Financial statements analysis of JC Decaux

Résumé du document

In the framework of our Analyzing Financial Statements, we are asked to make an analysis of a firm. This analysis should emphasize the company's management, strategy and its financial situation. I chose to work on the JCDecaux Group. I based my file on a question: "How JCDecaux group, an owned-family dimension firm, managed to develop a real business model and become the leader on the European external market?"

My choice was established on the fact that I would like to work on an international French firm, which still knows a success all over the world. Moreover, even if, each French people have already heard about the brand JCDecaux, a few of them is able to describe the company and its entire activity. We could see the name of the brand on a lot of billboards, but we do not know exactly which products belong to JCDecaux portfolio.

JCDecaux is a firm that was created by Mr JC Decaux in 1955. The company's first activity was a new concept: providing cities with furniture which is entirely financed by advertising. JCDecaux then launched three other activities. They became the first company in France to display public notes and advert posters also financed by advertisers. They also make furniture such as public toilets or public lampposts which are implemented in many towns. Finally, their most recent activity is Cyclocity: a new concept that offers self-service bicycles and here again, the activity is financed by advertisers.

JCDecaux has managed thanks to its creativity to grow from a local family-owned company to an international leader on its markets. Today, JCDecaux as a group is implemented in 3500 towns and 48 countries over 4 continents. Nowadays, they are leader on the external communication market on an international level.

Extraits

[...] Indeed, the company always wants to maximize its profits by preserving its market shares. III.IV. Conclusion strenghts weaknesses The MOFf matrice from H.Weihrich JCDecaux is in an “IDEAL situation” as there are very low threats on the market. Moreover, as JC is the leader on the European external communication market, I could notice that the firm has a strong position on its host market. JCDecaux is an “optimum situation” to get its growth constantly up. However, the French company has to be very aware in terms of competitive advantages it gets. [...]

[...] At the beginning of the year, JCDecaux also signed a contract in South America, in Chile for 15 years. Moreover, JCDecaux announced on January 2008, the renewal of its contract with MTR Corporation, firm which manages subways in Hong Kong. JCDecaux's strategy of development is based on being everywhere. We can notice that JCDecaux is not very interested by Northern American market as Clear Channel is still well implemented. However, Asian and United Arab Emirates are samples of places where JCDecaux want to set up its brand. [...]

[...] Their capacity to invest is so low than they can not resist at all. Substitutes could be threats Substitutes get a high power of investment and they can touch a larger target than JCDecaux or Clear Channel can; they could also be more precise into their targeting and then winning time to find customers. Negotiation Power of Clients JCDecaux does not offer promotions to its customers whatever its size. III.II. Competitive position market The blue circle determines the JCDecaux position on Cyclocity The yellow one gives details on its position on Transport. [...]

[...] This strategy could be justify by the fact that JCDecaux constantly faces big competitors and that it had to develop, rapidly, its brand awareness, by communicating with very implicated customers, ready to pay expensive prices. Main Key Success Factors are Innovation and Quality Test of Products. The company, which succeeded in turning them into competitive advantages, settles several strategies, during growing and maturity situation. Once products are launched, firm tends to improve its products quality and to add some characteristics. [...]

[...] Research and Development represent a very high cost. Clear Channel, the direct competitor wants to stay on the external communication market. Nowadays, this American firm is leader on its national market and leader on the Transports Posting market around the world. The main objective is to maximize profits Clear Channel is specially focused on engine of Innovation. As JCDecaux does, Clear Channel bases its strategy on profitability, efficiency, cash flow and market shares gaining. Moreover, CBS Outdoor, a JCDecaux competitor, adopts a “follower strategy”. [...]