The Bouygues Group is a diversified conglomerate which has the advantage of limiting the risks and measures to compensate for losses in some areas. Through this strategy the company has been showing positive results in 2009 despite of the economic crisis and has managed to reduce its debt by 50%.
However, forecasts for 2010 are not that rosy, as Bouygues expected a decline in turnover in almost all its business segments (DAS).Today, Bouygues, Alstom's largest shareholder, is closely watching for a new area of activity i.e. nuclear. Indeed, this area requires a variety of facilities, material that the company can actually deliver.
The new DAS is currently in vogue and may strengthen its diversification strategy and it will certainly allow Bouygues to strengthen its financial results. This strategy note is intended to inform the company on its business portfolio. Should you sell some DAS? Should we seek to diversify into a new DAS investing in AREVA?
Tags: Bouygues Group, DAS, business portfolio and strategy of Bouygues Group
[...] The cash will then be invested in the SBU in need such as the real estate sector. • DILEMMA: Bouygues Telecom and Construction: Bouygues Telecom has a market share of very low compared to competition. The dilemma is whether to invest in this activity to make it become a featured activity or abandon it. One can observe that between 2008 and 2009 investments for SBU were reduced by over 20%. Bouygues Construction has low market share and market growth is quite low so this category to the SBU was considered as dead weight. [...]
[...] The new SBU currently in vogue may strengthen its diversification strategy and certainly allow Bouygues to strengthen its financial results. This strategy paper aims to shed light on the company's business portfolio. Should you sell some SBU? Should we seek to diversify into a new SBU investing in AREVA? SWOT Analysis STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Conglomerate- Conglomerate-image S-economic crisis -Crisis -Sound financial that can harm the oopportunity to economic structure: debt company because it invest in decline in reduction, can be interpreted nnew SBU for lesser orders. [...]
[...] -Positive: a dynamic company and family -Venture known worldwide BCG Matrix Tx growth PdM CA relative Estate The BCG matrix allows us to visualize the state of the business portfolio of Bouygues and analyze in what activities and where investment is needed and what are the activities that should be abandoned. • SPOTLIGHT: Real Estate: This SBU appears in this category because the company is market leader. Furthermore the activity is growing. This activity contributes to the group's profitability because it generates cash and profit above all. However we can see that it approaches the SBU business dilemma. [...]
[...] Mostly a product or service is discontinued but dead weight; however we must remain cautious . Three scenarios for Bouygues • Scenario GIVE ONE OR MORE SBU: • Bouygues Telecom: the turnover of this activity does not reflect the large investments made for it. The telecommunications market will soon be saturated when interest in Bouygues are not to give up a potential sale of the SBU. • TF1: the results are steadily decreasing for 2009) and a turnover of less than all the business activities of Bouygues despite increased investment. [...]
[...] Also it could use Bouygues Construction in favor of nuclear power and vice versa (infrastructure . ) this generates new profits for the group and gives a new dynamism to Bouygues Construction.With this new investment Bouygues Construction could gain market share. However it would take Areva with Alstom merges. • Scenario SAVE THE PORTFOLIO BUILDING: Although many activities such as TF1 or Bouygues Telecom no longer generate enough profit they still remain profitable. Therefore it may be wise to think at first to strengthen each SBU because they are still in growth markets. [...]
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