Vivendi: Revitalizing a French Conglomerate(A)
Executive Summary
CGE experienced glaringly different leadership styles as Jean-Marie
Messier succeeded Guy Dejouany. While Dejouany focused on vertically integrating
CGE and transforming the company into a conglomerate, Messier focused on
profitability and restructuring within the company. As Dejouany’s leadership ended with
a cash crisis and corruption scandal, Messier’s leadership led CGE’s stock to an
appreciation of 71.8% within two years after succeeding Dejouany. The leadership
change occurred at the right time. Dejouany looked at the big picture and maneuvered
CGE into a vast and profitable conglomerate at its prime, while Messier painted the
picture and refined CGE into Vivendi, focusing on shareholder value.
With the merger of Havas, Vivendi could either further centralize and strengthen
the corporate office, or give Havas autonomy. The better choice is to strengthen the
corporate office which will reduce redundancies and free up cash. Vivendi has different
options in expanding its three focus areas of utilities, communications, and construction
and property. Since utilities provide stable cash flow, they should continue servicing
domestically and slowly expand internationally. Vivendi must trust their projections of
growing operating profits in communications and aggressively expand, while contracting
construction and property to free up cash for the communications expansion, as well as
lowering the company’s debt to equity ratio. These steps will guide Vivendi to success
like its predecessor CGE in the 1980s.
I & II. Problem statement/Key issues & Supporting argument
The case discusses the difference in leadership styles and behavioral patterns
between the two CEOs of Vivendi, previously known as Compagnie Generale des Eaux
(CGE). Guy Dejouany, who was the CEO of the company from 1976 to 1995, gave a lot
of importance to personal relationships, experiences, and
CGE experienced glaringly different leadership styles as Jean-Marie
Messier succeeded Guy Dejouany. While Dejouany focused on vertically integrating
CGE and transforming the company into a conglomerate, Messier focused on
profitability and restructuring within the company. As Dejouany’s leadership ended with
a cash crisis and corruption scandal, Messier’s leadership led CGE’s stock to an
appreciation of 71.8% within two years after succeeding Dejouany. The leadership
change occurred at the right time. Dejouany looked at the big picture and maneuvered
CGE into a vast and profitable conglomerate at its prime, while Messier painted the
picture and refined CGE into Vivendi, focusing on shareholder value.
With the merger of Havas, Vivendi could either further centralize and strengthen
the corporate office, or give Havas autonomy. The better choice is to strengthen the
corporate office which will reduce redundancies and free up cash. Vivendi has different
options in expanding its three focus areas of utilities, communications, and construction
and property. Since utilities provide stable cash flow, they should continue servicing
domestically and slowly expand internationally. Vivendi must trust their projections of
growing operating profits in communications and aggressively expand, while contracting
construction and property to free up cash for the communications expansion, as well as
lowering the company’s debt to equity ratio. These steps will guide Vivendi to success
like its predecessor CGE in the 1980s.
I & II. Problem statement/Key issues & Supporting argument
The case discusses the difference in leadership styles and behavioral patterns
between the two CEOs of Vivendi, previously known as Compagnie Generale des Eaux
(CGE). Guy Dejouany, who was the CEO of the company from 1976 to 1995, gave a lot
of importance to personal relationships, experiences, and