bombardier b

8/13/2019 Bombardier B

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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

ETHZ - Corporate Strategy28.11.2011 2


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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


Recreational Products

Transportation

Aerospace


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Revenue and Profit development of Bombardier


CAGR=18

.1%

Revenue last 6 years PBT last 6 years

CAGR=26

.7%


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Revenue by Region of Bombardier



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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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3. Organizational Structure

Bombardier Structures:

five geographically-based operating units

one market/functional unit


NorthAmerica

AtlanticEurope

ContinentalEurope

Mexico China

Total TransitSystem


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Adtranz Structures:

product segments

functions


ProductSegment

Functions

high speed trains

cars subway trams

bogies

drives car bodies


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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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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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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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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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Agenda



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4. Challenges (and Opportunities) after Acquisition


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


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


Revenue TransportationRevenue by Region(2011:$ 17.7bn)


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6. Q & A

Thank you!


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