Strategy monograph: Colas Rail, Turnkey produts

Résumé du document

Colas Rail continues to be the French leader in the rail-track laying business. Its leading role in this business is partly due to its unique ability to deliver turnkey products to its clients. The company has been active in all the spheres of railway business, from building up to the maintenance of the railway system. Colas Rail's activities extend to nearly everything related to the railway industry: engineering, building, cargo, metallurgy, and so on. It also installs power transformers and catenaries by itself.

The company is capable of integrating the whole project, and its clients can therefore rely on it to outsource their investments and maintenance costs. This ability, as well as Colas Rail's technological know-how and innovation, makes it likely to benefit from the rail-track management liberalization that began with railway cargo in 2005. This trend will continue since the European Commission is pushing for liberalization of most of the state monopolies.

However, the rail-track laying market is still a very special market.It is deeply imperfect with huge government power interventionism and protectionism. In some countries, foreign companies constantly face discrimination.

Extraits

[...] In fact, the firm, not managing the project, wouldn't even have any incentive to do so Being at the same time maitre d'œuvre and entrepreneur allows more flexibility. It enhances the feasibility of the project, being conceived by both management and realization teams. The competition Colas Rail faces depend on the type of business considered. Despite Colas Rail is clearly a big player on rail-track laying and catenaries, it is nonetheless a transversal player while most of the other players are hardly more than monoline. [...]

[...] Working together allows finding best solutions. Workers can give project designers a precious feedback on the feasibility and to project managers, while by its side, project managing gives an added value to the whole work, and can add a creative and innovative touch. IV- Rail-Track Industry Railway industry is a strongly regulated business. There are almost 80,000 rules enforced by SNCF regarding everything in this business, from materials to procedures, encompassing different things such as quality of materials, safety of workers and products . [...]

[...] Albeit globalized, Colas Rail has no venture in countries developing big railway projects such as China and the USA. Moreover, Colas Rail international presence seems to result in a considerable exposure to political risk. It subsidiary in Venezuela could be a risky exposure to sudden expropriation as more and more activities are nationalized in these countries, not to mention instable countries such as Algeria, Morocco and Egypt overall. Moreover, Colas Rail only has subsidiaries in 7 countries which is far from the critical point in international diversification all the more than 5 of these markets (development countries) have a similar risky exposure to instability. [...]

[...] Colas Rail is able to use it strengths to ensure it will not miss market opportunities. Given forecasted market trend toward turnkey products, Colas Rail should rely on its project management skills and its abilities to be involved in its parent company's BTP projects. Colas Rail is also a leader in private railway management thanks to its pioneer involvement in 2005. This is good omen for Colas Rail in the context of a general trend toward private railway management Colas Rail will also be able to use it strength to avoid threats regarding stringent state regulation and protectionism. [...]

[...] Strategic options (TOWS) review Strength -project management skills Opportunities -involvement in parent company's BTP projects -leader in private railway management Strategic knowhow regarding Threats regulation and laws (subsidiarization) Thriving on turnkey products growing demand -Liberalization Weaknesses Opportunity to enter booming foreign -Huge state spending markets (from which Colas Rail is now excluded) Reduction of exposure by limiting presence in risky developing countries Fighting against -Important state regulations state protectionism -protectionism -unilateral decree (expropriation ) Special strategic options review “developing countries / developed countries” -Switch from unstable developing countries to railway industry booming countries. -Rely and dwelve further into turnkey products in developed countries BIBLIOGRAPHY & RESOURCES Johnson, Gerry, Scholes, Kevan, Whittington, Richard. Exploring Corporate Strategy, 8th edition. [...]