Strategic Management Case Study: Thales Group's Global Expansion

This case study examines the strategic management of the Thales Group, a global company operating in aerospace, defense, transport, and security sectors. It begins with an overview of Thales' background, including its expansion through mergers and acquisitions and its global presence. The analysis includes a PESTEL analysis of the company's external environment, considering political, economic, social, technological, legal, and environmental factors. The case study then delves into business-level strategic analysis, focusing on Thales' protected vehicles division in Bendigo, Australia, and its cybersecurity division, including strategies for attracting top talent. The assignment also explores the benefits of Thales' strategic relationships, including major shareholders and mergers. The analysis highlights Thales' competitive advantages, challenges, and strategic positioning within the defense and technology industries, providing insights into its past performance and future prospects. The document is contributed by a student and is available on Desklib, a platform providing AI-based study tools.

Strategic Management – Case Study of Thales Group
Introduction
The 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 group
Political
Geopolitical 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).
Economical
Defense 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).
Social
Growing 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 like
transport, 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, Thales
constantly 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).
Technological
Innovation 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).
Legal
Revised 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.
Environmental
Shift 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

product lifetimes. This Clean Sky will reduce 50 percent of carbon dioxide emissions and 80
percent of nitrogen oxide emissions (Cassaro et al, 2013). It will also reduce noise levels by
50 percent.
Two key competitors of Thales are Boeing and Airbus.
Power of bargaining of suppliers:
Boeing is a huge company and its financial status is extremely strong in the market and so it
has greater bargaining power with its suppliers. This advantage comes from the fact that it is
strongly capable of paying off its debts.
Airbus has an upper hand over all its suppliers. In the context of product quality and power,
suppliers of Airbus needs to comply with certain rules and regulations. As such bargaining
power of supplier is low (He,Hipel and Kilgour 2017).
Power of Bargaining of Customers
Although in today’s business world, customers hold high bargaining power, for Boeing the
picture is different since it has high backlog.
Airbus manufactures high quality aircrafts which are highly in demand with the customers.
Its overall image and delivery of extremely fine quality products gives moderate powers to
the customers.
Substitute Threats
Boeing almost has no substitute threats due to high quality maintenance. Although there are
other rival companies who provide equal quality products, the threat that exists is minimal.

Airbus, on the other hand, caters to niche audience and so it has low threat of substitutes. Its
products are unique and so there is always specific customer demands(He, Hipel and Kilgour
2017).
Threat from New Entrants
Since Airbus invests greatly on innovations and research there is low threat from new
entrants. Aviation industry requires high investments and many rules and regulations. This
can be discouraging for new entrants.
Rate of new entrants entering this market is very low due to huge investments in skilled
labour and technological research and development. Apart from this, high level of legal
regulations and compliances in this industry make entry difficult. Therefore, Boeing has very
low threat from new entrants (Barrows, 2017) .
Level of Competition within Industry
For Boeing, quality of products and brand image are very strong factors.Moreover, financial
stability of Boeing in market helps it to remain competitive in the market. Still, competitive
rivalry is very high for Boeing.
Although there are few players in aircraft industry, but still level of competition is high
amongst them and advantage is gained by delivering high level of quality and brand
image(Barrows, 2017).
Business Level Strategic analysis of Thales protected vehicles division (Bendigo), with
your strategic perspective on the advantages and disadvantages of locating this division
in a small regional town.

Soldiers in Hawkei are supposed to gain from the protection and mobility provided by the
4x4 strong vehicle which can be modified to suit different missions. Thales also successfully
showed their expertise with protected vehicles in Bendigo. Their support centres are in
Brisbane and Townsville. Their Bendigo division is leading to make of new vehicle. There is
a new arrival of their vehicle General Dynamics Land Systems’ LAV(CRV) in Bendigo itself
(Slocombe, 2014). The Bendigo based Thales Australia was given the contract for making
armoured vehicles of the defence sector of Australia. At Bendigo, this operation assured
employment for 300 workers in manufacturing and design area (Slocombe, 2013). Also
manufacturing is locked in for next five years. So this helps in enhancing reputation of the
city with respect to high quality manufacturing. Around 6939 direct and indirect jobs will be
provided to the larger economy of Bendigo (Bendigo Advertiser, 2018). So the strategic
advantage lies in the fact that the company earns a good repute and acceptance in the
economy. Also there is hardly any competitor for them in the small regional town. Their
credibility as an investor will also improve. Disadvantage could lie with the available skillsets
in the small town where people were perhaps not skilled and hence unaware of the
technology used in protected vehicles. The company has to train the workforce in their
respective roles such that they will perform as per expectations.
Business Level Strategic analysis of Thales cyber-security division, with your strategic
perspective on how to ensure the best human talent is attracted to this division
worldwide
Thales has earned a reliable reputation with respect to providing solutions for disruptive
technologies and cyberthreats. Thales is a global leader in producing cryptographic security
packages. They work with cutting edge strategies and is involved with several business
sectors (Sadourny and Conan, 2003). They provide solutions for infrastructures of the
government and military segments, satellite networks, energy & utilities, banking and

insurance, high tech areas and transportation. With a team of 5000 IT experts and 2000
skilled cybersecurity professionals Thales work in close association with their clients across
the world. They have gathered around 40 years’ experience in protecting classified
information. They have a lot of experience in operating and monitoring critical information
systems of more than 100 customers. The company provides solutions for information
security and apart from identifying and preventing attacks they react fast when the attacks
take place. The company designs and operate completely secured information systems which
can help gain expertise over critical data (Thales Group, 2018). Technologies like cloud
computing, Big Data and Internet of Things have provided more opportunities for taking
business forward. In order to attract best talents they can approach the top level Universities
of the world to absorb new skills from the IT area. Their activities and strategies could be
taught in engineering universities and colleges such that they attract interest of young skilled
graduates all over the world. They can take part in training workshops in these Universities.
Explanation of the benefits of Thales strategic relationships, inclusive of at least one
major shareholder and one merger and acquisition
In 2017 Thales Group completed acquisition of Guavus, a big player in real time Big Data
analytics.This will help Thales get access to the large expert workforce of the Guavus.
According to their CEO, “the acquisition of Guavus represents a tremendous accelerator of
ourdigital strategy for the benefit of all our customers, whether in aeronautics, space, rail
signalling, defence or security”(Thales, 2018). Like the usual cases of mergers and
acquisitions Thales has benefitted from this merger by getting access to innovative experts in
the field of Big Data. This will help them expand their cybersecurity division as well. With
new technology and expertise Thales is set to expand its operations.
Conclusion

Thales Group has expanded through acquisition and merging apart from certain strategic
decisions of their production locations. They have kept pace with new technology and skills
while catering to different economies at the same time. Managing different cultures could be
a challenge but Thales’ subsidiaries hire local people usually. They have strategy of guiding
senior executives an engineers to accommodate them in new positions (Koc-Menard,2008).
The participants are selected according to their knowledge, experience, level of motivation
and ability to achieve in jobs which are outside their skills. They are trained as consultants
and coached in new domains. For instance a senior engineer is appointed to work in human
resources unit. They cater mainly to the defence sector and irrespective of their competitors
like Boeing and Airbus Thales successfully expands and grows their business worldwide.

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