The group JC Decaux invests on an average of about 200 million Euros each year to fund its growth. It is important to note that the investment turns primarily to urban furniture as the detriment of other areas of strategic activity. This seems consistent strategy for several reasons: the group holds the free cash flow which is necessary to self-finance its growth and the company is not a contestable market.
Thus, JC Decaux ensures greater progressivity in general since it is the same information systems, the same recruitment techniques and same distribution techniques are used. The result is uniform and therefore supports the creation of value.
Thanks to its acquisitions policy, JC Decaux was capable to: Benefit from rapid growth, start new businesses and acquire quickly a new market share, particularly in transport and display activities, entering new markets which were difficult despite of the cultural barriers, better control lobbying which is now considered as a key element of success model.
Therefore, the strategy chosen by JC Decaux to grow depends on the markets in which it wishes to locate. Far from a rigid dogmatism, the company can be seen as a pragmatic, alternating partnerships and strategic acquisitions, thereby avoiding too much debt and therefore the destruction of shareholder value, as in the founding family of the group.
JC Decaux has made the strategic decision to focus its growth on the internationalization, diversification of supply and differentiation.Through these strategic choices, the group's turnover has grown steadily since 2003 to 1.9 billion euros in 2006.
This report will show that to tackle the outdoor market, growth is a condition of survival. Indeed, the search for a larger size allows JC Decaux not suffer the disabilities associated with competition (control of the forces of competition). First, through internal growth is justified to the extent that the companyis on a global carrier market located in a trade which it has control.
The growth of JC Decaux is reflected in the company's ability to develop new means of production and to respond, to increase its logistics capabilities, but also to increase the number of cities where it operates.
JC Decaux has indeed quickly realized that to occupy a leading position in the market, it had to turn to international markets.Thus the company began its internationalization in the late 90s with the objective the establishment of a strong external policy of expanding its business portfolio.
The work of JC Decaux is composed of three segments: the transport advertising, street furniture and signage. Internationally, it is the only player to perform all these activities on the market for outdoor advertising.
Diversification of the offer to customers is one of the strengths of the group and its growth in general. To meet the growingand maintaining a competitive advantage over its competitors, the group created a subsidiary, JCDecaux Innovate, responsible for the R & D group: this subsidiary has launched the first bus shelters equipped with interactive flat screen.
Throughout its development, the group sought new areas of activities to achieve critical mass and thus greater profitability. Reach a critical size also allows the group to limit the risks of an exclusive activity, and reduce the risk of takeover by foreign investors.
Tags: JC Decaux, analysis of the group, business strategy
[...] Partnerships and acquisitions would take place if they were less expensive, and probably on terms favorable to the company JC Decaux. Its dynamism and innovation has always given it a strategic advantage which is not negligible. In addition, local markets have the most radiation and a very limited partnership policy is often facilitated by technical advances offered by JC Decaux, while absorption is easy due to the lower value of these companies. Conclusion To position itself as a global leader, it is important for the group to conquer new contracts and the renewal of those which are mature. [...]
[...] The market of Central Asia is strong, with many developing countries such as India and the republics which were created due to the breakup of the Soviet bloc in 1991. Thus, the company has operations in India by winning market shelters in the city of New Delhi in 2007, the first stage of implementation of this huge market size (India currently has 30 cities of over one million inhabitants, analysts believed this figure to 53 by 2015). The company has also won other strategic contracts to develop in the area. [...]
[...] We can see that the foreign investments in the context of mergers and acquisitions account for around € 250 million or of consolidated turnover. The majority of acquisitions are for the transport activity. Indeed, although this segment is currently the least profitable, it is by far the most dynamic. This segment grew by of sales in 2006 due to growth in acquisitions and sales growth (driven by high demand). In 2002, the business had heavy losses, but the synergies between the different segments reduced costs considerably. Diversification has created value for shareholders. [...]
[...] The parent company of the latter has however been sold to a consortium of two U.S. funds (funds Blackstone and Providence EquityPartners & other fund KohlbergKravis Roberts), and some American analysts have speculated a transfer subsidiary of Clear Channel Outdoor, which is in charge of outdoor advertising, and as such remains the main competitor of JC Decaux on the market. The company has grown less than JC Decaux in 2006, but has a number of advertising faces more than its French competitor). [...]
[...] Thus, the strategy chosen by JC Decaux to grow depends on the markets on which it wishes to implement. Far from having a rigid dogmatism, the company can be seen as pragmatic, alternating between partnerships and strategic acquisitions, which helps avoid a debt and therefore the destruction of shareholder value, for the founding family group. Introduction JC Decaux has made the strategic decision to focus its growth on internationalization, diversification of supply and differentiation. Through these strategic choices, the turnover of the group has grown steadily since 2003, reaching 1.9 billion Euros in 2006. [...]
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