Thales Group Case Study: Strategic Analysis and Competitor Comparison

This research paper analyzes the strategic position of Thales Group, including its background, external environment, and business level strategies. It also compares Thales Group with its main competitors, BAE Systems and Rockwell Collins, using Porter's Five Forces analysis.

1 The case Study of The Thales Group
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The case Study of The Thales Group
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2 The case Study of The Thales Group
Executive Summary
This research paper shows case of Thales Group to understand its background. It also shows the
external environment of France, Australia, and UK. Moreover, the report also examines BAE
and Rockwell Collins companies as the main competitors of Thales Group. The paper applies
Porter’s in vi the paper undertakes Porter’s views to clearly understand different market
positions. The last two sections explain the business level strategic analysis of Bendigo vehicle
division and the necessity of forming a good relationship with key stakeholders.
When we look at the company’s website, we find that Thales Group functions in more than 56
nations. This company concentrates in five market segments to manufacture technologically
advanced products for governments, military, organizations, and other planetary agencies. UK,
France and Australia indicate a solid environment for Thales Group to carry out its businesses.
When we locate Bendigo vehicle division in Australia we make international expansion easy. On
the other hand, small markets limits Thales Group from expanding. Thales Group can easily
merge with Lockheed Martin Company to enter the market faster. It also combines opportunities,
utilize many strategies and cost efficiencies.

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Table of Contents
Executive Summary.....................................................................................................................................2
1. Introduction.........................................................................................................................................4
2. A detailed explanation of the background of Thales group.................................................................4
3. PESTEL analysis....................................................................................................................................5
3.1. PESTEL analysis in Australia.............................................................................................................5
3.2. PESTEL analysis in France.............................................................................................................6
3.3. PESTEL analysis in Unites Kingdom..............................................................................................7
4. Two key competitors to Thales group and the five-force analysis.......................................................8
4.1. Rockwell Collins..........................................................................................................................8
4.2. BAE Systems..............................................................................................................................10
5. Analysis of the five forces..................................................................................................................11
5.1. Power of buyers........................................................................................................................11
5.2. The power of suppliers.............................................................................................................11
5.3. New participants........................................................................................................................11
5.4. The threat of substitutes..........................................................................................................12
5.5. Competitive rivalry....................................................................................................................12
6. A Business Level Strategic Analysis of Thales Protected Vehicle Division – Bendigo.........................12
6.1. Merits of locating in small regional town...................................................................................12
6.2. Demerits of locating in small regional towns...........................................................................12
7. A Business Level Strategic Analysis of Thales Cyber-Security Division...............................................13
8. Benefits of Thales strategic relationship with one shareholder, merger and acquisitions................13
9. conclusions........................................................................................................................................14
References.................................................................................................................................................14

4 The case Study of The Thales Group
1. Introduction
Strategic analysis is very necessary for all business functions. It involves developing a
plan for a business through conducting business research and understanding the environment
in which it operates. Strategic analysis is usually conducted to assist businesses to become
more maintainable, strong, advanced and stay pertinent (Wethington, 2018). The main
objective of this paper is to contact a strategic analysis of Thales group. This group ensures
this is done to discover many things. The paper covers a detailed background of the business,
the analysis of the company’s external environment, the analysis of the five forces, the
strategies at the business level besides the necessity (Kelly, 2016) of developing good
strategic associations with the main stakeholders of the company. In the current situations,
markets usually keep changing all the time hence the necessity of developing effective
strategies that ties them to customers than their competitors. Any company that have better
environment operates well because in most cases they usually comply to legal frameworks,
political rules and laws governing taxations. The five forces are very necessary for enhancing
competition.
2. A detailed explanation of the background of Thales group
Thales group is a French company that operates in many nations. It operates in more than
56 counties. The company designs and builds electrical schemes. The company also provides
aerospace, transportation, protection and security market services as given in the company
website. It is headquartered in the business districts of Paris also known as La Défense
(Wethington, 2018). It is among the 10 largest defense contractors worldwide. The stock of
the group is listed on the Euronext Paris. It has over 64000 employees and 55% of its of its
total sales comes from military sales. The company is the main designer of ship. This make it
to generate more revenue hence continued expansion (Kelly, E 2016). The company has
continued to generate deep knowledge in their areas of operation. The company has made
good and close relationship with local clients. The reason for this is to have knowledge of
their functional decision-making processes and values. This helps the management to endorse
best solutions to their problems. The main customers comprise of the institutions, companies
and government (Thales Euronext Paris 2016).

5 The case Study of The Thales Group
3. PESTEL analysis
PESTEL analysis is a marketing tool used to measure, analyses and monitor external
marketing environmental factors that affects a business (Song et al. 2017). They include the
political, economic, social, technological environmental and legal factors that affects the
business. The analyses help to identify the threats weakness and weakness that face the
company.
3.1. PESTEL analysis in Australia
The government of Australia developed business legislations that attracts direct foreign
investments and takes control of activities related to money laundering. The creation of trade
between Australia and china facilitates the export of Thales groups security products
(Aerospace & Defense Industry Profile: Australia' 2017) the country has strong financial
sector. This facilitates fast acquisition of findings by the company hence fast expansion.
According to the Government Spending Industry Profile: France (2017), Thales can access
funding from the stable banks in Australia when need be. This facilitates business
expansions. A business expansion motivates foreign investors to build more business in a
country (Kasahara, 2015). This country also experiences challenges (Kelly, 2016) when it
comes to technology. This made the country to develop a durable national broad band
network NBN. this company is slow in adapting to the use of this network as it strengthens
partnership with other business enterprises. Most students in this country do not undertake
science discipline. This therefore means that it affects the company in some negative ways
because its survival will make them higher more candidates outside the country. This then in
the long run becomes expensive to the company (Karadag, 2015). This country has various
legal elements. They include; strong environments for business, legal privileges and
increased rules on legal services. This element highly promotes the growth of Thales
environments.

6 The case Study of The Thales Group
Table 1: Australia PESTEL Analysis
Political
 Joint trade
 Rules that prevents direct
investments from foreign
countries.
Economic
 Strong direct foreign
investments
 Stables financial sectors
Technological
 Low no of
graduates in
science
 Low partnership
level
 Future prospects
of increased
business
Social -cultural
 High standards
of living
 Strong health
fertilities
 High income
discrepancy
Legal
 Strong legal
privileges
 Stable
environments that
favor
 business
expansions
 Raised rules on
legal services
Environmental
 High rate of
pollutants
 Strong
environmental
performance
3.2. PESTEL analysis in France
Thales is happy with the operation in France as this country very effective strategies that
pawns terrorism in Europe. This makes the country stable and good for investments. As
Thales operate in this country it has less worries wen it comes to terrorism (Kelly, 2016).
Countries that less experiences attacks attics more investors and increases the opportunity for
growth of business. Moreover, France is a democratic country that promotes reforms in
technological environments and has high rates of approvals of research and developments.
This support highly favors Thales group as it highly depends on technology to produce
advanced technology-led, aero plane, defense and security define solutions.
The country also has highly developed infrastructure (France Armaments 2018). This
ensures that Thales products and services reach respective clients without failure (Kelly,
2016). France has strained ties with other countries economically. This affects the general
operation of Thales group and other business and also reduces the rate of exportation. France

7 The case Study of The Thales Group
also has Labour reforms that restricts free movement of skilled laborer’s. this restriction
affects Thales from developing innovative products to limited skilled Labour.
Table 2: PESTEL analysis for France
Political
1. Strong democratic
rules
2. Poor relations with
other countries
3. Continuous reforms in
the local government
4. Possibility of attacks
Economic
1. Good infrastructure
2. Poor financial
systems
3. Strong labor reforms
Technology
1. High rate of research
and development
2. Technological
development
3. Increased approval
rate of patents
Social -cultural
1. High rate of fertility
2. High income
discrepancy
Legal
1. High rate of tax
2. High interference rate
3. High rate of openness
to foreign investors
Environmental
1. Possibility future
carbon tax
2. Strong commitment
towards international
laws
3. Financial risks
4. Poor commitment
towards international
laws
3.3. PESTEL analysis in Unites Kingdom
UK is a constitutional monarchy that operates at the influence of the parliamentary
systems. The economy of this country is stable hence good for investing companies like
Thales. This country has good relationship with other countries (FRANCE ARMAMENTS
22 April 2014' 2014). This assists investors to expand their businesses and attract more

8 The case Study of The Thales Group
investors. The problem with this country is that they are very contract. They sometimes give
first priority to those companies that come from UK. They become stronger economically.
This strength plays key role in businesses. This country shows quality living standard. Thales
operates well in this country as the employees are educated and like quality service
(Kasahara, 2015). Thales is good in providing quality services. the company has some legal
regulations that dictates how the employees are treated.
Political
 Politically stable
 Proactive
government
 Hidden corruption
Economic
 Diversifies
economy with public and
private sectors
 Free market
 High direct foreign
investments
 More money spent
on public resources
Technology
 Quality innovation skills
 Science expertise are
readily available
 Internal competition
 Rate of technological
development is slower than
UK.
Social cultural
 Free public
services
 High standards of
living
Legal
 They regulate the
way employees are
treated
 Laws are there to
restrict price movements
Environmental
 Environmentally
friendly

9 The case Study of The Thales Group
4. Two key competitors to Thales group and the five-force analysis
4.1. Rockwell Collins
Table 3: Rockwell Collins five forces analysis
Competitive Rivalry
 Key clients are the government
agencies
 Managed to grow with the
government
 Already has tougher financial
force and fixed costs for
investment
 Highly distinguished products
than Thales
Bargaining power of
suppliers
 Have specialized supplies
as they mainly rely on
government
 Has stronger financial
power than Thales
 High bargaining power
Bargaining power of
customers
 Major buyers are
government officials
 Lower exchanging costs
 High bargaining power
than Thales
Threats of entrants
 Rockwell Collins is more
experienced in manufacturing
of commercial security
systems, space defense, and
airlines.
 Access to strong worldwide
distribution networks
 Can determine the price of
their products as it is heavily
governed by the government
 Highly
Threats of substitute products
 Few replacements for aircrafts
 Low intimidations in terms of creating alternatives
 Increased swapping costs

10 The case Study of The Thales Group
differentiated products
4.2. BAE Systems
Table 4: BAE Systems
Competitive Rivalry
 Disjointed market with
Boeing, Lockheed Martin,
and EADS N.V as the
main players
 Companies use varied
product lines
 The compete for
government commercial
contracts
 High product diversity
 Large capital outlay
Bargaining power of
suppliers
 Quality and availability
determines quality of end-
products
 Improved power of
suppliers
 Unstable prices of
products
 Use of steel and
aluminum as Primary
inputs.
Average power of suppliers
Bargaining power of
customers
 Has moderate power due
to the quality of products.
 Few buyers from
governments, military
space agencies and
institutions.
 Low cost of switching as
clients can buy from
competitors.
 Buyers do not threaten
them through backward
integration
Threats of entrants
 BAE manufactures
world’s most advanced,
aerospace, technology-led
defense and security
solutions.
 Easy access to distribution
Threats of substitute products
 provide most advanced, aerospace, aerospace and
technology-led defense and security solutions
 doesn’t provide product substitute
 face threats of substitutes

11 The case Study of The Thales Group
channels worldwide
 Can survive frequent
changes in the prices
 They follow rues thus
prevent new entrants
5. Analysis of the five forces
5.1. Power of buyers
Rockwell Collins sells most of its products to the government agencies as compared to
BAE and Thales. This make it have an increase bargaining power than their competitors.
This competitive hedge makes the company to be price elastic hence availing products to
customers cheaply (Porter, 2017).
5.2. The power of suppliers
BAE and rock field has high power of receiving good suppliers. This two companies
have high power o suppliers. This make them to have increased cost of switching (Porter,
2017). This make to compete hence raising the threat to their suppliers as well
5.3. New participants
The two companies have been in the market for quite some time, therefore whenever new
competitors up it become1s difficult to outshine them. this is because they are already
experienced keeping them at the top in terms of competitions (Kelly, 2016). They also
produce quality products thus giving new entrants a difficult time if they try to compete them

12 The case Study of The Thales Group
5.4. The threat of substitutes.
BAE and Rockwell do not have many substitutions in the market as compared to Thales.
Thales are continuously contacting research by specialized employees hence continuously
improving their product and creation of more substitutes (Ascher, D et al, 2018). Those two
companies have week threat of substitutes. Those companies that can comfortably compete
globally should have a variety of products so that the customers buy what they can afford.
5.5. Competitive rivalry
This company faces competition from various companies. Some of them include, the
Rockwell, Boeing and BAE. for instance, Boeing has very high fixed costs than its
competitors (Porter, 2017). This offers this company the capacity to alternate the unit cost of
the products the offer easily than the competitors.
6. A Business Level Strategic Analysis of Thales Protected Vehicle Division – Bendigo
6.1. Merits of locating in small regional town
Few companies in Australia cannot serve all the regions. Therefore, Thales started
developed a strategy of using the bendigo business units to expand the markets in Australia
(Sturiale, et al.2017). This assists in serving the whole market. This strategy enables them to
maximize the use of fixed capital.
6.2. Demerits of locating in small regional towns
Thales group is a multinational company that has a high opportunity for growth. This
therefore means that locating it in a small-town limit it cavity to grow (Ascher, 2018). If the
company lacks capacity it grows it mean that even the profit levels will be lower. This
contravenes one of the objectives of Thales which is to increase the sale volumes.

13 The case Study of The Thales Group
7. A Business Level Strategic Analysis of Thales Cyber-Security Division
At the present moment, Thales adopted a differentiation strategy to handle its cyber
security divisions. This strategy results in the production of unique and durable products that
are not easily imitated (Sturiale et al. 2017) by competitors. The strategy ensures the products
are cost effective, easy to maintain and convenient.
This company targets different classes of customers using different approaches. At the
current moment, this company manufactures quality cyber security systems (Beuve &
Saussier, 2012). In order to achieve this the company has to outsource specialists in
innovation, internet security and technology. This is because Australia has low number of
engineering skills.
8. Benefits of Thales strategic relationship with one shareholder, merger and
acquisitions
There is a mutual relationship between shareholders and the company. Shareholders are
people who depend on the company to satisfy their goals and the company also depends on
them (Beuve, & Saussier, 2012). Shareholders assist the company in making different kinds
of decisions and facilitates expansion of the markets.
A company that have the capacity to merge with Thales is the Lockheed Martin
company. Mergers and acquisitions (Sturiale et al. 2017) facilitates fast entry into the market.
This also helps in utilizing the capacity of the strategies and efficiency in costs.

14 The case Study of The Thales Group
9. conclusions
This report clearly explains environment in Australia, France and UK in terms of
contacting a business. It further provides knowledge regarding the strategic analysis of thales
groups and the ways it operates in either small or large markets. The paper also identifies
BAE and Rockwell Collins as the main competitors to thales group.
References
Aerospace & Defense Industry Profile: Australia. (2017) Aerospace & Defense Industry Profile:
Australia, pp. 1-40
Ascher, D, da Silva, W, Polowczyk, J, da Silva, E, & da Veiga, C. (2018) Neurostrategy: an
advance through the paradigm epistemological in strategic management?. Academy of Strategic
Management Journal, 17,. (2, pp. 1-19
Beuve, J., & Saussier, S. (2012) Interfirm cooperation in strategic relationships: the role of
formal contract. Industrial & Corporate Change, 21(4), 811-8
France Armaments (2014) Acquisdata Industry Snapshot: France - Armaments, 1383, pp. 1-74
France Armaments (2018) Acquis data Industry Snapshot: France - Armaments, 11397, pp. 1-8
Government Spending Industry Profile: France. (2017) Government Spending Industry Profile:
France, pp. 1-38
Karadag, H. (2015) Strategic Financial Management for Small and Medium Sized Companies,
Bingley, United Kingdom

15 The case Study of The Thales Group
Kasahara, E. (2015) Practical Strategic Management: How to Apply Strategic Thinking in
Business, New Jersey
Kelly, E. (2016) Australia's One Sky makes progress. Asian Aviation Magazine, 14(2) p. 10.
Porter, E. M. (2017) The five competitive forces that shape strategy. Harvard Business Review,
[Online]. Available at https://apps.insead.edu/edp-files/coords/share/MartinaF/BAE
%202.1/5%20Competitive%20Forces.pdf
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incineration industry in China. Renewable & Sustainable Energy Reviews, 80, pp. 276-289.
Sturiale, A, Chicca, L, & Gerosa, S. (2017) Do not Gamble with Uncertainty. PM Network, 31,
10, pp. 30-31,
Thales Euronext Paris (2016), 1159, pp. 1-15
Thales SA SWOT Analysis. (2017) Thales SWOT Analysis, pp. 1-9
Thales website (2017) About us [Online]. Available at
https://www.thalesgroup.com/en/global/group/about-us/thales-worldwide [accessed on 25 May
2018]
Wethington, T. (2018) Making Contact: Thales Launches One of Europe's Most Ambitious
Tactical Radio Modernizations. Military Technology, 42, 1, pp. 68-69