Bombardier transportation and the Adtranz Acquisition
1. What is this case about (250 words)?
2. What are the Key Success Factors of the railway equipment industry ?
3. Draw a schematic representation of Bombardier’s business portfolio before and after the Adtranz acquisition. How critical is the European railway market for Bombardier? (From a business and a corporate level perspective).
4. Is Adtranz an attractive acquisition target for Bombardier? What are the arguments for and against?
5. What should Lortie do with Adtranz? Integrate it ? Leave it as a stand alone? A mix? Justify. What should be his focus in Europe in the next three years : growth or profit ? ...view middle of the document...
Should BT starts to work actively on this M&A operation? should it focus on top-line revenue growth or start to immediately focus on bottom-line cost cutting?
The most important KSF of the railway equipment industry is its size due to the acquisitions. Those investments permit to Bombardier to be on several continents and on several markets and that make the influence wider.
Its diversification in terms of technologies enhances the efficiency. This also had helped BBD to be efficient on many sectors such as aerospace or transportation because it allowed it to master several technologies.
This industry is known for being able to innovate and constantly develop new products. In such sector, technological responsiveness is a key element since it indicates whether or not a company is competent. Having an extensive experience and expertise is a strong advantage.
The reputation is also a KSF. Indeed the industry is known to ensure the excellence of its products and also to be as efficient as possible in its core functions (such as inventory, management control, assembly…).
The ability to generate cash to finance other firms owned is a great KSF because it contribute to the sustainability of firms. It provides a potential to raise profits where it is less evident to have it.
In this industry negotiation with high authorities (and concessions as well) and the ability to build partnership with locals actors contributes to its success. It strengthens the credibility and power on the given territory. Having good negotiation qualities prove that a firm can gain approval with legal and fair maneuvers which is important for credibility and the image of the firm.
In this industry, customers can customize their orders thanks to tailor-made products. Firms respond in an unique way to each customer requirements.
Having a dominant position is also a KSF in this industry because decisions can be made without taking into account the reactions of competitors, suppliers or customers. However, in this industry having a dominant position can cause abuses because competition is reduced.
In terms of people management the railway equipment industry gives credit to not replace existing staff when there is a merger. This is an asset because existing staff can form the other ones on manufacturing methods and share best practices. BBD named it “tried and tested management approaches”.
Bombardier’s business portfolio before the acquisition:
Bombardier’s business portfolio after the acquisition:
In these two schematic representations we can see that the biggest business group of Bombardier is the Aerospace group with a revenue of $8 126 M during for year 2000. As Bombardier is the number one or two globally in the aerospace industry, depending on which under group you are looking at, Bombardier is considered to have a high competitive advantage. The industry attractiveness is rather high, as it is a global industry with a turnover of...