bombardier
11/21/2012
What is this case about?
Established in Canada in 1942, Bombardier Inc. (BBD) first produced snowmobiles and all-track vehicles. By the mid-1970’s, the company achieved global leadership position in the snowmobile industry and has conquered the US market. Nonetheless, despite high revenues BBD faced cyclical risks, that’s why the firm expanded in both aerospace and the rail transportation industry. The firm pursued external growth by vertical integrations and increased its producing capacity. During the following years, BBD kept purchasing companies at low prices in order to further diversify its portfolio and gain market share. Acquisition allowed the firm not only to complement and diversify but also to strengthen its core activities thanks to excellent management approaches in integrating acquired companies.
Till this day, Bombardier Inc. is comprised of 4 main business groups: recreational product group, transportation group, aerospace group and capital group. Among those groups, aerospace group represent the greatest proportion in company’s total profit. However, it is also a cyclical business with fluctuating revenues. Therefore, Bombardier Transportation (BT) plays an important role to make a balance of the corporate’s revenue since it is a business counter-cyclical to the aerospace business. In order to expand BT’s presence in global market and to increase revenue, in 2001, BT planned to acquire Adtranz, a Europe based company with the competencies of propulsion system that BT lacks. Before the deal could close, BT had to wait for the approval of the European Commission. Although reaching the European market is crucial for BT, there are still many questions left concerning the compatibility of two companies.
Draw a schematic representation of bombardier’s business portfolio before and after the ADTRANZ acquisition
As we can see on the schema below, among 6 distinct segments in rail transportation
What is this case about?
Established in Canada in 1942, Bombardier Inc. (BBD) first produced snowmobiles and all-track vehicles. By the mid-1970’s, the company achieved global leadership position in the snowmobile industry and has conquered the US market. Nonetheless, despite high revenues BBD faced cyclical risks, that’s why the firm expanded in both aerospace and the rail transportation industry. The firm pursued external growth by vertical integrations and increased its producing capacity. During the following years, BBD kept purchasing companies at low prices in order to further diversify its portfolio and gain market share. Acquisition allowed the firm not only to complement and diversify but also to strengthen its core activities thanks to excellent management approaches in integrating acquired companies.
Till this day, Bombardier Inc. is comprised of 4 main business groups: recreational product group, transportation group, aerospace group and capital group. Among those groups, aerospace group represent the greatest proportion in company’s total profit. However, it is also a cyclical business with fluctuating revenues. Therefore, Bombardier Transportation (BT) plays an important role to make a balance of the corporate’s revenue since it is a business counter-cyclical to the aerospace business. In order to expand BT’s presence in global market and to increase revenue, in 2001, BT planned to acquire Adtranz, a Europe based company with the competencies of propulsion system that BT lacks. Before the deal could close, BT had to wait for the approval of the European Commission. Although reaching the European market is crucial for BT, there are still many questions left concerning the compatibility of two companies.
Draw a schematic representation of bombardier’s business portfolio before and after the ADTRANZ acquisition
As we can see on the schema below, among 6 distinct segments in rail transportation