Bombardier & Adtranz : Strategic Management
- How do you make money in the rail equipment industry?
- Is Adtranz an attractive acquisition target for Bombardier?
- What should Lortie do with Adtranz? Absorb it?
- Should Lortie focus on top line or bottom line Management?
- Headquarter's location and most adequate organizational structure
The rail equipment industry is divided into six departments: services, propulsion and controls, total transit systems, rail control solutions, rolling stock and fixed installation. First and foremost, moneymaking policies cannot go apart from public subsidies: Government regulations are to be taken into account for companies to be efficient. The trend from public management to private companies compelled passenger rail car manufacturers to make the industry more cost-effective. To do so, those firms could bet on diversification and government subsidies.
Concerning Bombardier Transportation (BT) and its specific business model, it differs from its competitors. BT defines its business in five main operating areas (North America, Atlantic Europe, Continental Europe, Mexico and China). Contrary to a functional strategic structure, BT does not separate its activities within each region, which gives it a wide know-how plan.
[...] Adtranz is complementary to Bombardier since it has expertise in propulsion systems, high-speed and inter-city cars and signaling systems, which Bombardier does not have. So this acquisition will bring needed technology and product expertise to different domains of Bombardier. Completing its product portfolio and increasing its competencies will really be good points for Bombardier's future. Moreover, this acquisition will expand Bombardier's geographic scope. Indeed, Adtranz is positioned in many countries across several continents. We can also add that Bombardier's personnel is very well trained and can teach the new staff its successful approaches and manufacturing methods. [...]
[...] Indeed, Bombardier has the reputation of being patient in the integration of the acquired companies. Moreover, in addition to the potential negative point of this acquisition is that there is the lack of Adtranz's reputation for producing high quality products. This firm already has already had several problems in the past concerning quality, reliability and certifications. It has also had problems of mismanagement. Thus, some management practices need adjustments. To conclude, we can say that we think there are more positive arguments when coming along the view of Bombardier. [...]