquisition normally involves the purchase of another firms
assets and liabilities, with the acquired firm continuing to exist as
a legally owned subsidiary of the acquirer.(Source: Spth, ETH 2011)
Type of Aquisitiono Horizontal Aquisition
o Market-extension
o Product-extension
Motivationo Monopoly Theory
o Efficency Theory
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Case Study - Group B
3. Organizational Structure
Should Adtranz be absorbed or preserved ?
o Absorbed
Adtranz is a bunch of companies
No real culture
Lack of Management Skills
but:
o Smooth Integration Process
keeping Adtranz Organization initially consistent transferring Management Skills
Integrate Solutions/Skills in Bombardier Division
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Case Study - Group B
3. Organizational Structure
Level 1: Global HQ functionso Capital Group
o Cooperate Functions: Strategy, Marketing, Finance, Legal
o Cooperate TQM Business Excellence
Level 2: Industry Divisionso Aerospace (1/3), Transportation (2/3), Recreational Products (5%) (in 2001)
o Goal to divest Recreational Products
Level 3: Aerospaceo Global division with functional organisation
Level 3: Transportationo Geographically-based operating-units (from Bombardier Transportation)
o Level 4: Product and Service oriented
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Case Study - Group B
3. Organizational Structure
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Case Study - Group B
3. Organizational Structure
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Case Study - Group B
3. Organizational Structure - Where would you put headquarters?
Bombardier Cooperate HQ: Montreal, CAo Bombardier is acquiring (purchasing and absorbing) Adtranz
o Bombardier is solid company, acquiring a messy, but profitable patchworked
Adtranz
o Bombardier has strong management and business excellence capabilities
o Legal location: EU is tougher on legal issues (monopoly)
Transportation Center of Excellence: Berlin, Germany (Adtranz-HQ)o Consolidation of management for Transportation Group in Germany
o Most facilities and sites are in Germany
o Europe is biggest and very (country-) segmented market
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Case Study - Group B
Agenda
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4. Challenges (and Opportunities) after Acquisition
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Reduced economic risk through economies
of scope
Management Skills (M&A)
Increased +complementary productportfolio + technology
Increased market share / global reach
2.7 billion $ backlog maintenance +
services
Density of service facilities increases in
Europe
Quality issues of Adtranz-products
Limited presence in emerging markets
Strengths Weaknesses
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4. Challenges (and Opportunities) after Acquisition
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Development of European Highspeed train
infrastructure
Increase productivity + quality on Adtranz
sites
Economies of scale
Expand in emerging markets
Trend towards privatizationLeasing contracts (Financing)Delayed investmentsDysfunctional practices
Redundant functions
Cultural and organisational differences
A small company (BT) takes over a big one
(Adtranz)Management Capacity/Skills
Opportunities Threats
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4. Proposals to address Challenges
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Agenda
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5. Bombardier todayCore Business
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Revenue TransportationRevenue by Region(2011:$ 17.7bn)
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6. Q & A
Thank you!
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