Vivendi: Revitalizing a French Conglomerate Essay

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During the 1980's the French economy expanded assimilating rapidly the scarce existing venture capital from the week capital market. As a company with a healthy cash flow, Compagnie Générale des Eaux (CGE) took advantage of economic circumstances and pursued a strong expansion strategy entering different business realms like real estate, healthcare, or telecommunication. Although this strategy worked well with the current economical conditions, the absence of an adequate organizational structure and control was the main cause for the serious financial problems that followed on the late 1990's.
The person responsible with the vast expansion of CGE, Guy Dejouany promoted a strong asset diversification strategy. This was possible through a …show more content…

Through divestment Messier reduced the debt ratio, and consequently the company's leverage. He sold many of the nonessential businesses, but still maintaining a healthy diversity. Strategic alliances with wealthy and well established partners guaranteed a flow of capital for the rapid growing business of the conglomerate. Also, partnerships with other competitors, especially in the communications area, ensured the use of a larger infrastructure and the opportunity to provide services for more customers. Messier also restructured the company's remaining subsidiaries through parallel consolidations and mergers.
One of the most important measures that Messier undertook was the formation of a new and clearly defined organizational chart. An Executive Committee with representatives from all the subsidiary business meets as a team twice a month, eliminating this way the internal competition. The headquarters in Paris consisted of departments of finance, legal, human resources, and investor relationships. Messier instituted that all the asset allocation decisions will be taken at the corporate level only, in contrast with Dejouany's liberal view who granted investment power based on trus to the individual managers.
Messier also adopted a plan for employee mobility in order to promote a corporate culture. Under Dejouany, employees from different subsidiaries rarely acknowledged the affiliation to the same corporation. The incentive system that

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