Bombardier transport Case Study Solution
Attractive acquisition target for Bombardier
There are many reasons and attributes of ADTRANZ that makes it an attractive acquisition target for Bombardier. Firstly, the acquisition of ADTRANZ results in the increase in the revenues and profits of the Bombardier.It can be said that, the management of Bombardier is keen to increase the sources of revenue and wants aggressively to increase the domination in the market. It is anticipated that, acquisition of ADTRANZ can help the management of Bombardier, to achieve their intended purpose. On the other hand, the acquisition will also increase the skills of the key members of the Bombardier, the fact that ADTRANZis involve in the manufacturing of complex systems.Which are used in the trains makes it highly possible that, management of Bombardier will get benefit from the acquisition of ADTRANZ.
Another reason which is enforcing the management of Bombardier to acquire ADTRANZ is.It is highly likely that, the shares of ADTRANZ are trading at a substantially lower value, because of the consecutive losses it was generating. However, the generation of losses doesn’t mean that the ADTRANZ don’t have potential to generate profits, given the fact that management of Bombardier is very successful in the turnaround of the performance of the companies makes it anattractive target for acquisition.
Overall Business Strategy
It can be said with certainty that, acquisition of ADTRANZ fits with the overall business strategy of the Bombardier Transport. The management of Bombardier has adopted a strategy to aggressively pursue inorganic growth from its initial days.Since its incorporation, Bombardier has acquired many companies,within the sector and outside the sector as well. Many of the acquired companies are not performing well at the time of acquisition.However, by making continuous efforts, the management of Bombardier has successfully turnaround the performance of those companies. As there are just four key players in the rail business in Europe, the market was only shared by those companies, ADTRANZ and Bombardier are two of them. By acquisition of ADTRANZ, Bombardier would be able to reduce the competition to acceptable lower level, which helps the management top fulfill their ultimate goal or business strategy i.e. maximizing the wealth of shareholders.
Arguments against the proposed acquisition
Arguments for the Acquisition:
Acquisition of ADTRANZ will result in numerous benefits towards the Bombardier.Firstly, Bombardier would be able to obtain economies of scale, by combining the marketing and administrative function of both companies. Furthermore, Bombardier will also negotiate better with the suppliers and finance providers, as it is now a much bigger company. In addition to this, the current systems of manufacturing the trains might be improved in both the companies. It is because of the integration and communication between two of the largest train producers in the world. Moreover, the competition will also be reduced as the number of companies, which are manufacturing the trains will be reduced and some serious competitive advantage will be gained by Bombardier, because of the acquisition. Currently, ADTRANZ is finding it difficult to maintain the quality and reliability of its trains, the reliability and quality will be improved of the trains of ADTRANZ, because of the association with the producer of high-quality trains.
BOMBARDIER TRANSPORT Harvard Case Solution & Analysis
Arguments against the Acquisition:
Although there are many advantages of the acquisition of ADTRANZ, there are many disadvantages as well.Which flow towards both the companies, as a result of the acquisition. It can be said that,numerous acquisitions and disposals of ADTRANZ have affected its productivity and efficiency of its products. There is considerable evidence available in the case study, which depicts that acquisitions have a negative impact on the performance and culture of ADTRANZ. There can be serious cultural mismatches between the management of both the companies, especially the culture of ADTRANZ might be too complex, because of the association with various companies. On the other hand, there had been some quality issues in the trains produced by ADTRANZ, which might have a negative impact on the reputation of Bombardier. Additionally, Bombardier might have to face some restrictions on the regulatory authority such as EU. It is because of the increased dominance of the train manufacturing industry, which might again impair the reputation of Bombardier....................
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