Thomson Case Study Answers
At the start of the relevant decade, in 1997, Thomson was one of the industry leaders in the consumer electronics industry (TVs, CRTs etc.). But their financial performance was suffering, and they were losing money heavily in the face of competition from lower cost Asian companies. The French government, who were the majority shareholders in the company at that point of time, brought in new people to lead Thomson to profitability, and also move towards privatization. Thomson was reorganized from a functional structure to a product based structure by the new management, to track performance and also generate more accountability from the individual business lines.
By 2000, Thomson was further put under pressure due to the shift in TV technologies towards LCD flat screens and plasma technologies. The industry trend was reduced margins due to increased competition and cheaper manufacturing. Thomson decided to strategically move towards an exit from the consumer products industry, and sustaining profits would only become tougher given the environment and significant investment required to switch to the latest technologies. From a growth standpoint, Thomson decided to change its focus towards digital images and complete video technology solutions for its clients. With this intent, Thomson started acquiring companies to increase its portfolio of image and video service offerings. For the next few years, it acquired a multitude of companies ranging from Technicolor to PRN. Structurally, Thomson kept the acquired companies autonomous to retain brand awareness of the acquired companies.
In 2005, Thomson effectively exited the consumer products industry, by selling its CRT division to Videocon, India. Thomson as a company had changed from a consumer electronics manufacturer to a video technology and services company through its acquisitions. However, this business was seen as an attractive bet by other competitors too, and Cisco and...
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