Vivendi: Revitalizing a French Conglomerate(A) Essay

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Executive Summary

CGE experienced glaringly different leadership styles as Jean-Marie

Messier succeeded Guy Dejouany. While Dejouany focused on vertically integrating

CGE and transforming the company into a conglomerate, Messier focused on

profitability and restructuring within the company. As Dejouany’s leadership ended with

a cash crisis and corruption scandal, Messier’s leadership led CGE’s stock to an

appreciation of 71.8% within two years after succeeding Dejouany. The leadership

change occurred at the right time. Dejouany looked at the big picture and maneuvered

CGE into a vast and profitable conglomerate at its prime, while Messier painted the

picture and refined CGE into Vivendi, focusing on
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company started an incentive system in 1997, under which the pay of the managers of

the 8 major business units was linked to their respective return on investment targets.

By the end of 1997, due to Messier being at the head of the company, the stock price

had an appreciation of about 71.8% which lead to a high shareholder value.

III. Alternative strategies

Upon studying the key issues and the corresponding supporting arguments, we

have come up with a few recommendations as to how Vivendi should proceed.

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One option is to strengthen its corporate office by means of centralizing through

the merger with Havas. Vivendi can centralize the various different departments

from the merger with its own departments already in place, thereby reducing staff

redundancy and increasing the sharing of firm knowledge. Once staff redundancy is

reduced, cash flows will be freed up to be injected into more profitable areas. Vivendi

would need to forgo letting Havas operate autonomously when following this strategy. If

Havas operated autonomously, it could continue in much the same way that brought its

success in the communications segment thus far.

Instead of integrating Havas, it could be given autonomy and be separate from

the central organization. This would allow the resources from Havas to have a sense

of boundaries, thereby retaining the
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