Strategic Management – Case Study of Thales Group
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Added on 2021-06-18
Strategic Management – Case Study of Thales Group
Added on 2021-06-18
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Strategic Management – Case Study of Thales GroupIntroductionThe paper presents a case of strategic management with the case of Thales Group. They have expanded strategically through mergers and acquisitions and have a trained workforce in operation. They have access to a wide range of skillsets in different divisions or domains of work. The paper shows their position in different segments of operations globally and comments on their scopes for expansion.Thales’ Background:The Thales group operates in more than 56 nations and has 64000 employees. It is owned partly by the French government and their headquarter is in La Defense, Paris. They conceptualize and make electrical systems. They cater to sectors like aerospace, defence, transport and security. Thales Group is the 10th largest defence contractor globally. They earned a revenue of €15.8 billion (6.1% increase over previous year) in the year 2017-18 and Market capitalization of €19 billion (Craft, 2018). The group is led by their CEO Patrice Caine. Their predecessor was Thomson-CSF founded in 1893. They have expanded through acquisitions, mergers, joint ventures. In 2006 they had acquired the Australian Defence Industries and in 2008, British Hardware security module. Their last acquisition in 2017 was the Guavas.The Thales Group functions in three segments – Aerospace, Transport and Defence & Security. In the aerospace segment, they offer aircraft control systems. The services in this sector comprise generation of electricity and conversion, entertainment services within the flights and systems for connectivity. They also manage air traffic and other maintenance services. In transport area, the group deals in signalling systems of railways for traditional
and also the other areas like high end mainline, freight, metro and tram networks, etc. critical information and solutions for cybersecurity and ticketing. In the defence and security area, they provide telecommunication systems and secure information (Som, 2009).PESTEL analysis of Thales groupPoliticalGeopolitical tensions – Since Thales provides services to the defense sector, geopolitical tensions help boost its sales. Since Thales is supplier of defense products, the company can foresee great business prospects when countries increase their investments on security and defense. For instance, Thales provides services to Australia’s new fleet of submarines which is worth $35.83 billion. According to the chairman of Thales, the geopolitical tensions that exist in the Asia Pacific region has induced countries to focus more on their safety and security infrastructures (Roy Choudhury, 2016).Growing populists’ sentiments –There is a rising trend of trade constraints and anti-globalization sentiments across countries. With popular sentiments on both sides of Atlantic moving towards anti-immigration, the need for border security becomes enhanced. For instance, to curb migration France has signed a new deal with Britain to increase border security. As such defense service companies like Thales can make financial deals with countries that increase their focus on border security (UK, France agree on new border security measures, 2018).EconomicalDefense budgets – Since there is growing trend of defence and security in countries due to various political reasons, many countries are opting to increase their defense budgets. This means countries spend more on buying defense services from companies and thus Thales
stands to make massive gains from this. Australia for instance had decided to increase its defense budget by 6 percent in the fiscal year 2017-2018. By 2020-21, the country’s defense expenditure is estimated to reach 2 percent of its GDP (Gady, 2017). Thus Thales, in near future have huge business prospects in Australia.Brexit and currency volatility – Any company can make profits in an increasingly volatile market. George Soros who is one of the successful investors in the world has stated that British’s exit from the EU has influenced all aspects of macro economy. With growing uncertainties in the money market, market volatility increases which can become a platform for making profits for Thales (Why would Brexit affect the currency market? 2017).SocialGrowing urbanization and smarter cities – Thales can have huge contribution to growing urbanization by providing services to enhance sustainability. For instance, Australia is considered as the most urbanized country in the world with 9 million of its 24 million people living in its two major cities, Melbourne and Sydney (Wyeth, 2017). With big cities there is need of efficient functions and Thales can provide comprehensive solutions. Every sector liketransport, defense and public services need flow of information and each sector has different database to maintain data. Thales can provide solution to collect and merge all data by keeping in view limitations of each sector. This makes all sectors collectively work more efficiently (Smart City, n.d.). Aviation demand in emerging markets – there is growing demand 5 aircraft manufacturers in the French market. These manufacturers namely Airbus, Airbus Helicopters, Dassault Falcon Jet, ATR and Daher are controlled by parent company Airbus Group. Thales can make huge benefits by selling its products and services to these aircraft manufacturers.
New work force – With growing defense and security measures in countries across the globe, it is natural that Thales is making investments in new deals every day. With such investment prospects Thales is set to create 500 new opportunities for jobs. Moreover, Thalesconstantly invests in research and development which demands new and more sophisticated workforce (Thales announces new capital investments and job growth in the state of Florida, 2016).TechnologicalInnovation for differentiation advantage – innovation has always been an integral part of Thales group. This is a huge advantage for the company since it deals with service products that cater the dynamic industries life defense, aviation and transport. The 5 aviation companies in France require product assessment and qualification, both of which are strong elements of Thales considering its high investments in research sector (France – Civil Aircrafts and Parts, 2017).LegalRevised quality management regulations – Thales has its team of experts who improve competitive strategies, enhance working processes and improves customer satisfaction.Intellectual property rights – Since Thales makes massive investments on research and development therefore it needs protection by property rights to get financial benefits from its investments.EnvironmentalShift towards renewable energy sources – Thales is founder of Clean Sky which is one of the largest research programmes in Europe (Brunet, Aubrey and Lafage, 2015). The program focuses on making greener designs for its products which usually have long design cycles and
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