Adtranz - Summary

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3. Why an acquisition rather than organic growth or partnership? A traditional organic growth would only expand BT’s revenues and geographic scope. However, BT is looking for something more than that. Indeed, with this acquisition they will increase their competencies in propulsion systems and train controls which would complete their product portfolio. In other words, BT will gain technical and technological knowledge as well as a more complete product range thanks to this acquisition. Doing that internally would cost a lot of time and money : both of which Bombardier cannot spend since they want to invest in the European rail market as soon as possible and bridge the gap between them and their competitors Alstom and Siemens.

4. Is Adtranz an attractive acquisition target for Bombardier? What are the arguments for and against? To begin with,Adtranz faces difficulties and might deter Bombardier from acquiring it. First, it has a history of poor quality products and reliability and certification problems with two train models : Electrostar and Turbostar. The challenge for BT is to find the causes of these problems and put an end to the mismanagement in place in Adtranz. One cause, according to the director of public affairs at BT Neil Harvey, might be that Adtranz took too many contracts and did not carry them out well enough. Furthermore, Adtranz has a poor customer support function and its contract bidding processes were considered as inefficient. Consequently, BT’s strong governance, manufacturing controls and efficient contract bidding can perfectly outweigh Adtranz’s weaknesses.

However, the prospects of the European market and the core business of Adtranz outweigh its weaknesses and make it attractive for BT.

First, Europe is a strategic location to expand railways activities. Indeed, Europe is at the top of technological performances in the industry. Moreover, the eco-friendly movement and strong government support assure long term growth in...
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