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Strategic management is the process of identifying effectiveness of strategies through which entity can meet with its organizational goal (Fernandez, Le Roy and Gnyawali, 2014). It is the tool that assist in improving performance of business unit and gaining competitive advantage in the market. Present study is based on Thales group. It is the French multinational firm that in engaged in manufacturing of electronic systems. Current study will discuss background of the company and will conduct PESTLE analysis of the business unit. Furthermore, it will carry out porters five forces of the firm in order to identify its strategic position in the market.
Background of Thales'
Thales group is the manufacturing firm that conducts its operations at global level. It designs electrical systems and provide services to transportation, defence and security market. This firm is state owned by government of France. It majorly designs remote weapon system, radar, infantry mobility vehicles etc. Recently company is operating in more than 56 countries across the world. It has employed 64000 employees, total revenues generated by cited firm in the year 2016 was 14.9 billion (Le Roy and Fernandez, 2015). Now Thales group has become the 10th largest defence contractor globally. In the year 2016 company has generated 55% sales from military products. It is the entity that provides solutions to such customers those are related with aerospance, space, security etc. In the aerospace segment it provides aircraft control system, in-flight enterainment services, connectivity system etc. In the transportation sector it provides rail signaling system, tram networks, ticketing solutions etc. In the year 2017 it has generated 15.8 Billion revenues. Market capitalization of the organization is 19 Billion (Beaugency, Sakinç and Talbot, 2015).
It has generated 6.1% more profit in the year 2017 as compare to previous year. Net income of Thales' in Financial year 2017 was 887.1m. Maximum revenues are generated in the firm from the defence and security market (Hill, Jones and Schilling, 2014).
It is multinational firm that is popular for high technological solutions in the area of aerospace, ground transportation, defence and security. It is the leading firm that always work to keep public safe and protecting interest of nations. PESTLE analysis is the method that helps in analysing external environment of business unit (Wheelen and et.al, 2017). There are many macro factors that impact on performance of business unit to great extent.
- Political factor: Political condition plays significant role in business unit. As Thales' is operating its business across the world, if country does not have stable situation then it may create difficulty for the firm to run its business smoothly. As in French government is stable and government of France take care of security aspects. Thus, Thales' has opportunity to grow well in the market (Ginter, 2018). That impacts positive on the business unit and entity become able to conduct business in France easily. On other hand Australia has stable government conditions and there are favourable policies that support the firm in smooth running of operations. South Africa is another country where entity run its business. There are unstable situation and norms are tough. Thus, in this area company has to face difficulty in running its operations (Hill, Jones and Schilling, 2014).
- Economic factor: Increasing GDP rate in Australia and France enhance air travel demand. But South Africa is the country where GDP is stable and it is not growing. In such condition company may get fail to generate more revenues. Thales' has to face issue due to foreign currency fluctuations. This impact on working of cited firm in each country South Africa, Australia and France (Beaugency, Sakinç and Talbot, 2015).
- Social factor: Australia and France are the countries w here defence industry hire ageing workforce and skilled employees. But South Africa is the destination where skill gap is high thus, Thales' fail to adopt advance technical equipments in this country. Furthermore, increasing demand of travel impact positive on Thales group and it fails to generate revenues in France, Australia and South Africa all countries (Fernandez, Le Roy and Gnyawali, 2014).
- Technological factor: Changes in technologies create pressure on Thales group to adopt new techniques and design products by using these techniques. This helps the firm in meeting with the demand of space and transportation markets. By this way company becomes able to run operations in all three countries easily (Le Roy and Fernandez, 2015). But due to technical changes its cost get increased and if the country does not have adequate economic position then it may get failed to sell its products in such country.
- Legal factor: Government of Australia and France has made effective policies for protecting the population. They provide advance technical solutions to the defence and transportation department so that security can remain maintained (Fernandez, Le Roy and Gnyawali, 2014). But pairs is the country where non compliance of trade law takes place. This impact negative on Thales because it fails to run its business in South Africa smoothly.
- Environmental factor: CO2 emission regulations are now creating problem for cited firm in designing products in eco- friendly manner (Thales Group, 2017). Though, Thales's follow all norms of government in each country which impacts positive in run operations smoothly.
Key competitors to Thales and five forces analysis
For analysis of competitive business position, it is essential for company to undertake a external analysis which provide information about factor which are providing influence on their business operations. External analysis of Thales will provide helps the organisation to analyse impact of competitors on decision of competitors. Strategies are developed by organisation through analysis of influence of customers and competitors in marketing (Le Roy and Fernandez, 2015). In present context, Porter's five force model is used to determine competitive intensity and attractive of market for Thales. It helps to analyse where power lies in a business situation and understanding the strengths of Thales current competitive positioning and strength of position which organisation may consider moving further.
There are basically five forces which mentioned below:
- Competitive rivalry: Intense competition in market as there are large of competitors in market which are also capable of manufacturing and providing same electronic safety devices at low prices. Thales operates in three business segments such as Aerospace, transport and defence & security. Presently there are two main competitors of organisation in market are identified such Leonardo and L3 Technologies. These organisations also have strong positioning in market as they have targeted different geographical segments in countries.
- Bargaining power of suppliers: High supplier power as there are number of Leonardo and L3 Technologies which are also providing similar products therefore suppliers have more option in industry for selling their raw material.
- Bargaining power of customers: Finding states that the number of competitors in against Thales have been increased which are providing similar products and service at low prices (Stead, J.G. and Stead, W.E., 2014). Through this, customers of Thales are also influenced by pricing policies and they are also power to change their business and products development decisions. s
- Threats of new Entrants: In this, there are no threats of new entrants in industry because establishment and operations of business involves huge capital and licenses. However, new entrants does not provide influence on performance and decision of enterprise.
- Threats of substitute products or services: Increase in competition in industry have also raised threat of substitutes for Thales in market. Similar kinds and characteristics of products are also manufactured by Leonardo and L3 Technologies to attract corporate clients which aims at getting quality services at lowest prices.
Strategic analysis of Thales
There are various merits and demerits that needs to be faced by organisational if they want to locate their business in small regional town Bendigo. Below given are the point that determined the advantages and disadvantages of locating business such as:
- Tax rates: Establishment of business in small regional tow will provide support to organisation in getting rebate in tax from government because they tend to provide support in development of those small regions (Bryce, H.J., 2017). However, Thales will also get rebates in tax rates if they locate their business Bendigo which is also small town in Victoria city, Australia.
- Reducing cost of labour: Locating business in small regional town Bendigo will provide benefits to organisation in getting employees at low rates. Decrease in cost labour will tend to provide influence on business as it will tend to increase its profitability.
- Community Support: When organisation will locate its business in small regional town, then it will also get support of local communities and people to organisation. People provide support in expansion of company' business operations through promotion of its products and services.
- Workforce: While working in small town Bendigo, company will issue in getting qualified workforce who possess abilities to perform task and accomplish business objectives (Morschett, Schramm-Klein and Zentes, 2015). In small regional town, Thales will not be able to get qualified employee and also face problems in regulation of business.
- Infrastructure: In comparison with large cities, smaller regional town like bedingo contains less effective and no proper infrastructure which is required for organisation to regulate business operations.
- Resources: In small town regions, organisation will not be able to get overall business resources required to carry out business operations. Businesses that target a certain segment of customers will do better in a big city that has a larger population of that segment.
Business level strategy analysis
From the above analysis, it was identified that organization dealing in cyber security division requires talented and qualified employees which helps them in developing new and improvement in existing products and services. There are various ways through Thales will be able to attract the best human talent in their division in Bedingo which are mentioned above:
- Selection of appropriate methods: In order to attract the best human talent in Bedingo, manager of Thales needs to select appropriate method such as internal and external recruitment (Wheelen and et.al., 2017). External recruitment will provide them opportunities to gain new and fresh talent whereas internal recruitment will provide opportunities to get experienced employees from different business units.
- Managing performance: Management of employees performance in other business units will provide them support in getting the best talent for their business unit in small regional town Bedingo. Company can also shift their employees in this unit to start its operations.
- Following proper recruitment and selection procedure: proper recruitment and selection is required to be follow by ensure in order to select qualified employee from selected pool of applicants. Standards must be set by managers on basis of which they will hire employees who will be able to meet those standards.
Benefit of Thales strategic relationship
Thales group has acquired many companies and now these firms have become subsidiaries of the company. These are such as Gemalto, Guavus, Aviovision, Visionix, CMT medical technologies, Thales Alenia space etc. This merger and acquisition are profitable for the business unit because by this way entity becomes able to expand its business across the world and gain competitive advantage (Ginter, 2018). There are various important benefits will be achieved by Thales after such development of strategic relationship with these companies such as increase in market share, low risk, less financial investment and resolving employees problems. Through merger, company will be able to reduce risk in market which they will face while locating their business in small division. Merger will also provide support in getting financial resource from other organisation which are required for regulation of business operations. Also, it will not face problem regarding lack of qualified employees and resources which are not available with them. This strategic decisions will help in reducing impact of competition on their business and also provide support in increasing market share within industry.
From the above report it can be concluded that strategic management is helpful for the firm in measuring effectiveness of strategies and develop new strategies that can support the entity in gaining success. Thales group is the international firm that is performing in the market well. Company hires skilled employees worldwide that help the entity in providing high technological solutions and satisfying needs of consumers of different markets.
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- Hill, C. W., Jones, G. R. and Schilling, M. A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.